Shrinkage In Enterprise: OneRail's New Solution And The Complexities Of Inventory Management

Inventory shrinkage is a costly issue that enterprises face, leading to billions of dollars in losses annually. While theft often comes to mind first, the reality is that shrinkage can occur at various stages of the supply chain due to a range of factors, from operational inefficiencies to simple human error. Addressing these issues head-on, OneRail has introduced its OmniPoint® Inventory Visibility platform, aiming to provide a comprehensive solution to this persistent problem.

Bill Catania, Founder and CEO of OneRail, provided an in-depth look at how OmniPoint Inventory Visibility works and the broader challenges it addresses. "Think of it as a complete chain of custody view of who has the product, when, and where," Catania explained. This level of visibility is crucial in a supply chain where products can often seem to vanish between points A and B.

A significant part of the problem lies in the lack of data normalization. With products moving through various types of packaging—pallets, totes, bins, and SKUs—the data can become fragmented and inconsistent. "Our platform stitches together inventory at the SKU level with transportation records, creating a unified, conjoined record," said Catania. This standardization helps maintain a clear and consistent picture of inventory as it moves through the supply chain.

(Image Credit: John Monarch)

Beyond Theft: The Complexity of Shrinkage

While theft is a well-known cause of shrinkage, Catania emphasized that operational issues also play a significant role. For example, misplacement and mishandling of products when there's a handover between warehouse and carrier can lead to significant losses. "There's a lack of infrastructure and accountability at the warehouse level where products get misplaced, mishandled, or damaged," he noted. "If a pallet gets damaged and an item is not accounted for properly, it can just disappear from the system."

Another issue is the timing of inventory picking. Inconsistent processes can lead to delays and losses. Catania recounted an operational problem uncovered by their data: "We found that in some warehouses, instead of picking orders immediately upon receiving them, staff would wait until the courier arrived. This operational delay caused significant inefficiencies."

Breaking down larger units, such as pallets into smaller ones, further complicates inventory management. As shipments are divided into smaller units like cartons and totes, maintaining visibility becomes increasingly challenging. "When shipments are broken down, it's easy for items to get lost in the shuffle," said Catania. "Being able to track at the SKU level helps solve this issue, but it requires robust data integration."

Addressing Critical Pain Points

The OmniPoint platform is designed to address several critical pain points in inventory management:

1. Inaccurate Inventory Data: "Garbage in, garbage out," Catania remarked. Accurate, consistent data is crucial for effective inventory management.

2. Gaps in Visibility: As products are divided during shipment, maintaining clear visibility becomes more difficult.

3. Insufficient Carrier Accountability: Ensuring carriers are held responsible for their part in the supply chain is essential.

4. Theft and Pilferage: Both internal and third-party theft contribute significantly to shrinkage.

5. Operational Inefficiencies: Misplacement, mishandling, and incorrect timing of inventory processes lead to losses.

Catania added that the consumer products and automotive industries face some of the most significant challenges in managing inventory. These sectors deal with high volumes and frequent handling, increasing the risk of shrinkage.

Looking Forward

OneRail's OmniPoint platform is not just a technological solution but a catalyst for better operational practices and accountability within the supply chain. By providing detailed visibility into each step of the transportation process, the platform empowers retailers to identify and address shrinkage at its source.

"We're opening up a whole new set of ways to solve problems," Catania said, highlighting the platform's potential impact. "Customers are going to solve these issues in different ways, but having the right data and visibility is the first step."

While OneRail's current focus is on large enterprises, the company is looking ahead to expand its solutions to small and medium-sized businesses (SMBs). Catania sees significant potential in helping SMBs tackle the same issues of inventory shrinkage and operational inefficiencies. "It's a nightmare for SMBs because they often lack the resources and infrastructure to manage these problems effectively," Catania noted. "We want to provide a modular offering that gives SMBs the tools they need to operate more efficiently and with better fulfillment capabilities."

As enterprises continue to grapple with the complexities of inventory shrinkage, solutions like OmniPoint Inventory Visibility offer a promising path forward. By addressing both the technological and operational aspects of the problem, OneRail aims to help companies reduce losses and improve overall efficiency.

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