5 Ways Smart Data Capture Reduces Inventory Distortion

What is inventory distortion?

Inventory distortion refers to the combined total cost to a business of overstocks and out-of-stocks. In 2024, it cost global retailers an estimated $1.7 trillion (IHL Group). That’s roughly the size of Australia’s entire GDP, or just over $200 for every person on Earth.

A few factors cause it:

• Human error: Manual inventory counting can be prone to errors, such as miscounting items or forgetting to count items entirely.
• Theft: Inventory can be stolen by employees, customers, or suppliers.
• Damage: Inventory can be damaged during shipping, storage, or handling.
• Obsolescence: Inventory can spoil or be out of season.
• Poor demand forecasting and supply chain management.

What are the impacts of inventory distortion?

Inventory distortion impacts retailers by causing lost sales, higher operational costs, and poor customer experiences. When stock records don’t match actual inventory, retailers risk stockouts that drive shoppers to competitors, or overstocks that tie up cash in unsold goods, insurance, and storage costs.

Distorted inventory data also leads to inefficient replenishment, higher shrinkage from errors or theft, and reduced employee productivity as workers spend more time reconciling discrepancies. Ultimately, inaccurate inventory leads to lower profit margins and erodes customer trust.

The overlooked cause of inventory distortion - data capture

The process of collecting and digitizing information from the physical world (aka data capture) is often overlooked in its importance. It’s relatively easy to analyze data from e-commerce operations. Less so when the process involves scanning thousands of SKUs when managing stock with an inventory barcode system.

Most current retail data capture workflows suffer from two elements:

Processes to capture data are outdated and inefficient

Receiving goods or counting inventory still relies heavily on manual processes. Scanning items one by one takes time and can involve human error.

Real-time data is not available to those who need it

Decision-making is hampered by a lack of access to real-time data. Often, this is due to devices that can’t connect to systems and provide feedback or poorly defined processes.

When combined, store operations become inefficient and decision-making becomes slow and unreliable. Contributing to the causes of inventory distortion.

How Scandit Smart Data Capture reduces inventory distortion

Scandit Smart Data Capture reduces inventory distortion by giving retailers accurate, real-time visibility into stock levels. Store associates can scan barcodes and full labels with smart devices, ensuring that digital records match physical inventory.

This reduces inaccuracies and errors when items are being received and transitioning through stores into the hands of customers.

Here are 5 ways it helps:

1. Accurate receiving

If you want accurate inventory levels, then a good place to start is receiving. Ensure accuracy when goods arrive and retailers have a better starting point when inventory moves through stores. However, it can be tedious and time-consuming to count every item. Some receiving workflows employed only count 10 or 20% of items that arrive, with the shipping manifest doing the rest of the work.

MatrixScan Count is a lightning-fast multiple barcode scanner solution that makes receiving workflows up to 10x faster. With this level of automation, all items can be checked as they enter the store and any discrepancies can be immediately identified.

2. Easier and faster cycle counting

The same speed and accuracy that comes with MatrixScan Count can be applied to spot checks and cycle counting too. This means that another time-consuming task can be carried out more frequently.

This allows retailers to continuously monitor that other stock-keeping efforts are accurate – and quickly identify if factors such as theft are impacting stock levels. With more regular and accurate checks, retailers can address minor inventory distortions before they hamper business.

3. Prevent human error

Unfortunately, humans do make mistakes. Miscounting or not counting items significantly contributes to inventory distortion. In a pressurized retail environment, store associates have an ever-increasing list of tasks to do. Inevitably, things get missed.

We know this at Scandit, so we have built-in workflow assistance in our tools to alert store associates to failed scans or discrepancies that can be addressed immediately. Feedback is provided visually using augmented reality on the device screen, as well as through sound and haptic responses, to ensure it doesn’t get missed.

4. Precise e-commerce fulfillment

Statista puts e-commerce at nearly 20% of total retail sales worldwide. This means that inventory distortion is a multi-billion-dollar problem for the e-commerce industry. Automating fulfillment efforts to ensure precision and eliminate human error is a big business.

Being able to locate the right item to be picked and in the correct order helps keep fresh produce from spoiling and ensures that inventory levels remain accurate. MatrixScan Find uses augmented reality to help find products instantly and make errors almost impossible.

5. Real-time data

As store associates go about their daily tasks, they can constantly capture data about inventory levels and feed it back to a central system. Discrepancies can be identified by store associates in real-time, and inventory management systems can be updated to resolve them.

Access to a single source of truth empowers everyone to monitor stock levels, supporting demand forecasting and reducing inventory distortion.

Key takeaways: How smart data capture reduces inventory distortion

Smart data capture directly addresses the causes of inventory distortion by:

• Ensuring accurate receiving through automated batch scanning and counting
• Enabling more frequent cycle counts with faster scanning
• Preventing human error with on-screen instructions
• Supporting omnichannel fulfillment with AR guidance
• Providing access to real-time data for a single source of truth

Unlock next-level business efficiency and improve inventory management.

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