Retail teams are already stretched. Margins are thin, demand swings wild and channels are piling up. An inefficient inventory strategy leaks cash and creates downstream chaos. But that doesn’t have to be business as usual. Maybe an audit is in order.

Use the sales data you already have, let AI surface and handle inventory optimization for you and stop the guesswork and headache of old, manual inventory management processes.

Retailers are acting on the shift to proactive decision-making with AI. In 2024, Retail Dive reported, “More than half of retail and consumer packaged goods executives will invest in artificial intelligence tools for financial forecasting (52%).” AI-driven inventory management and decisioning tools protect margin and expose waste, like inventory allocated based on assumption. They also help teams move product before they reorder. Run the inventory audit with actual data, not guesswork, and you’ll see where to replace, transfer or cut. Here are a few tips to start, rethink and audit your retail inventory strategy audit.

1. Start with the end goal

Before you get lost in spreadsheets, ask what your inventory strategy is meant to achieve.

Are you optimizing for profit dollars? Turnover? Availability? Reducing stockouts?

By defining your goals clearly, you can align every audit step with what matters most, margin. Clarity ensures you're not chasing metrics that look good on paper but do nothing to boost customer experiences or cash flow.

2. Identify your current blind spots

Manual reporting and siloed data can bury critical inefficiencies. Many retailers still operate with outdated inventory control methods or incomplete SKU management. In many cases, the inventory management system can be a shared spreadsheet that’s either out of date, full of errors or even approaching a size that causes your computer to crash. You can use this audit to uncover where guesswork still drives decisions.

Look for signs like frequent stockouts, excess safety stock or inconsistent inventory replenishment patterns across stores. This is especially helpful during seasonal peaks, like back-to-school shopping. A manual review will surface friction points that hurt revenue, but AI tools can flag these faster. Plus, AI can actually make the decisions for you, reducing rework and guesswork around the clock. If your process still leans on just-in-time (JIT) ordering without clear visibility, you risk stockouts and overcorrections.

3. Examine supplier performance

Even the best internal planning can break down with poor vendor execution. Review shipment accuracy, average lead time and order cycle reliability across your supplier network. Spotty performance at this stage can derail the most meticulous demand forecasting models and cause cascading inventory optimization issues. The audit should highlight where delays, excess stock or incomplete shipments are still costing your team time and margin. 

4. Monitor item-level movements and demand

Instead of relying on outdated models like ABC analyses, use dynamic tools that analyze item-level movement with sales data guiding all decisions. Look at inventory turnover rates and sales velocity by SKU to identify underperformers. AI-driven systems can help refine inventory replenishment, reduce excess safety stock and eliminate hidden inefficiencies. Static inventory allocation software suites, such as traditional analytics capabilities, can miss the nuances that modern platforms like invent.ai can catch instantly. Yes, analytics are great for understanding demand, but AI can act on the needs without your intervention.

5. Evaluate system accuracy

How accurate is your perpetual inventory system?

If your system says 16 units are on hand but your physical count says 9, that gap may be small, but it's a warning sign. Inaccurate data throws off everything from reorder point timing to batch tracking and cycle counting priorities. An audit is often a good moment to recalibrate and verify system reliability. Now, that still hinges on a manual review, but with AI-driving the decisions, you can effectively automate your audit itself. 

6. Quantify your current cost drain

Use your inventory strategy audit to calculate how much capital is locked in underperforming inventory. Start with items that exceed the recommended economic order quantity (EOQ) or haven’t moved in 90 days. Every dollar tied up in unproductive inventory is a dollar not invested in growth. AI-driven inventory automation can prevent this drift, but only after you’ve established a baseline and caught the excess manually.

7. Prioritize what to fix first

Audits are useless if they end with a long list and no roadmap. Rank your issues based on margin risk, team bandwidth required and ease of correction. Fixing a vendor’s late deliveries might take weeks. Updating inventory reporting rules or resetting reorder point logic can happen in days. Focus your energy where results will be felt the fastest.

Shift from a static inventory strategy to continuous clarity with invent.ai

Retailers already wear too many hats. Adding audit responsibilities can feel like one more burden. But the payoff is real. A leaner, data-backed inventory strategy means fewer emergencies, more accurate demand forecasting and better customer satisfaction. And the best part? AI can do it all, around the clock, while you get to reap the reward of revenue growth. Meanwhile, you don’t have to overhaul everything at once. You just need to get started, prioritize what matters and lean into AI where it makes the biggest difference. A partnership with invent.ai ensures you’ll see the real results faster than trying to go it alone or conduct an audit manually. Speak to an expert in retail AI to get started.