Why you need a war room for post-pandemic inventory management

The ups and downs of the pandemic exposed a key flaw in retail: the industry’s overreliance on long planning cycles. 

When the pandemic hit, no one was buying anything. Widespread lockdowns forced store closures, and uncertainly over the economy led consumers to tighten their pocketbooks.

As consumers settled in for the long haul, they began shopping again. Stuck at home, they suddenly had money to spend on things—and spend it they did. Digital sales exploded, particularly in categories like apparel, department stores, and beauty products. 

Many retailers found themselves caught on the back foot, scrambling to implement omnichannel strategies like curbside pickup and trying to respond to widespread supply chain disruptions and shortages. They ramped up production, only to find themselves with too much inventory as inflation surged and consumers once again cut back on spending. 

It had become crystal clear—across industry segments, regardless of the size and maturity of the organization, retailers simply didn’t have the fundamentals in place to react as quickly as the market demanded. 

As a result, a growing number of companies are now looking to reinvent how they track and manage inventory. With decent growth predicted for U.S. retail sales in 2024, they’ve increased their investment in technology, including AI-driven automation for demand forecasting and inventory planning, articulate demand prediction, and customer sentiment analysis. 

But AI, hampered by data siloes and the need for models trained on that data, continues to fall short when it comes to decision-making. Increasingly, future-looking industry leaders are looking to reinvent how they track and manage inventory management in a fairly non-technological way: by creating a "war room."

The Role of a War Room in Reinventing Inventory Management

In business, a war room is a dedicated time or space where teams come together to strategize, plan, and execute large-scale projects. Originally inspired by military efforts during World War I and World War II, war rooms have evolved into a collaborative nerve center for managing projects and tackling complex challenges, with a focus on increasing business agility.

They typically operate under a few common principles: 

• They facilitate effective communication, creative problem-solving, and quick decision-making by involving a diverse group of team members whose contributions carry equal weight. 
• They break down siloes with a real-time view into business trends and metrics. 
• They lean heavily on visual aids, like whiteboards or dashboards, to present the data needed for brainstorming and strategy.

In retail, the war room is increasing in popularity due to its ability get answers in real time to a wide variety of business-critical questions, including:  How do sales break down by channel?  Where is product sitting?  Do we have the right inventory in place to meet demand?  What’s within our control—and what isn’t?  What levers can we pull today to use our inventory more effectively?

It’s an abrupt departure from the governance and ways of working currently in place at most retail organizations, where stakeholders often rely on weekly reports of past sales to piece together the information they need for decision-making. 

But getting started with a war room doesn’t require upending how your teams work on a daily basis. You can start small, with a daily meeting that includes merchandising, planning, logistics, technology, and data science (to identify data sources and build and maintain the dashboards you will need), then expand the stakeholders over time. 

As you scale and mature the war room, it can be helpful to bring in additional viewpoints, including finance, regional store directors, and even individual store managers who have a good sense of what’s happening on the ground—for example, if store employees are so busy they don’t have time to perform inventory counts or unpack incoming shipments. 

You’ll eventually want machines making some of these decisions, and retailers are making great strides toward this goal by investing in creating best-in-class engineering organizations to focus on building the critical software that will help them understand demand, more efficiently manage inventory, and more. 

In the meantime, the war room can help retailers not only determine what processes can be automated but also test out the inventory management technology the organization is building. 

Looking to the Future of Inventory Management

As the retail industry anticipates growth and contends with evolving consumer behaviors, the war room provides a practical, immediate solution—one that represents a significant step forward in addressing the need for increased agility made glaringly clear during the pandemic. 

Retailers should begin with daily meetings, gradually incorporating broader insights to refine processes and test new inventory management technologies. By enabling collaborative problem-solving among diverse stakeholders, war rooms can dismantle traditional siloes and enhance retailers’ responsiveness to market changes.