Omnichannel
Inventory can be a retailer’s biggest asset or crippling liability
In a world where demand fluctuates rapidly, only those retailers who manage inventory with comparable fluidity will stay stocked, profitable and in business.
September 2, 2025 by Yishai Ashlag — CEO and Co-founder, Onebeat
Brick and mortar retailers are constantly fighting to accurately align stock with fluctuating demand. But the reality of modern business is that shorter product life cycles, ever-growing variety, and unpredictable factors like pandemics, tariff spikes, and shifting consumer trends make inventory forecasting harder than ever.
Indeed, optimistic forecasting and ambitious business objectives are always in tension with prudent inventory management. That conflict only worsens when economies waver and past inventory plans fall out of alignment with current needs.
Traditional inventory management is steeped in statistics and prediction models that simply can't account for modern supply chain volatility or unforeseen circumstances. That's a serious problem because under stocking or overstocking due to misguided inventory management can compound into trillions worth of losses annually for retailers.
The bottom line: We need a better approach.
Where traditional solutions fall short
Alarmingly, Gartner reports 41% of businesses still track and update inventory manually, with 26% utilizing only basic spreadsheets, and another 26% outsourcing their inventory management to third-party solutions. Fuelled by historical data, rigid frameworks, static spreadsheets, and fallible human agents, these traditional, software-based predictive models are growing increasingly ineffective.
Pre-season demand forecasting — attempting to predict consumer demand months in advance and pre-committing inventory accordingly — is as much of a gamble as betting on a baseball game. Win streaks, batting averages, and other historical statistics can help paint a picture of how the game will play out, but there's no way to predict injuries, umpire errors, rain delays, or which players simply woke up on the wrong side of the bed on any given day.
At a time when tariffs, pandemics, global conflicts, and other uncontrollable events create an increasingly turbulent retail landscape, investing in smart inventory management is key. Indeed, either overstocking or under stocking inventory can quickly sink a business, eating into already razor-thin profit margins.
To overcome this uncertainty, retailers must view their inventory not as a predetermined quota but as an agile asset that ebbs and flows alongside consumer expectations and market trends.
Reducing liabilities with smart inventory management
Where traditional inventory predictions often yield costly missteps, smart inventory management can account for the dynamic inputs needed to accurately evolve alongside consumer behavior. This approach not only prevents losses, but it creates operational resilience, enhances customer satisfaction, and positions retailers to remain competitive amid ongoing market fluctuations.
So, what exactly does smart inventory management look like? It begins with rethinking how and where retailers manage stock.
First, retailers should adopt a "lean allocation" approach — holding inventory in centralized aggregation points like warehouses instead of pre-commiting it to individual stores. Rather than allocating 70-80% of merchandise ahead of the season, starting with 50% or less leaves much more flexibility to adapt to shifting demand down the line. This also helps retailers avoid costly overstocks or stockouts at the store level and eliminates pain points such as rigid allocation and delayed reaction to consumer trends.
Next, retailers must shift from long-term predictions to real-time optimization. Rather than gambling on pre-season forecasts, they should focus on in-season, agile inventory movement. Treating inventory as a continuous, responsive flow instead of a fixed allocation will mitigate uncertainty and support better decision-making as consumer behavior fluctuates.
Technology is critical for enabling these changes.
Advanced tools like AI analytics and micro-level data enable dynamic inventory management across stores, using real-time signals to inform what to replenish, where, and when. By using data and automation to ensure inventory aligns closely with customer needs, retailers can eliminate the necessity for broad assumptions or static predictions. This level of granularity gives retailers the ability to anticipate and react to demand with speed and accuracy.
By adopting the right tools and integrating them into a smart inventory management strategies, retailers will minimize markdowns, maximize sales opportunities, and transform inventory from a risk into a competitive advantage.
Keep an eye on supply
Retailers can no longer afford to rely on static prediction methods, human capital, or legacy solutions that run on historic data to make broad predictions.
Instead, precision inventory management must become responsive and fluid, untethered from pre-commited inventory allocation. By holding inventory in aggregation points and using AI-powered, data-driven insights to move inventory in accordance with market demands, retailers will keep uncertainty at bay, better meet customers expectations, and protect their bottom line.
In a world where demand fluctuates rapidly, only those who manage inventory with comparable fluidity will stay stocked, profitable and in business.
About Yishai Ashlag
Dr. Yishai Ashlag is an economist, author, and globally recognized authority in the Theory of Constraints (TOC) methodology. A former partner and founding member of Goldratt Group and post-doctoral fellow at the Wharton School of Business, Ashlag brings academic acumen and decades of experience in management consulting to lead sustainable growth through operational excellence for Onebeat and retail at large. Ashlag holds a Ph.D. in Economics from Bar Ilan University and is the author of acclaimed fiction and non-fiction titles on the topic of managing uncertainty, TOC, and more.
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