Epicor ERP Software
View Your Business From A Customer’s Perspective

No matter how you see your store, ultimately you should view your business from a customer’s perspective. In a recent Inventory Optimization webinar, we discussed the value of refining the management process and best practices for planning for the right inventory balance.

Let’s say your customer races down the aisle, only to find items out-of-stock – this is the ultimate retailer’s fear, not having what your customer needs. Meanwhile at the other end of the spectrum, your businesses could be facing overstocks with items that are heavily discounted to get them off the shelves.

According to IHL Group*, retailers world-wide are losing $818 billion annually due to inventory distortion ― the combined cost of out-of-stocks, lost sales, and overstocks that retailers must deeply discount to sell. On the other hand, dealing with stockouts and overstocks is another business critical issue that must be remedied. Aberdeen Group** research has revealed that 70% of retailers rate themselves average or below average on their inventory management. So you may now ask, “How do I get a hold of my inventory, I don’t want to be sold out, or overstock.”

Retailers want to have the right balance of inventory. To get to that optimal level of inventory, retailers greatly benefit from working with an inventory management solution provider, like Epicor. There is typically one field of data, which if managed properly, could reveal significant value. That data field is Quantity on Hand (QOH)—getting that one field right allows your business to optimize inventory. QOH can be very elusive because it has various ways it can be impacted:

  1. POS check out – if barcodes are not set correctly
  2. Receiving – if controls aren’t in place
  3. Backroom – while this is helpful to house extra product, it can be a nuisance if that product is not controlled appropriately
  4. Special orders – if not managed correctly, the business could be holding onto unneeded products
  5. Shipping, Shrinkage, etc.

How can businesses improve the management of QOH? Little Hardware of North Carolina typically has 65,000-70,000 items in their inventory. They have decreased stock out rates on A and B items by 25%, increased GMROI by 19.1%, and increased turns by 13.1%. How? Through their use of Epicor Eagle Inventory Planner dashboards and real-time, actionable information. “Over the past few years, we recognized that ordering the wrong items in the wrong quantity was money out of pocket. Money we’d rather have kept in the business . . . Our goal was to make better business decisions related to ordering,” said Kyle Little, eCommerce and IT manager at Little Hardware.

Watch this video to hear how Little Hardware has accomplished this business improvement.


If your business is struggling with stockouts, out-of-stocks, and improving cash flow, better managing your inventory and QOH could be key for your business. In regards to inventory optimization, if you want to reach the optimal inventory level that improves turns, a dramatic change to business management policies must be implemented. Ultimately, inventory optimization will improve margins and customer service levels.

To the view the full Inventory Optimization webinar, click here.

*Source: IHL, “Inventory Distortion – Retail’s $800 Billion Problem” by Lee Holman and Greg Buzek, December 5, 2011.
**Source: Aberdeen Group, “Inventory Optimization: Retail Strategies for Eliminating Stock-Outs and Over-Stocks” by Sahir Anand and Chris Cunnane, May 2009.

Posted by Doug Smith, Senior Product Manager, Epicor Retail Distribution


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