Achieving Real-time Inventory Availability with Nick Nedev

June 27, 2023



This episode’s special guest, Nick Nedev, Digital Product Manager for BJ’s Wholesale, discusses the value of inventory explainability and how omnichannel owners leverage this concept to effectively manage their business.

  • How is inventory explainability defined and how do omnichannel owners use this concept to manage their business? What Key Performance Indicators (KPIs) should be employed to measure inventory explainability? How does this information aid in strategic inventory considerations and help omnichannel owners maintain positive relationships with partners?

  • In this episode, we delve into these questions and more with our special guest, Nick Nedev. Drawing from his hands-on experience of processing orders and managing inventory flows at BJ’s Wholesale, Nedev unfolds the intricacies of inventory explainability. He explains how this understanding provides crucial internal insight into how retailers attain ATP inventory, thereby creating a comprehensive understanding of the various components that coordinate in the overall inventory flow.


Also check the blog , Mastering eCommerce Inventory Management: The Crucial Role of Explainability, where Nick Nedev shares his valuable insights on the complexities of eCommerce inventory management with the concept of “explainability.”

Conversation Rundown

[ 05:08-08:03 ] Real-world inventory and order processing challenges
By prioritizing accuracy, visibility, and explainability, retailers can optimize inventory availability and deliver exceptional customer experiences. For inventory accuracy, retailers need accurate information about stock quantities to provide reliable inventory availability and ensure accurate product availability information. For inventory visibility, real-time tracking of inventory is necessary as it enables retailers to monitor stock levels across channels by leveraging technologies like RFID tagging and integrated inventory management systems. Furthermore, understanding of factors influencing inventory availability is essential for retailers for the sake of explainability. Analyzing historical data, customer trends, demand patterns, and current displayed inventory provide insights into inventory fluctuations.

[ 08:34-10:50 ] Inventory explainability and its role in calculating ATP?
Inventory Available to Promise (ATP) is used in retail and inventory management to determine the number of products that can be promised to customers based on the available inventory. Explainability gives internal teams the ability to understand the inputs that go into arriving at the ATP. But why does understanding this process matter? Why is Explainability essential in ATP and retail inventory management? Nick Nedev says- understanding explainability creates the ability for product managers to be able to clearly explain these processes to stakeholders to gain credibility and trust in the system as a retailer.

[ 12:00-14:03 ] How to improve operations with inventory explainability?
Have you ever wondered why your best-selling product isn't available on the website? It's all about troubleshooting and finding answers. A vital aspect of the inventory system is explainability, but why does this process matter? Nick Nedev shares insights on the role of explainability in retail, how it empowers internal teams to comprehend the inputs behind determining available inventory, and why it's essential for product managers to explain these processes to stakeholders.

[ 15:18-17:28 ] Balancing inventory for walk-in and online customers
Balancing inventory between walk-in and online customers is a challenge for omnichannel retailers. One effective solution is milking safety stock to address gaps caused by demand generation and pick-up time lag. By setting higher safety stock levels for popular products, availability, and customer satisfaction can be ensured. Explainability plays a vital role in understanding inventory management complexities. It helps retailers grasp why the complete stock may not be available for online customers, enabling the optimization of inventory flows. Nick shares his thoughts on how it enhances customer experiences and empowers retailers to unlock their inventory's potential.

[ 17:48-21:28 ] How can retailers align siloed inventory channels?
Aligning siloed inventory channels is a critical endeavor for retailers operating in the enterprise retail space. With various channels managing different retail aspects like mobile apps, online sales, POS systems, and even B2B sales, integration challenges, and siloes often arise. But how can omnichannel retailers ensure these siloes work together seamlessly? Nick stated that the key lies in establishing a "single source of truth" for inventory. This means creating a centralized point that serves as the ultimate reference for all inventory-related processes. By consolidating all inventory touchpoints into this single source of truth, retailers can break down siloes and achieve cohesive integration across channels. This ensures accurate and synchronized inventory information, leading to improved operational efficiency and customer satisfaction.

[ 21:33-23:09 ] Why is ERP not enough to achieve inventory accuracy?
Unlike traditional ERP systems, an ATP-based system, powered by the OMS, considers demand when managing inventory. It leverages rules such as safety stock and threshold calculations to compute ATP and push the most accurate and up-to-date inventory information to the e-commerce platform.

[ 23:20-25:11 ] A retailer's definition of inventory visibility
Achieving real-time inventory updates can be challenging. Instead, the industry often aims for what we call 'near real-time' inventory. This means that inventory updates occur within a maximum timeframe of 30 minutes. This is especially crucial when dealing with integrations involving drop shippers. When it comes to measuring the success of real-time or near-real-time inventory management, several key performance indicators (KPIs) play a critical role. On the operational side, KPIs such as high availability, fill rate, cancellation rate, and substitution rate come into focus. In this context, Nick elaborates on the concept of real-time inventory and its practical implementation.

[ 25:13-27:54 ] Synchronizing inventory in real-time across channels
One essential metric is the Found rate, which provides valuable insights into the accuracy of your inventory. The Found rate offers a clear picture of how accurately your inventory was managed. It represents the proportion of orders where the requested item was found without any substitution. The substitution rate measures the frequency of retailers offering substitutes instead of the received order. Including this rate in the calculation may lead to an overstatement of inventory accuracy. The Found rate offers a more accurate assessment of inventory availability for customers compared to the substitution rate alone. Nick explains how leveraging the Found rate can help retailers gain a deeper understanding of where inventory fell short in meeting customer demand, while also identifying opportunities for improvement.

[ 28:50-32:12 ] How to deal with the slow-moving inventory
Instead of resorting to deep discounting, retailers can allocate more resources to marketing departments. By bidding on profitable keywords, implementing targeted email campaigns, and generating more excitement, retailers can attract attention to slow-moving inventory. While not ideal due to a potential cash tie-up, another option is to back and hold merchandise. Retailers can store the inventory for a few months and reintroduce it in the next season. However, this approach may not be suitable for apparel or time-sensitive products. It's important to be aware of the risks associated with these strategies. Nick explains how Increasing the marketing spend may bring in less qualified traffic and result in fewer conversions and, how backing and holding inventory ties up cash and requires careful planning.

[ 32:18-34:28 ] How to decide if Pre-Orders fit into your retail strategy
When it comes to avoiding markdowns, one potential approach to gaining attention is implementing a Pre-Order strategy. However, it's crucial for retailers to carefully consider whether this strategy aligns with their overall business strategy and product offering. Practices like shifting sales timing, extending product lifespan, and high-demand products can help. Pre-Orders have the potential to shift sales earlier, typically by a week or two. Nick explains how Pre-Orders tend to work best with items that are in high demand and it works as a valuable strategy to capture customer enthusiasm.

Meet the Experts

Nick Nedev is the Digital Product Manager of Inventory Systems at BJ's Wholesale. He has a strong background of experience in e-commerce operations, omnichannel order fulfillment, and inventory management. Before joining BJ's Wholesale, he worked as a senior manager at rue21, where he supervised order fulfillment, inventory control, merchandising, and merchandise planning. Nick also has previous experience in merchandising and inventory control from working at Boscov's Department Store as their department manager, as well as from working at JC Penney in their shoe department as a salesperson.

Retail Tips & Tweetables

I think of inventory opportunities in 3 buckets - Inventory Accuracy, Inventory Visibility & Inventory Explainability.

For customers, all we need to consider is the inventory available-to-promise (ATP).

Real-time is very hard to achieve, and near real-time takes no longer than 30 minutes.

On operational side of things, important key metrics are - Fill Rate, Cancellation Rate & Substitution Rate.

No one really likes accumulated inventory because it usually translates into diminished profits.

The concept of backing and holding merchandise is not ideal because it ties up cash.

If I am able to offer pre-sale & sell my stuff, I am extending the life of my products by 3 weeks.

Pre-orders usually work best with items that are in high demand & limited in supply.

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