For most companies, inventory management is where all the elements of the supply chain come together. Inventory is a vital part of any competitive business, and an unobstructed flow of inventory ensures the well-being of an organization, especially those dealing with tangible goods. Globalization, consumer empowerment, and advancement in technology have greatly influenced the way industries have managed inventory in the last couple of decades. So what does the future of inventory management hold for us? Let’s take a look.
With globalization, businesses have been challenged to reposition their inventory within their supply chain to drive reductions in the cost of goods sold and avail the benefit of production economies in remote locations. The supply chains have become more agile, responsive, and quality-focused due to consumer empowerment as companies direct their attention more on the demand side. Similarly, advancements in technology with tools like ERP, Demand Planning Forecasting Systems, Warehouse Management Systems, and more have helped make inventory-related computation faster. They have also improved the accuracy of inventory record keeping.
Inventory Management is not a stand-alone process; instead, it’s a high-level process that should be integrated into other supply chain planning processes. The inventory linked integrations and automation bring in new trends, and when these trends prove to be successful, it ultimately changes the face of the process.
Here are a few future trends in inventory management-
Application of Artificial Intelligence in Inventory Management
Imagine even before a customer hits the ‘buy’ button, the inventory knows that it needs to stock up since there is a 90 percent probability that the customer would buy. Thanks to artificial intelligence, this is now possible. AI uses advanced systems that analyze the unstructured data to recognize customer buying patterns, interdependencies and predict behavior. Such systems can effectively predict demand and plan the inventory and overall supply chain more effectively.
In today’s world, variables like the season, weather, and marketing campaigns can determine ‘near-perfect forecasts’ of consumer orders. However, the use of AI in inventory management goes beyond predicting the buying behavior of the consumer. In some cases, artificial intelligence is being used for warehouse robotics, where warehouses can be navigated just like humans.
There are many advancements which are still being made in AI application, and it would be interesting to see how these innovations can be useful for businesses in the future.
Focus on Omni-channel inventory management solutions
When a consumer physically visits a retail store, the immediacy of the exchange makes inventory management easier. The consumer leaves the store with the item in his/her possession, and therefore the product can be immediately subtracted from the inventory. However, when it comes to online shopping, even though the item technically belongs to the consumer, it remains part of the inventory until it is physically delivered, thus tying up capital.
Therefore, a need to focus on Omni-channel inventory management is required. There should be regular inventory reconciliation exercises to avoid inaccuracy in numbers. Businesses need to have multiple distribution centers since it helps shorten the fulfillment time and reduces shipping costs. Moreover, stock-outs can be addressed quickly, and inventory can be topped up from other distribution centers. The use of shipment automation rules and order routing by the advanced WMS (warehouse management software) helps decide which warehouse’s order needs to be fulfilled.
With sales being made online, in-store, via mobile app, and inventory spread across multiple locations, there can be conflicting data. Therefore, a need for connected systems to get the correct numbers. Point of sale solution and integrated warehouse management ensures that you have one set of accurate numbers.
With the increasing popularity of personalization and customer-centricity, stores are now turning to ‘streaming analytics.’ Real-time data is being used to implement decisions. This process is not new but is getting more and more important because it amplifies the effectiveness of personalization models and helps the business become more data-driven.
The retailers can make better demand forecasting, avoid stock-outs and replenish inventory, get up-to-the-minute information about the supplies, determine suppliers’ performance based on real-time information, and know when supply prices change, and adjust inventory accordingly by using streaming analytics.
Inventory solutions for experiential shopping
As we all know, consumer behavior has changed, and especially during the ongoing COVID-19 pandemic. Customers browse online for products and services from the comfort of their homes. In response to this change, brands are moving to ‘experiential’ retail, turning shopping into an experience. Many companies have opened ‘experience centers’ or ‘concept stores’ to draw consumers and introduce them to the product to meet this requirement.
The sophistication of Inventory management skill set
With inventory management becoming more sophisticated, the skillset too needs to be tuned accordingly. Many companies are eliminating manual processes and are introducing software to reduce their dependencies on excel sheets. Therefore, it is up to the inventory professionals to understand how to use the new tools.
Additionally, inventory managers will need to have a working knowledge of essential concepts to stay up-to-date on the upcoming trends and new technologies.
To sum up, most of the trends come from tech advancements. The trends mentioned above drive a fundamental point that inventory management has improved over time, and as technology gets better, there will be better inventory management trends.
The need of the hour is to scale up and help your business adopt this change.