Bridging the technological gap between out-of-stock and save-the-sale through an intelligent ERP core 

At a time when the balance of power is shifting towards the ‘connected consumer,’ each out-of-stock situation represents a missed opportunity. 

Based on our work with global fashion retailers, we’ve listed down real-world scenarios on how our customers are salvaging out-of-stock revenue using a digital ERP. 

Stockouts consistently find their way onto retailers' "worst nightmare" compilations, and understandably so.  

The consequences of a stock-out go beyond just the immediate sale; they extend to the loss of additional sales, the difficulty in attracting future customers, and even the risk of losing loyal consumers. So, how can companies tackle this challenge that has plagued the industry for many years? The solution may lie within your operational backbone - your ERP system.

Ultimately, the question that fashion retailers face is a simple one. How can you consistently fulfill consumer demand for an out-of-stock item? Retailers who have effectively addressed this question have showcased their success by utilizing an integrated system and enhancing their supply chains with the agility required to adjust inventory levels on-the-go.

These fashion retailers are redefining consumer engagement by leveraging save-the-sale initiatives that place the highest priority on getting in-demand products into the hands of consumers by intelligently sourcing inventory from alternative in-stock locations, irrespective of the sales channel. 

However, when it comes to intelligent cross-channel sourcing, legacy or home-grown systems struggle to process massive volumes of data required to gain comprehensive inventory visibility across all channels. This is primarily because fashion companies often treat their retail, wholesale, and e-commerce channels as separate business entities with distinct inventory pools.

In today’s fashion retail landscape, it is essential for companies to maintain visibility and control while embracing decentralized structures, enabling seamless data flow between systems to eliminate any disconnect. To effectively adapt to changes in consumer behavior and provide customers with the right products, an integrated solution is key.

Fashion retailers like Carhartt are using SAP S/4HANA® Fashion and Vertical Business, an omnichannel fashion-industry solution that unifies manufacturing, retail, wholesale and e-Commerce to reduce out-of-stocks and improve endless aisle capabilities. This integration facilitates a cohesive inventory view, enabling fashion companies to function as a unified entity rather than operating separate wholesale, retail, and e-commerce businesses. 

Brands that leverage SAP S/4HANA For Fashion and Vertical Business will be able to retrieve stock levels in real-time and source items from any inventory pool, including those designated for other channels. In doing so, fashion retailers can effectively ensure adequate in-stock quantities while eliminating excess safety stock, which legacy systems typically maintained separately. 

This insight into inventory at any location, across all channels, at any time is coupled with the ability to orchestrate multiple fulfillment options such as: 

• Pick and hold in a store for customer pickup
• Store-to-store transfer for customer pickup
• Ship from DC to store for customer pickup
• Ship to home from a DC
• Ship to home from a store

Let’s look at how SAP S/4HANA For Fashion and Vertical Business helps “Save the Sale” in two scenarios:

Save the Sale— sourcing inventory from DCs  

In this instance, store associates are equipped with inventory visibility, enabling them to use in-store kiosks to order out-of-stock items. This triggers a notification to the warehouse, which subsequently delivers the item directly to the customer's home. This streamlined process offers customers a convenient way to obtain desired items, even if they are currently unavailable in-store.

Save the Sale—involving customer pickup at other stores

In this scenario, store associates can access inventory visibility and utilize an in-store kiosk to capture orders for items that are currently out of stock. The kiosk then sends a notification to the designated store, reserving the item for the customer to pick up. 

In such scenarios, SAP S/4HANA For Fashion and Vertical Business incorporates effective segmentation strategies that clearly differentiate inventory across various channels, including retail, wholesale, and e-commerce. Cross-consumption tactics are employed to prioritize which channel can utilize inventory from another in the event of stock-outs. Stock protection measures are in place to ensure that items are always available for high-priority orders or segments. The order orchestration rules engine plays a critical role in determining the optimal shipping site for the customer, considering factors such as geolocation. 

While it may be challenging to completely eliminate out-of-stock situations, retailers have an opportunity to recover and salvage sales by utilizing all inventory sources at their disposal. Platforms like SAP S/4HANA For Fashion and Vertical Business have already proven successful in enabling fashion retailers to achieve this.

Learn how SAP S/4HANA forms the digital core for your entire fashion business.

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