Gazelle Information Technologies

Gazelle Supply Chain Consultant

Future Trends In Inventory Planning

Tushar Ahuja

Table of Content

Future Trends In Inventory Planning

Objectives and advantages of inventory planning

Objectives

  • Material availability – The primary goal of inventory management is to ensure that all kinds of materials are accessible whenever the production department needs them, ensuring that production is not stopped or slowed down due to a lack of resources.

 

  • Better level of customer service – It is impossible to fulfil a received order if you do not have an accurate count of the items in your possession. In order to meet requests, you must have accessible the appropriate goods at the right time. Otherwise, you may end yourself in a state of confusion. To fulfill the needs for quality products, the concern must maintain an adequate supply of completed items to guarantee that customers’ orders are fulfilled. It will increase the company’s brand image.

 

  • Keeping wastage and losses to a minimum – Inventory management attempts to minimize inventory waste at all stages, such as during storage in godowns or during production in the plant. Normal or uncontrolled waste should not be allowed to exceed a permissible level, whereas abnormal and unmanageable wastage should be carefully regulated. Moreover Keeping track of the goods by having a document in hand reduces the likelihood of loss, if not completely eliminates it.

 

  • Maintaining sufficient stock – Supplies should be easily available for all stages of production, from raw materials to completed goods. You need to make sure you have enough of the necessary material on hand to meet client demand without having to cut corners.

 

  • Cost effective storage – It eliminates the possibility of keeping extra stock, since the needs are predetermined, thus eliminating needless storage expenses.

 

  • Cost value of inventories can be reduced – When purchasing products or stock on a regular basis, an organization may negotiate discounts and other incentives to lower the overall cost.

 

  • Optimizing product sales – Inventory management may be used to determine the volume of product sales. Sales is one of the most essential and crucial phases of the whole process.

 

Advantages

  • Reduce or eliminate stock outs
  • Optimize stock so you can easily spot slow-moving items you need to discount.
  • Inventory planning is crucial for smaller businesses, which rely on fast turnover.
  • Items are easily retrievable from warehouse or stockroom.
  • Eliminate redundancies, or an excess of the same object, and prevent obsolescence, or items that remain too long in inventory.

 

Major challenges facing inventory planning and how can it be overcome

  • Using manual inventory tracking procedures across different software and spreadsheets is time-consuming, redundant and vulnerable to errors. It can be overcome by centralized tracking where tracking software is used that provides automated features for re-ordering and procurement. Cloud-based databases for accurate, automatic inventory updates and real-time data backup are provided by these inventory management platforms.

 

  • Inventory management in the warehouse is labor-intensive and involves several steps, including receiving and put away, picking, packing and shipping. This problem is solved by measuring and reporting warehouse performance metrics like inventory turnover, customer satisfaction and order processing speed to overcome warehouse inefficiencies.

 

  • Data inaccuracy is also an issue. Gone are the days when inventory could be physically counted. This issue is solved by frequent stock auditing which reduce human error and provide more accurate up-to-date inventory data for managing cash flow.

 

  • The constantly changing customer demand could result in obsolete inventory which the company is unable to sell and hence it is difficult to fulfill customer’s order. To overcome this problem demand forecasting tools are needed which are provided by inventory management platforms. This feature integrates with accounting and sales data to help you predict demand and schedule orders based on shifting customer preferences, material availability or seasonal trends.

 

  • Poor production planning causes delayed manufacturing and cost overruns which then has an impact on sales forecasts and project scheduling. To avoid this problem an inventory management system with advanced demand forecasting reporting features to prioritize your top inventory. Take into account the availability of the top 20% of inventory that generates 80% of your customer demand.

Technologies which help to improve inventory planning

  • Warehouse Management System (WMS) – Comes in various types and implementation methods which depends upon the size and nature of the organization. Small organizations use a simple series of hard copy documents or spreadsheet files. Whereas the medium and large sized organizations use the VMS software. For example, an e-commerce vendor might use a WMS that has different functions than a brick-and-mortar retailer.

 

  • RFID (Radio Frequency Identification) – Refers to a technology whereby digital data encoded in RFID tags or smart labels are captured by a reader via radio waves. RFID is similar to barcoding in that data from a tag or label are captured by a device that stores the data in a database. RFID tags contain an integrated circuit and an antenna, which are used to transmit data to the RFID reader (also called an interrogator). The reader then converts the radio waves to a more usable form of data. Information collected from the tags is then transferred through a communications interface to a host computer system, where the data can be stored in a database and analyzed at a later time. For example DVD rental kiosks use RFID DVD tags to make sure customers receive their selected movie rental.

 

  • LiFi (Light Fidelity) technology – LiFi is a technology for wireless communication between devices using light to transmit data and position. Visible light communication can provide accurate 3D positioning for robots, drones and other devices in warehouses and factories, where indoor positioning and navigation is a crucial element. For example, this technology is used in operation theatres in the hospitals as light waves have little effect on medical instruments.

 

  • Barcode system – Barcodes are seen everywhere from malls to small stores and also the on the goods we purchase. Barcoding increases efficiency and productivity in a number of industries when paired with barcode readers. Barcode readers use laser beams to read the barcodes and translate the reflected light into data that is then transferred to a computer for action or storage. Barcode readers often are attached to computers in retail settings, but they also are handheld and portable for other uses, such as scanning barcodes in warehouses and tracking inventory.

 

  • Robotics Technology – New robotics technology has become one of the most sought-after technologies for warehouse management. These smart robots help to manage the movement, storage and sorting of warehouse inventory. With increasing order volumes, numerous products to navigate, highly personalized order packing and faster shipping requirements, robotics solutions will help effectively respond to volume growth and perform more tasks with lesser labor and at a lower cost. For example aerospace engineering use robots often to do certain operations.

 

Future of inventory planning

The future of inventory planning is going to be full of technologies right from virtual reality to AI to digital signage and even inventory-less stores. The main aim is to attract customers and along with these technologies it’s only going to grow from hereon. New types of RLTS (Real-Time Location Systems) have the ability to bring about a constant digital awareness over inventory while evolution of WMS (Warehouse Management Systems) brings about maximum accuracy on inventory adjustments. Inventory-related computations at exceedingly high speeds, and have improved inventory record accuracy substantially. Globalization is a big driving force for businesses to cope up with the market industry and use these technologies for planning their inventory well therefore selling their product at a larger quantity. Consumer empowerment has led supply chains to become more responsive, agile, and quality-focused, as companies direct more attention to the demand side of their businesses. Nordstrom has recently introduced a new inventory strategy – only with no inventory. They’ve introduced a store concept called Nordstrom Local, a tiny space where instead of focusing on the inventory, they focus on the customers. Customers crave fast and convenient methods of shopping, and Nordstrom took that and ran with it. The store has alteration services, personal styling, nail salons, beverages, online order pickups, just no inventory. By introducing this store concept, they are proving their loyalty to their customers and giving them what they really want.

 

Latest trends in inventory planning

  • Predictive picking and artificial Intelligence – With the help of artificial intelligence a warehouse can pick products before customers can hit the ‘buy’ button. Thanks to artificial intelligence, advanced systems use unstructured data to recognize patterns and interdepencies and predict behavior. They can effectively initiate the order fulfillment process before the order’s even made.

 

  • Omni channel retail solutions – There are three features which are a part of this solution. They are:
  1. Regular inventory reconciliation exercises – For getting accurate numbers this exercise is needed.
  2. Multiple distribution centers – A distribution center closer to the customers can shorten fulfillment of time to find a product and also reduces shipping cost.
  3. Connected systems that provide a single source of truth – An integrated warehouse management, inventory management, and point of sale solution helps ensure you have one set of accurate numbers.

 

  • The rise of experiential shopping experiences – To turn shopping into an experience much like going to movies or restaurants the objective of concept stores is introduced in order to draw consumers to get introduced to their product. Concept store is a place in which retailers can offer carefully-curated selections of products, services and experiences, all of which relate to a particular theme or concept.

 

  • Personalization inventory control – According to one McKinseyreport, the recommendation algorithm accounts for 35% of the online retailer’s sales. Brands that use customer information to suggest additional products can significantly boost their sales. Amazon was quite successful in following this trend. Personalization drives sales, increases brand loyalty, and elevates the customer experience. That said, this strategy only works if you can deliver on said goods once you acquire those customers.

 

  • Supply chain management skill requirements – Companies are opting for software instead of manual processes so that they don’t have to rely on spreadsheets much. As a result, it’ll be up to inventory professionals to understand how to use these new tools. Warehouses and retailers are moving towards artificial intelligence to manage demand forecast, automation to pick stock, and RFID scannersto gain visibility over inventory.

 

  • Creative arrangements between supply chain partners – The agreement between warehouse management software providers and machinery suppliers together working with customers to develop creative financing options. These cost saving opportunities can pass on to the end user hence acquiring more customers.

 

  • Streamlining returned inventory – A robust WMS Systemhelps handle the increasing flux of returned orders. Keep in mind that your WMS needs to do more than just help workers pick, pack, and ship. The WMS must also help you manage returned inventory

 

Conclusion

The key is to purchase the right amount of stock and the correct decision of how much to reorder. Inventory planning helps lower the costs of keeping items in stock and helps make sure there is enough stock for making and selling items. Inventory planning is an essential part of supply chain management. The two main benefits by which an organization can grow are that this inventory planning ensures that you are able to fulfill incoming orders and raises profits. It also saves money and helps understand the stock trends so that you can see how much stock you have and where and thereafter are able to use that stock well