By Rajiv Manalal Gupta, SCM Expert & Managing Director
Customer is the core to business. Good customer experience is the key to customer retention and their keenness to do business with you. Increasing customer retention rates by 5% increases profits by 25% to 95%, according to research done by Frederick Reichheld of Bain & Company (Click to read)
Efficient Inventory Management is key to driving customer experience. It is essential for every business to ensure designing of an inventory management system which facilitates real-time visibility of stock status of finished goods/products to WIP inventory status, raw material, unsold or dead stock etc. The system should also provide view of procurement schedules for better planning of production and dispatch.
Ensuring timely delivery of products is one of the key output expected form a good inventory management system. On-time delivery, every-time, increases customers confidence & hence reliance on you. This results in increased business, better pricing from same customers, lowering of business acquisition costs thus increased profits.
For reliable and intelligent Inventory Management System, independent or as part of end-to-end SCM solution, some of the below points will demonstrate to you how inventory management impacts customer retention.
Efficient Order Fulfilment
Every order you get must be delivered or serviced on time even if it for special items. For this to happen you must have complete visibility and analysis of item ordered, visibility of stock of fast moving as well as slow moving items and delivery timeline to fulfil orders especially order for special items.
Ability to service special order on time and quickly will leave positive impression on your customers for them to be wanting to do more business with you even if you charge marginally higher premium.
Managing Warranty Returns
Efficient management of sales returns drives customer satisfaction hugely. Amazon has built a huge customer credibility just by managing returns and replacement efficiently. Having real-time visibility of stock available for sale will enable your team to commit and block the stock for swapping the damaged stock immediately thus driving your customer satisfaction positively.
Inventory & Competitive Pricing
Historic trends and real-time visibility of inventory will enable you to analyse stock by shelf life and project for you expected order fulfilment timelines. A good inventory management system will give you information increasing your ability to maintain stocks at optimum levels thus reducing blocked cash in extra stock holding. Reduction in unwanted inventory will result in reduced cash requirement and related costs like interest, insurance etc. thus reducing your overall costs. This will make you more competitive by reducing your price or increasing your profits. Your clients will be delighted if you were to pass on part of this benefit to them.
