As a technology professional, you focus on keeping your company’s network infrastructure at peak capacity. You also need to consider what types of technology to leverage in operations to improve productivity while reducing costs. Supply chain optimization can leverage a range of technologies to help track and monitor inventory levels. Yet keeping up with changing technology has become a challenge for retailers.
About 46% of small businesses still do not use an automated system. Moreover, only 18% of small and medium enterprises had an inventory management system in 2020.
As consumer demand grows and customers have more ways to shop, your current technology may struggle to maintain the right levels of inventory on warehouse shelves. Having an optimized warehouse could have a 20-50% impact on supply chain costs. It also avoids some of the common problems that could reduce potential profits.
Too much inventory
When you don’t use effective inventory management technology, it becomes more difficult to understand changes resulting from customer demand. Products that you think will stay in vogue for the foreseeable future suddenly aren’t coming off the shelves as fast anymore. Inventory turnover rates plummet as products sit on shelves in boxes for weeks and months.
The company also begins to spend unnecessary capital that is used to cover the cost of ownership to house immobile inventory. Excess inventory prevents you from obtaining new products that may be in demand due to a lack of storage capacity. As you keep inventory longer, it begins to lose value over time. The company may end up having to cut prices drastically just to get inventory out of the warehouse. In other scenarios, you may donate or dispose of the products at a loss of profit.
When you use technology to track customer inventory and purchase history, you have better insight into possible buying trends in the marketplace. Warehouse management understands and can better forecast demand to adjust the number of products ordered from the manufacturer. Additionally, workers can better track inventory as it arrives at the warehouse docks.
Too little inventory
On the other hand, without an inventory management system, you may not have enough inventory to meet customer demand. Not being able to track inventory from the time it leaves the manufacturer until it arrives in your warehouse leaves sales teams wondering when orders will arrive. This problem leads to disgruntled and angry customers.
Missed sales opportunities will likely have a significant impact on your operations. Customers may go to competitors who will fill their orders, while customers will leave negative reviews of your business. The resulting public relations nightmare can impact your reputation in the long run. Unfortunately, if the problem lies with the manufacturer running out of materials, the warehouse may simply have to wait until they resolve the issues with the supplier.
When it comes to an inventory management system, it allows you to better understand stock levels during supply change shortages. You can adjust inventory quantities to have enough supplies to fill orders until the manufacturer can increase their production levels. Another advantage is to use this technology to find additional suppliers who can ship products immediately to help fill orders.
Technology available for inventory management systems
Inventory management technology can involve a wide range of internal network systems, versatile warehouse dashboards and personal portable devices. Features can also provide various benefits. They could enable greater visibility and automation through barcode scanning options that update warehouse records in real time or provide report generation for better demand forecasting. Workers and processes can increase productivity levels.
These tools and resources allow for more balanced inventory levels during hot sale periods and during periods of slow sales. You can better control warehouse overhead so that working capital can now be invested in the best places of operations.
An effective system should allow you to monitor daily warehouse and supply chain performance, inventory turnover rates, customer transaction history, and production rates. In this way, the business may be able to uncover inefficiencies in warehouse performance as well as ways to cut costs that are better for its bottom line.
Ready to know more? Be sure to check out the accompanying resource for more information on this popular topic created by WSI.