How focusing on perpetual inventory accuracy can drive profits and enhance customer loyalty
By Craig Rosenblum, Principal, Columbus Consulting

Perpetual Inventory management is difficult for grocers because the grocery business is extremely complex. However, recognizing that inventory costs typically account for 60-70% of total sales, optimizing inventory and improving turnover rates in grocery stores can have a substantial impact on profitability and efficiency.
Inventory management decisions are managed and are impacted by multiple departments across the organization, including: merchandising, procurement, transportation, warehouse, store operations, and accounting.
Today, without perpetual inventory accuracy, grocers struggle with the following:
- Forecast Accuracy, particularly for perishables
- Out-of-stocks, overstocking, and excess shrink
- Real-time Visibility into inventory levels
- Understanding the Cause of inventory issues
- Increased Labor from manual counts and reactive replenishment
- Omnichannel Shopper Frustration, product unavailability and substitution
- Insufficient Technology and data infrastructure
While there are many challenges in achieving inventory accuracy, the key areas to overcome include:
- Data Accuracy for delivery, sales and product losses – Research shows 56% of PI records are inaccurate
- Cost of Technology Infrastructure and Seamless Integration between sales, purchase and inventory capable of supporting real-time tracking
- Absence or Manual Purchase Order Management and Receiving Workflows leading to inaccurate tracking and on-hand stock, duplicate, missed or inaccurate records, monitoring vendor performance and budget forecasting
- Perishable Departments – Produce, Deli, Bakery, Meat and Seafood, each have their own nuances of packaging, seasonality, variability and systems
- Staff Training to ensure processes and procedures are updated and maintained – accurate records can be labor-intensive and prone to errors
The benefits of Perpetual Inventory Accuracy impact the entire organization and the shopper, specifically by providing:
- Real-Time Inventory Updates: Automated updates inventory levels after each transaction, provides a view of stock availability
- Improved Accuracy: Reduces errors associated with manual tracking and periodic inventory counts, helping maintain accurate records
- Enhanced Decision-Making: With real-time data, businesses can make better decisions regarding restocking, pricing, and promotions
- Cost Efficiency: By minimizing overstocking and stockouts, perpetual inventory systems help reduce storage and carrying costs
- Streamlined Processes: Automating inventory management saves time and allows focus on other tasks
- Theft and Shrinkage Detection: Regular updates make it easier to detect discrepancies and address theft or loss
- Customer Satisfaction: Accurate stock information ensures customers get what they need without delays or disappointments, in-store and on-line
To implement Perpetual Inventory, Retailers need to focus on the following three areas:
- Master Data Management – clean and accurate data is the foundation for ongoing success
- Create product hierarchy and attribution model for all skus – one record of the truth
- Develop and maintain customer relationship management segmentation and personalization
- Define data governance model and rules
- Technology Needs
- Assess current approach and technology
- Establish business and IT requirements
- Identify vendor participants
- Develop request for proposal (rfp)
- Conduct vendor assessment
- Develop vendor scorecard
- Change Management
- Total organizational alignment
- Defined process changes developed
- Developed personnel training – across the organization
- A change plan is defined to ensure maximum engagement & change implementation
- A communication plan defined to meet each team’s change requirements
Even with all of the challenges and obstacles, modern technology can help grocers achieve perpetual inventory accuracy. Leveraging AI enabled visualization tools can now align individual plan-o-grams with demand planning and forecasting resulting in higher sales and increased consumer satisfaction. According to a leading industry tech provider, grocers who utilize connected platforms/computer system ordering can reach a 95% accuracy level and achieve 18% higher sales than their manual counterparts. So instead of seeing inventory accuracy as an insurmountable challenge, look to the tremendous benefits it can provide by prioritizing this initiative within your organization.
Don’t know where to start? Let Columbus Consulting work alongside of you to assess your people, process and technology and enable more efficient processes, data alignment and appropriate investments.
For more insights on the grocery industry and additional Tech Scan articles, click here: https://www.columbusconsulting.com/the-tech-scan/
ABOUT COLUMBUS CONSULTING
Columbus Consulting delivers solutions that drive true value and have been transforming the retail and CPG industries for over two decades. We are a retail consulting company of industry experts. Our approach is simple, if you do it, we do it. We are more than consultants; we are experienced practitioners who actually sat in our clients’ seats. We understand the challenges, know what questions to ask and deliver the right solutions. Columbus offers a unique, consumer-centric approach with an end-to-end perspective that bridges functional & organization silos from strategy to execution. OUR SPECIALTIES include: unified commerce, merchandising & category management, planning & inventory management, sourcing & supply chain, data & analytics, accounting, finance & operations, people & organization and information technology. Let us know how we can help you. To learn more, visit COLUMBUSCONSULTING.COM.