Inventory ties up more cash than any other part of your retail operation. Get retail inventory management right, and you protect margin, free up working capital and maintain lower overhead costs. Get it wrong or fail to use inventory optimization solutions, and you are faced with excess unsold stock and deep markdowns that drain profit. 

Consider this. According to the Institute for Supply Chain Management, "A consensus ideal inventory as a percentage of sales is 20% to 40%." But what if even 20% is too much for your business? Not every location hits that target. In some markets, carrying 10% might be healthier for margin and cash flow. Without clear data, you risk out-of-stocks, upset customers and higher costs you can't recover.

How do inventory optimization solutions work

A robust inventory optimization solution connects demand forecasting, replenishment, allocation, transfers and live sales signals. It gives you the just-right mix of inventory across stores, DCs and channels, so every unit works for you, not against you. Strategic solutions must also apply advanced analytics to ensure you're seeing the full picture and knowledgeable of what even small changes would mean for your bottom line.

Invent.ai uses hedge-fund math to consider risk factors and protect  your retail decisions against future scenarios, so you avoid sudden gaps or expensive overstocks. 

As a retail AI-Decisioning Platform, invent.ai is able to empower retailers with AI-enabled capabilities to make decisions based upon idealistic scenarios that will increase overall revenue. Together, it creates a system of retail decision-making, built on AI-decisioning, that really does move the needle toward improved margin. After all, if your inventory isn’t creating value daily, it’s costing you more than you think.

1. Forecasting and allocation that move together

Forecasting should help you see demand shifts as they happen. The right system combines historical sales with live local signals like buying habits, events, weather, foot traffic and promotions to push stock where it’s needed most.

For example, if a sudden cold snap or heat-wave hits, your system spots the spike in weather-gear sales and adjusts your allocation before stores miss out. Keeping demand forecasting and allocation linked means less stuck stock, fewer rushed markdowns and better cash flow. Plus, the combination also creates stronger sales, creating additional feedback for planning, inventory and pricing decisions in the context of all decisions. 

2. Replenishment and procurement that adjust daily

Manual ordering slows teams down and bloats inventory. With automation in tandem with AI-decisioning, your replenishment engine tweaks shipments daily based on SKU sell-through and supplier lead times. That means your procurement stays lean, your safety stock stays protected and your overhead stays lower. Instead of massive overorders, you run a steady flow that matches true demand.

3. Just-right inventory with POS integration

You can’t manage what you can’t see clearly. The best inventory optimization solutions combine clear enterprise visibility with real-time POS integration. In other words, an AI-enabled inventory management solution must be optimized based on real sales data and all connected systems. This integration keeps your plan grounded in what’s actually selling, not just what you expected to sell. 

If a product lags in one region but spikes in another, an effective inventory optimization solution will catch it early and shift stock before it sits. This is true inventory control: knowing your actual amount of inventory by store, region and DC, and using that data to act before you’re forced into a fire sale.

4. Transfers that protect profit

Sometimes you can’t avoid moving stock between locations, but you can avoid wasting money on the wrong moves. When store and DC transfers are guided by real demand, they protect profit dollars instead of just adding costs. Plus, more information in making these decisions directly affects replenishment further up the supply chain, so your team can make reordering decisions for the whole company, not just a handful of locations, more easily. 

An AI-enabled system flags inventory granularities, location, color, size or other factors, based on sell-through potential. Rather than allowing inventory bloat to give rise to perpetual inventory–inventory that’s going to end up discounted heavily or even donated–the system helps you make those decisions without manual intervention. That’s how transfers work as a means of margin protection. Strategic inventory management is not an afterthought and certainly not a panic move but actually an intentional plan that’s continuously considering all things all the time. 

Choose invent.ai for inventory optimization solutions

Stock that sits costs you twice: once when it ties up cash and again when you discount to clear it. A strong inventory optimization solution connects every piece — forecasting, replenishment, allocation, procurement, POS integration, transfers — to hold the just-right mix that fuels margin and cuts overhead. And your next inventory optimization solution must do all of the above and with AI making those critical decisions for you. 

Invent.ai does exactly that. It puts teams in control with daily signals, explainable moves and no guesswork. Ready to see what that looks like in your stores? Get in touch with the invent.ai team today.