In retail, the moving parts are many — forecasting and demand planning, inventory management, fulfillment, store distribution, point of sale (POS) by channel, returns, and markdown optimization. In an ideal world, those dynamics would be coordinated, analyzed in real time, and continuously tuned to maximize product velocity.
Yet many retailers sputter along without clear insights into improving product velocity. They need to find efficiencies, build economies of scale, and optimize product allocations, but that’s difficult with vast volumes of fast-changing data scattered across siloed systems. In this post, we break down how to improve product velocity and maximize your retail performance.
What Does “Product Velocity” Mean in Retail?
Product velocity refers to the rate at which products move through the supply chain from production to the customer. It includes the speed of manufacturing, shipping, stocking, and selling products. Higher product velocity means faster turnover, leading to more efficient inventory management and increased sales.
Product velocity can be measured by:
- Inventory turnover ratio: The number of times inventory is sold and replaced over a period.
- Days sales of inventory (DSI): The average number of days it takes to sell inventory.
- Sell-through rate: The percentage of inventory sold over a specific period.
Why is Improving Product Velocity Important for my Retail Business?
Accelerating product velocity is crucial because it can:
- Reduce inventory costs: Faster turnover means less capital tied up in inventory.
- Increase sales: Quicker replenishment keeps popular items in stock, satisfying customer demand.
- Enhance customer satisfaction: Faster restocking reduces the risk of out-of-stock items, leading to a better shopping experience.
- Improve cash flow: Faster sales cycles lead to quicker revenue realization.
Solving Common eCommerce Issues with iPaaS
Retail lines of business can spend hours rounding up data, dumping it into spreadsheets, and attempting to spot bottlenecks and opportunities. Despite the effort, they still rely heavily on gut instinct and educated guesses for critical decisions.
Many retailers run purpose-built applications for functions such as forecasting, demand planning, inventory management, and point of sale transactions. Yet without a way to consolidate and analyze that information as a unified data set, they can end up with conflicting metrics and multiple versions of the truth.
Ultimately, retailers risk missing sales targets without timely, accurate, and aggregated data. You might lose out on sales because a product is out of stock. You might be forced into markdowns to clear an underperforming product while bearing high inventory carrying costs.
Importance of Data-Driven Decisions in Retail
The technology that retail needs isn’t another planning or inventory tool. It’s an integration layer to orchestrate existing applications, unlock the value of data, and gain a single pane of glass view across the lifecycle and performance of your product. And the best part? Being able to see all of this information in a unified e-commerce dashboard.
Many retailers are acutely aware of the important role integration plays in the value of data and delivering a single source of truth. In fact, respondents to TotalRetail’s annual retail technology report for 2022 named integration as the #1 obstacle to implementing a new system.
Leading retailers solve that integration challenge with Boomi, the world’s largest integration platform as a service (iPaaS) provider and a Leader in the Gartner Magic Quadrant for enterprise iPaaS for eight consecutive years. Our Product Velocity Accelerator is designed expressly for retailers to:
Consolidate and standardize data. Bring information from multiple systems (inventory, merchandising, POS, etc.) into a unified repository; generate a single version of the truth with Boomi’s master data capabilities to aggregate, cleanse, and enrich data.
Monitor and react. Set and track critical metrics; get real-time alerts if, for instance, sales are below a forecasted threshold, or if sales exceed expectations and more inventory needs to be ordered.
Analyze and understand. Give key stakeholders in demand planning, finance, buying, store operations, etc., insights for data-driven decisions with Boomi’s Business Analytics Intelligence layer. Plus, Boomi connects to artificial intelligence/machine learning (AI/ML) solutions such as Aible for predictive forecasting.
With the right approach to integration, retailers can improve collaboration and accountability across their internal departments. Time once spent debating data accuracy can be focused on analytics for informed decisions on short-term tactical issues, and longer-term strategic direction.
Benefits of Integration for Retailers
Retailers have flexibility to apply the Boomi platform to multiple use cases, including:
- Forecasting. Align real-time POS data against forecasts to measure variance, capitalize on opportunities, and implement countermeasures such as canceling purchase orders for a product that’s not selling to expectations.
- Promotional planning. Get early insights into real-time sales performance from POS systems compared to inventory levels and purchase orders to craft promotions that clear out inventory as needed, or avoid promotions on a product exceeding targets.
- Merchandising and store allocations. Quickly assess the impact of product placement in physical stores and on ecommerce sites, and adapt allocations based on POS sales data by regions and demographics.
- Returns. Capture information on item returns, including customer feedback supplied to customer support agents, that can be shared with product category teams to address customer-identified weaknesses.
Real-time POS data is another advantage that retailers can gain with Boomi. As it is, many in-store legacy POS systems funnel data to headquarters with periodic batch processing, sometimes taking up to 24 hours to get to critical business stakeholders.
Boomi makes possible real-time POS data updates with “Atom at the Edge” technology that uses a lightweight integration to consolidate transactional data from in-store POS terminals. Instead of waiting 24 hours to assess a new product placement or promotional strategy performance, retailers can adapt as needed based on up-to-date information.
Keep Pace with Growing Complexity and Consumer Demands
Data complexity is rising as fast as the expectations of demanding consumers. Shoppers expect to buy what they want, when they want, over whichever channel they prefer. If your business falls short, it’s all too easy for consumers to turn to a competitor — maybe for one sale, maybe for good.
Traditional approaches to managing the product lifecycle are hard pressed to meet today’s changing demands. More spreadsheets and best-guess decisions are unlikely to improve product sales. A new forecasting application might be best in class, but its value is limited if it’s another standalone data silo.
Retailers that augment their business applications with an intelligent integration and automation layer are positioned to improve inventory visibility, protect margin, and increase customer satisfaction. Product velocity will be poised to soar, along with improvements in cross-functional team efficiencies and economies of scale.
Contact Boomi experts in your region to size up how an iPaaS can help you increase product velocity across your retail business.