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In today's competitive environment, retailers can't afford to lose a sale - and a loyal customer - due to unavailability of merchandise. Proper inventory management plays a central role in every retailer's need to satisfy their customers.

In a literal sense, inventory refers to stocks of anything necessary to do business. These stocks represent a large portion of the business investment and must be well-managed in order to maximize profits. In fact, many small businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled, they are unreliable, inefficient and costly.

According to the U.S. Small Business Administration (SBA), successful inventory management involves balancing the costs of inventory with the benefits of inventory. Many small-business owners fail to appreciate fully the true costs of carrying inventory, which include not only the direct costs of storage, insurance and taxes, but also the cost of money tied up in inventory. This fine line between keeping too much inventory and not enough is a common concern among retailers.

Retailers in Denial About $93-Billion Out-of-Stock Problem
"Out-of-stocks seems to be one of the biggest issues facing retailers today," said Frank Riso, marketing and operations executive at Motorola. "I've heard horror stories of retailers who've reached up to 8 percent out-of-stock during the holiday period - especially on popular items."

In fact, according to the 2008 Store Systems Study produced by RIS News and research partner IHL Group, the loss of sales to competitors due to out-of-stocks measures a staggering $93 billion.

According to the study, entitled "Seizing the In-Store Opportunity," of the three major verticals polled in the survey, Specialty Soft Goods retailers take the hardest hit, with out-of-stocks amounting to the equivalent of 7.1 percent of store sales, or a weighted cost of $5.82 for each transaction. For Department Stores, the loss of customer revenue amounts to $5.15 for every transaction, or the equivalent of 4.2 percent of same store sales. Food/Grocery pays the least for per-item out-of-stocks in the survey, only losing $0.92 for every transaction. But, the study points out, when you take into consideration that the average supermarket makes less than a penny profit per item, the loss to out-of-stocks still accounts for up to 1.5 percent of annual sales.

"If a retailer completely fixes the problem, it could increase same-store sales by 3.7 percent by converting out-of-stocks into transactions," the study revealed. "Put another way, the average retailer loses the equivalent of $3.19 for every transaction it makes either through lost sales of specific items or by creating a situation where shoppers purchase nothing in the store even though they came in to buy."

Furthermore, according to statistics from Information Resources, Inc. (IRI), 70 percent of customers will buy a substitute item the first time they encounter an out-of-stock situation. By the second encounter, there is a 50/50 chance that the customer will go someplace else. A third out-of-stock situation drives 70 percent of customers out the door.

While a 100-percent in-stock position is probably neither achievable at an affordable price, nor necessary, retailers should try to improve inventory visibility, create greater flexibility in order fulfillment, and evolve the supply chain network for optimized inventory levels and minimized out-of-stocks.

Embrace Technology With Mobile Computers
So how does a retailer avoid losses and minimize out-of-stocks? According to the experts we spoke with, there are numerous ways to take better control of your inventory and decrease its associated costs.

First and foremost, you must embrace technology and do away with those cumbersome manual spreadsheets. Technological advances in wireless, handheld mobile computers are changing the landscape of retail - providing retailers with more and better ways to service customers, improve their shopping experience, and streamline back-office functions. Not only are today's handheld models extremely powerful multi-task devices complete with color monitors and the ability to handle an ever-increasing array of store functions, they are far lighter, faster, have better battery life, and run on open platforms that are easily integrated with other retail applications.

Thanks to mobile computers, information is no longer tethered to a desktop application - now, workers in the front and back rooms can hold all the tools needed to streamline day-to-day tasks right in the palm of their hands. At the press of a button, a store associate can look up pricing and check stock - in the backroom and at other store locations. Advanced data capture - including the ability to scan a bar code or magnetic strip on a credit or other ID card - enables associates to quickly perform a stock take, ring up sales and more. Integrated voice and data devices with push-to-talk functionality allow associates to quickly reach out for assistance or answers to questions - without ever leaving the customer's side. And RFID makes real-time inventory visibility a reality, delivering a number of strategic advantages for retailers from better purchasing decisions and a reduction in stocking inventory requirements to the ability to instantly locate any item in the store - even if it has been misplaced.

Take for instance Motorola's MC3000 Handheld Mobile Computer. This advanced mobile computer is small, lightweight and rugged for applications requiring high-quality data capture and high-performance real-time computing. Since you are able to customize this device to the specific demands of individual jobs, employees are able to complete their work faster and with better results. The optional gun-grip model is ideal for scan-intensive environments, offering the best in comfort for employees throughout an entire shift. Additional models include the value-end MC1000 and high-end MC9000.

The MX8 Handheld Data Collection Computer from LXE is another example of a high-performance mobile computer. The company's smallest, lightest, most economical handheld computer to date, it's perfect for use in a broad range of supply chain tasks. It's rugged enough for industrial assignments yet cost-effective enough for use on retail store floors. More importantly, it measures a mere 7.6 inches long and weighs less than 13 ounces with battery and several options.

"What's really encouraging about the latest products is the cost," explained Riso. "The memory and the operation of the mobile computers have gone up and the prices have come way down. When I first started using mobile devices in supermarkets back in the 1970s, they were costing $2,000-$3,000. They didn't do a third of the stuff you can now do for less than $1,000. It's great because retailers of all sizes are now able to compete more effectively with larger retailers who have been using this type of technology for years."

What to Look For
According to Riso, when choosing a mobile device, retailers should look for a software partner who has implemented systems in the small-to-medium-sized business arena. "A majority of the inventory management providers will have references or the types of customers they've dealt with in the past. That can certainly be helpful," he began.

Another important factor in your selection of a mobile device - it should be user-friendly. "Anybody who can dial a telephone can probably use a mobile computer. If you're familiar with any kind of desktop or laptop computer, it's not a problem at all to use. For the most part, the units have a trigger that you pull, it scans the barcode, you enter several numbers - maybe it's quantity or a price - then you read the data that comes back up on the screen. It may be intimidating when you think about it upfront, but I've been involved with putting technology in stores for over 25 years, and it's always amazing to watch people 'get it, '" he concluded.

Vendors of mobile computing solutions such as Motorola are focused on delivering inventory management solutions like those offered by SofTechnics to the retail industry on the convenient form factor of a handheld computer. Scanning; ticketing, shelf-labeling and item-labeling (which are three of a retailer's few constant and controllable customer interfaces); price auditing; markdowns; and promotion execution are but some of the inventory management applications retailers can run more efficiently using mobile technology driven by modern software solutions. In a nutshell, wireless mobile computers can make every store-level task faster, more accurate and visible.