The retail industry is witnessing a massive shift and with this, the industry is also facing one of the biggest challenges—procurement. With time, the needs of customers and shift retail formats changes and to match that, retailers need to adapt to new procurement solutions every now and then. That is not all, retailers also need to closely monitor the supply chain to focus on both price and quality.
What are the basic challenges in procurement?
When talking about the retail industry, there are a number of challenges — whether it's about the profit they make or customer expectation or quality of the product. Procurement in the retail industry is something that needs a lot of work to stay relevant to the industry and the customers.
In this internet-driven era, it has become really difficult for retailers to sell something that is priced high. With the rise of online shopping websites, it is becoming more and more difficult for retailers to have a high-profit margin.
That is not all, to achieve operational efficiency in the procurement process is not something really easy. To manage every phase of procurement —both physical and digitally—companies across the world are opting the latest ERP tools to minimise the chances of messing up things.
Furthermore, nowadays retailers are going omnichannel, making things convenient for consumers. However, omnichannel also has a lot of challenges, the procurement processes changes and becomes complicated too. That not only delays the process but also becomes a critical factor that affects the number of products in an inventory as it gets difficult to predict how many orders will be placed in the coming days.
The Impact Of Machine Learning
Technology over the years has evolved tremendously, and today there is almost that it cannot do. Talking about some of the latest tech — AI, ML, Deep Learning, they are year by year invading a lot of industries and retail is no exception.
While artificial intelligence can be used to automating procurement processes, machine learning can help in managing the inventory. How? It's not an easy task to guess the number of products that need to procure for future sales. Sometimes over procuring results in wastage and loss for the retailers. This is where machine learning comes into the scenario.
As we all know that machine learning works based on statistics, it can help retailers and brand maintain their inventories. If right and accurate data about consumers’ purchases are fed, then machine learning has the capability to predict and recommend the retailer the number of orders that will be placed in a given time frame based on consumers’ past purchases.
Another problem that machine learning can solve is reducing the price of the product while procuring items. Usually, when we think reducing prices, the first thing that comes to mind is mass purchase — buying something in a huge amount would definitely reduce the price. However, when a buyer procures an item in a huge amount from the same supplier across different locations, it gets difficult to map the items. And this is where machine learning can help. With the correct data, machine learning can help the buyer map the items as well as have an insight into what price similar products are getting sold in other parts of the world. Also, it would help the retailer to set the price tags accordingly.
Technologies like machine learning and AI over the years have become the backbone of several industries. And now with time, it is marking its presence in the world of retail. There was a time when procurement was something that needed a lot of strategies and a lot of things used to get messed. Today, with machine learning, retailers are able to combine both past and present data and figure out the patterns that humans and traditional tools would have missed. The pace at which machine learning and other techs are evolving, it seems, soon, the retail industry would also witness a tremendous transformation for the good.
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Harshajit is a writer / blogger / vlogger. A passionate music lover whose talents range from dance to video making to cooking. Football runs in his blood. Like literally! He is also a self-proclaimed technician and likes repairing and fixing stuff. When he is not writing or making videos, you can find him reading books/blogs or watching videos that motivate him or teaches him new things.