The cost of holding stock is under the spotlight as retailers look to free up cash, and IT departments should make sure that they are involved.

Too much stock can strangle any retail business. But if there is one good thing to come out of the recession, it is the rethink many retailers are having on how much inventory they need. Most are finding that they can make do with less.

Yesterday, SAP revealed the results of research it has undertaken in conjunction with the British Retail Consortium, which showed 90 per cent of respondents are planning to optimise inventory levels in their supply chains.

Richard Lim from the BRC says that from talking to his members, inventory reductions of between 10 and 15 per cent aren’t unreasonable. And SAP’s retail industry principal Richard Mills went further, saying that the vendor is seeing its retail customers reduce inventory by 15 to 30 per cent.

One respondent to the survey commented: “We know that buying, supply chain and customer demand are not always working together; bottom line, it’s about getting cash back out of our business more quickly.”

This is an operational issue that the IT department is perfectly placed to assist with. A third of those asked said that technology will allow them to reduce inventory.

SAP’s survey also showed that more than half of the retailers surveyed cited customer analytics as their priority to understand their customers’ needs better. Knowing what your customers actually want, and getting an idea of when they might want it, being the first step in deciding what you can do to cut stock levels while still having availability that always meets demand.

With the news today that retail IT budgets are being cut on average by 20 per cent, it is even more of an imperative for these departments to show that they are crucial to their business’ efforts to successfully trade through the recession.

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