Retail | Store Operations
Inventory Shrinkage Management
Objective
Inventory shrinkage due to theft, administrative errors, increased demand, and supplier fraud is a significant issue in retail operations, leading to substantial financial losses and inefficiencies in inventory management. The client needed an effective solution to mitigate these issues.
Challenges
- Identifying the root causes of inventory shrinkage.
- Implementing real-time monitoring and predictive analytics.
- Integrating various data sources for comprehensive analysis.
- Ensuring scalability and adaptability of the solution across multiple stores.
Solution Proposed
We provided a holistic and scalable solution for inventory shrinkage management using the following:
- XGBoost was found to be better for anomaly detection in sales/inventory data and predictive analytics.
- Implemented BI tools like Tableau for real-time monitoring and visualization of shrinkage patterns.
- Engineered an automated ETL pipeline using Python and MySQL to integrate transaction data, inventory data, and store attributes.
Outcome
- Significant reduction in inventory shrinkage by 20% within the first six months.
- Improved accuracy in identifying shrinkage patterns and root causes, leading to better stock management and reduced stockouts.
- Enhanced decision-making capabilities for inventory management teams.
- Increased overall efficiency in store operations.
Design & Thinking Wins
- End-to-end automation of the shrinkage management process.
- Scalable solution deployed across multiple retail stores.
- Real-time monitoring and predictive analytics capabilities.
- Integration of diverse data sources for comprehensive analysis.
Disclaimer: The outline showcases the typical challenges, solutions, designs, and outcomes for industries and functions, in general, based on Affine’s prowess in the Industry. The outcomes would be much higher for specific clients as they would be based on their data and specific problems to be solved.
