Inventory Management Maturity Model

Level 1 : Manual Inventory Management

• Manage incoming and outgoing inventory Excel or manual register
• No central system to see inventory across the enterprise
• Huge delay in processing of sales and inventory updates 
• No ERP system available, even billing might be done manually

Level 2: ERP Enables Inventory Management

• Near Real Time Data flow architecture across the ERP systems
• Single source of truth for inventory
• Day -1 update of inventory and updates

Level 3: Auto Replenishment Enables Inventory Management

• Automated replenishment of repeated orders
• Reduced Inventory holding cost without impacting forward cover
• Central and regional ARS enabled distribution system

Level 4: Planning and Forecast Driven Inventory Management

• Demand Forecasting system enabled Merchandising Planning
• Open to Buy enabled purchase order management
• Replenishment Optimisation based on product lifecycle
• Business Analytics driven by Day-1 data warehouse setup

Level 5: Actionable Insights Driven Inventory Management

• Contextual BI and actionable Insights driven operational decisions
• Near Real time perspective analytics to end user
• Track Inventory ageing and forward cover
• Optimised Push & Pull Strategy for profit centers driven inventory control
• Near real time to real time business analytics supported by OLTP systems

PRODUCT CLASSIFICATION

To efficiently manage inventory, launch products and improve sales retailers should continuously study and understand their products. The knowledge gained through such continuous analysis will help in achieving good inventory turnover, reduce inventory holding cost and better understand customer's needs.

CLASSIFICATION BASED ON MANUFACTURING (applicable for "private labels")

1. Core or Flagship products
2. Basics

CLASSIFICATION BASED ON PURCHASE AND SALES TYPES

1. Consignment
2. Concession
3. Regular
4. Deposit
5. Non-Trading

CLASSIFICATION BASED ON SALES

1. Top Selling
2. A Class , B Class and C Class products based on average sales in descending
3. Clearance goods

CLASSIFICATION BASED ON SEASONALITY

1. New Launch - Specific Season
2. Continued - All Season
3. Continued - Specific Season

CLASSIFICATION BASED ON FLOOR PLANNING

1. Preferred Category
2. Impulse Category
3. Destination Category

CLASSIFICATION BASED ON BUSINESS STRATEGY

1. High Volume Goods
2. High Value Goods
3. High Margin Goods
4. Footfall drivers
5. Image Building Goods

CLASSIFICATION BASED ON INVENTORY TURNOVER
1. Runners
2. Repeaters
3. Strangers