Legacy systems are being left behind as retail moves to omnichannel. There’s a reason why.

Inventory management in an omnichannel world: How retail companies regained control with the Dynamics 365 IT system

One of the biggest challenges retail companies face today is effective inventory management.

More companies in today’s marketplace are counting on sales from two pipelines: physical shops and online. The interaction between physical warehouses and webshops is placing new demands on companies. More specifically, the IT systems their infrastructure is based on.

“Effective online sales challenge inventory management in a completely different way than sales in physical stores. Time-to-market, delivery times and stock replenishment are just the tip of the iceberg. There are also challenges like: can we show our online customers which products we have in stock in real time? Or when they will be back in stock? There are a number of challenges that companies have not had to deal with before,” says General Manager at AlfaPeople, Paw Steffensen.

In this blog post, we take a closer look at omnichannel inventory management in 2022, and what happens when omnichannel collides with the legacy systems that many companies still base their business on.

It’s not good.

Then we show you the benefits gained by replacing legacy systems with a unified platform designed to support omnichannel sales.

The most successful retail companies are transforming their business into omnichannel. Read how in our latest e-book: Transformation in B2B retail: 5 challenges and how to solve them.

Challenges within inventory management

One of the most interesting publications in recent years concerning B2B retailers and omnichannel is The Total Economic Impact Of Microsoft Dynamics 365 Commerce by Forrester Research.

The report is informative for many reasons, not the least of which is its focus on the real challenges created by the collision of legacy systems and omnichannel, and the chaos that creates in, among other things, inventory management.

Companies focused on in the report had independently developed a legacy solution for inventory management and supply chain, but those systems were created before omnichannel.

This caused many problems in thongs like:

Synchronization of data: Storage systems did not synchronize with other systems. This made it necessary to update product data and information relating to stock manually within every system.

Inventory in real time: Because data about goods and inventory had to be updated manually in each individual system, it was not possible to provide webshop customers with precise answers about inventory, delivery times and other information.

Replenishment of stock: Slow synchronization of data also caused problems from webshop to stock. Information about out-of-stock items and new orders had to be delivered across different systems, risking delays and lost information.

Time-to-market: The introduction of new products was delayed by the technical limitations inherent in the connection between the warehouse, other systems and the website platform.

Customer experience: Insufficient product data and information about items in stock and delivery times affected the customer experience and the ability to generate additional sales.

While none of this is good for B2B retailers, Paw Steffensen especially believes bad customer experiences deserve a closer look.

“B2B customers expect the same smooth experience when shopping online as B2C customers do,” explains Paw Steffensen.

The inventory system is completely central to delivering a B2C-worthy customer experience.

“There are so many facets of a good online shopping experience which can only be delivered if inventory and the webshop are updated synchronously. ‘Shopping list’ is an example of a feature we expect to find in a webshop, and it only works if the inventory can be updated in real time. The same applies to features like delivery times and recommended products based on previous purchases,” says Paw Steffensen.

Warehouse management and the webshop on the same platform

Paw Steffensen is not surprised that the companies in the Forrester´s Report that have implemented Microsoft Dynamics 365 Commerce realized a positive return on their investment than two years after implementing the platform.

“Commerce is an excellent example of a true omnichannel solution. Technically, it is an integrated platform, which means that you can handle inventory management in the same system where you have your webshop. You achieve the positive effects gained by data from the warehouse being updated directly in the webshop,” says Paw Steffensen.

After implementing Microsoft Dynamics 365 Commerce, companies achieved better inventory management in both their physical stores and web shops. They achieved more online sales – without cannibalizing the physical stores, gained faster time-to-market and found it easier to introduce products into new markets.

In fact, they experienced a ROI of 58 percent just three years after they invested in Microsoft Dynamics 365 Commerce, according to the Forrester Report

“A whole new world is opening up with online sales and positive online customer experiences. Much is gained by the ability to place stock data directly in your webshop. The pricing concepts we see online can only be done with a combination of algorithms and real-time data from the warehouse. Customers save money if they combine several orders into one, with shopping lists or recommended purchases that include discounts and other benefits. This is part of what you get with a true omnichannel solution,” says Paw Steffensen.

Read our latest e-book, which gives you answers on how to solve the 5 biggest challenges in B2B retail: Transformation in B2B retail: 5 challenges and how to solve them.

If you are interested in reading more about digital transformation in B2B retail, visit our blog.

If you want to hear more about how AlfaPeople can help with the implementation of new Microsoft business technology, contact us here.