How is Technology Influencing Inventory Management?
Inventory management software is a software system for tracking inventory levels, orders, sales and deliveries. It can also be used in the manufacturing industry to create a work order, bill of materials and other production-related documents.
Inventory is a company’s most treasured asset, which makes inventory management a critical issue.
With the company’s expanding to reach the global marketplace, the complexities are growing, resulting to a demand for a specialized solution to ensure a reliable supply and an efficient supply chain. Today’s inventory management technology helps the decision-makers to understand how their inventory is working as it moves in the distribution chain.
With the possibility to identify patterns, track shipments, and fulfill orders efficiently, companies can better their growth potential, lessen the risk, and enable new efficiencies that satisfy all stakeholders, from the factory floor to the customer’s door. Here are some necessary inventory management tools to embrace.
Inventory software
Regardless of what industry one operates in, reliable inventory software is crucial to the process. Starting from the easiest iterations to the most complex one, an inventory software should provide a view of the stock at a glance while monitoring incoming items, pricing, cost, sales, expiration dates, distribution channels, and more. An advanced version of inventory tracking software will be able to count items independently. It will also inform companies about any anomalies, and the best in class will also help in predicting the future and optimizing distribution throughout multiple channels.
RFID Tags and IoT Sensors
RFID technology helps in improving the inventory accuracy by 98 percent while reducing costs and improving efficiency from end-to-end, along with enabling automated processes and creating new capabilities that drive profits. Generally, inventory counts are done periodically, either monthly, weekly, or according to the given use case. RFID tags and IoT sensors work hand-in-hand to simplify the inventory process, providing accurate counts in an instant, eliminating errors, and helping you to reallocate human capital to higher-value tasks.
Robotics Technologies
Use of robot pickers in a warehouse helps to optimize the fulfillment process by giving a reliable and precise way to pick and pack orders for shipments. Considering the benefits of robotic technology, robots don’t take breaks or vacations. They can work for longer hours and carry heavier loads, lessening workplace injury, and boosting productivity in the process.
The Role of AI in Efficient Inventory Management
Digitalization is bringing in new opportunities and is opening new doors for the automated world. The ever-growing technology has entirely changed the functioning of the corporate world. With the advent of robots to assist humans, the efficiency and productivity of the company are witnessed more evidently.
Industry 4.0 is already revamping the way businesses work across the supply chain. Using AI, sensors, and IoT, a smart and data-driven distribution system can be developed. As AI offers a list of benefits, the supply chain network can have a more significant economic interest. With the help of these technologies, distributors will no longer predict demand for products through guesswork but would instead make accurate predictions, enabling them to make well-informed business decisions.
1. Inventory Efficiency
AI can help in predicting future demands and also forecast the demand of suppliers based on the previous orders. This helps in forming crucial decisions in optimizing stock levels. For instance, if AI lets a distributor know that many other distributors will demand the same equipment in the coming time, the chances are high that he jumps the queue and gets ahead by ordering it much sooner.
2. Cost of Goods Sold
What happens when the inventory level isn’t optimized? The cost of goods sold (COGS) decreases as one is not able to incur the costs of holding inventory beyond its use. According to a report by IHL Group, a research firm, in 2015 the value of overstocking was $470 billion, while the understocking cost was $630 billion worldwide. Hence, freeing up cash and storage space creates the potential for savings.
3. Reduction in Lead Times
As industry 4.0 empowers supply chain to manage different orders fast, lead times for customers were shortened automatically. However, this leads to an increase in the pressure to deliver products on time and that too every time. To overcome this problem, AI enables one to spot loopholes in an organization and also build and maintain a long-lasting relationship with their customers.
Whether AI implementation is on the want list or not, ensuring data collection and storage is a good idea. Adopting Artificial Intelligence for inventory management can help in avoiding poor decisions as well as provide information for new investments; the success of technology depends upon the data quality. However, expecting all this overnight is too much.
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