From shelves to algorithms: Navigating the future of inventory management

For retailers– especially those in growth mode – inventory management is a process of near-constant refinement and tweaking. From overcoming inefficiencies to dealing with overstocks and keeping up with changing customer demands, there’s a reason many eventually turn to smart, automated solutions.

Andrew Gholizadeh is something of an expert when it comes to inventory management, lending his expertise to retailers at Cin7 as a senior partner manager. It’s a role that exposes him to a lot of different customers and the unique problems they’re trying to solve. We sat down with Andrew for an interview to learn more about the future of inventory management – and what lessons retailers can learn today.

Andrew, thanks so much for doing this interview. To start,from your perspective in inventory management, what sort of technologies do you see as having the biggest impact on eCommerce and retailers more generally in the near future?

So, from an inventory management perspective, one of the things that's going to have probably the biggest impact is transitioning from a scattered ecosystem to a more connected ecosystem. In practice, this means an integrated world with the use of tools like AI to really bring together all the separate tech stacks that companies have built.

An average company, in our ecosystem, has roughly about five to seven different technologies that they're using.

Do you see that as being a new category of products to bring these things together? When you mention tools like AI, for example?

It's definitely going to become the new trend because for so long it was digitisation that was at the forefront. Now that we’re pretty much done with digitisation, it’s become "Okay, let's re-engineer your business with a defined tech stack in mind”.

Post-digitisation, businesses had all these random digital tools in place, but one of them really worked together.

I think the next phase is going to be all about saying “Well, how well are these tech stacks actually communicating? How are they working together? Are any of them causing a bottleneck?”. We’ll also be looking at the level of intelligence going from one app to another so that businesses can really get that holistic view.

Eventually (future state) I think you’ll have this tech stack and you're going to have a single dashboard to be able to look into and see how everything’s performing from your shipping logistics all the way to your purchasing.

You’ve mentioned AI, obviously a hot topic right now. Beyond that holistic view you’ve mentioned, do you see AI having a role to play in inventory management specifically?

We're actually in the process of incorporating some AI tools into our own platform as we speak!

I think what AI is really going to do is allow business owners to identify problems and be able to come up with a solution on how to rectify those problems quickly. Shopify has recently unveiled a new AI platform designed to do just that.

AI will also really have a big impact on basic tasks between systems. So, if there's a limitation between two platforms in terms of connectiveness, an AI tool could help to remove that limitation. For example, if the one tool is connected to multiple applications, the AI could say “Hey, this data doesn't flow”. Then, it could create that link. This is actually what we've seen demoed a couple of times.

In terms of inventory accuracy and the role hardware plays, I think people for a long time have talked about the internet of things and terms like that. What’s your view?

So Starshipit and the other shipping platforms are really good at managing all the packing and label printing. But there's the whole other side inventory management, which is bin management, picking zones etc.

What we're seeing is that warehouses are now becoming smart warehouses. They’re utilising different technologies. They’re adopting things like QR codes and RFIDs to really help with the accuracy and flow of stock in their warehouse.

This is digitisation of the warehouse, because what's happened is most businesses have to first nail selling their selling goods. They get the eCommerce really dialed in. Then it's like, “OK, I need to send the stock out effectively”.

At this point, they typically turn to a solution like Starshipit who will come in and help them with that fulfillment. Then as they grow and maybe adopt multi-location, eventually have hundreds of tens of thousands of SKUs, they'll need something to manage all the back end for them.

It’s making the warehouse smarter and going back to the drawing board saying, “Hey, now I have this beautiful web experience, my shipping is running smoothly. How can I make sure this also extends to my physical warehouse?”.

It’s also about engineering workflows in a specific warehouse. You’ve just moved to a new warehouse. How do you actually lay it all out? This is where sometimes our systems can help, of course, but we see a lot of need for digital experts. So expert consultants that are really familiar with these cloud technologies and these cloud tools to help them actually now go and engineer the warehouse.

Do you think that's something technology can solve in any way? Or do you think people are still going to need to bring in a human expert to actually physically go in and lay out this warehouse and then match it back to the systems?

I think it's going to come down to what level of investment makes sense, and it really depends on the size of the company. But I think the beauty of it is that once companies hit a certain size, they actually have the ability now to make that decision.

Now we’re out of the “pandemic years”, an understandably turbulent time for businesses. How has that changed the uptake of the kinds of technologies we’re talking about here?

You know even before COVID, I think most business owners were somewhat scared to introduce new technologies because there was a wall of resistance from the actual workforce – from the warehouse staff.

But now since COVID has come and forced digitisation and people have tried new things (whether at work or at home), the general aversion to new technology has come down a lot. People are a lot more receptive to using new technologies. Now, it's a bit easier when someone comes in with a plan to move everything from printing manually to printing directly from a PDA device. It's just a smoother transition.

Do these lower barriers to entry make the prospect of implementing services like same day delivery, on demand delivery and ship from store easier?

Yeah, I think that's true for sure. It’s also worth talking about how various offerings like ship from store transition from unique selling points to the norm. Some time ago, if you just offered online shipping, your sales would go through the roof. Then it became a norm. After that, the next trend was same day shipping. As soon as you were the first person to offer same day shipping in your space, your sales went through the roof. Now we’ve seen the same with self-service returns. Offer that, and your sales go through the roof. But now it's starting to become expected, right?

It's become a new norm to be able to pick up in store, pick up from a location, do the same day delivery. And it's become a must-have for retailers because it’s set a new customer behavior.

Thinking about predictive algorithms, data analytics and demand forecasting, how do you see retailers using these tools to better predict their inventory needs?

With intelligence and on demand planning, it really comes down to the realisation that there's two things that happen with stock that drives this. One is that stock sitting in your warehouse is cash that's not sitting in your bank account. This reduces your ability to grow. But most importantly, it also hinders your ability to pivot if something happens.

If you have $10 million of stock sitting in your warehouse and you have $4-5 million turning over nicely, you have $10 million that's sitting there that should be cash in your bank account. It's really become a must to forecast and buy stock that's relevant.

Then, when the buyer comes back to the online store, they want to get blue cheese and white cheese. But this time, they see that red cheese is on sale, so they switch and buy that. Now I’ve solved my red cheese problem, but I have a supply of blue and white cheese to deal with.

There’s a question of how you strategically position, bundle or discount certain products without impacting the sales of your other products.

That is a huge aspect of really good intelligence when it comes to demand forecasting and something that not a lot of businesses get right without the help of really strong data from systems. The ones that get it right are the ones that have really good systems in place.

A smarter system have the intelligence to flag to me that, “Hey, every time the red cheese goes on sale, no blue and white cheese gets sold”. This may seem relatively straightforward when we’re talking about three cheeses, but it’s an impossible task when you have six thousand SKUs. That’s where the intelligence becomes really important.

Do you have any final thoughts on the future of inventory management?

It’s my view that we’re starting to see the dawn of a new category of eCommerce business – one that’s essentially been able to skip the digitisation process and build their entire operation from day one using digital platforms. These are the companies that started 8, maybe 10 years ago with Shopify, they then added Starshipit, Cin7 and whatever other tools they deemed necessary at the time. Then, in the years since, they’ve added new tools, ripped old ones out and continuously refined and optimised.

When appropriate, they’ll also introduce entirely new types of tools (like demand planning tools, for example). Their entire business was actually established on modernization from day one. We've seen in our data internally that these businesses on average are growing around 20 to 30 percent year on year for the last seven, eight years and it's been nonstop.

These same companies will be the ones seizing on the next wave of technology, really seeking out AI-powered tools and systems and implementing them if they see the benefit. These are the businesses that will continue to thrive, in my view.

Thank you so much for your time, Andrew.

Wrap up

And that concludes our interview with Andrew Gholizadeh. If his final words are anything to go by, it’s clear that those retailers who understand the benefits of new systems – especially systems that are able to talk to each other – will be in the best position both for growth and weathering any future storms.

To future-proof your shipping today, learn more about how you can use shipping automation with Starshipit to transform your business.