Inventory management is a cornerstone of businesses' operational efficiency regardless of scale. At its core, it involves the intricate orchestration of various processes—from the initial ordering of goods to their storage, tracking, and eventual restocking. The ultimate goal? Maintain a delicate balance that ensures products are available when needed and in sufficient quantities, all while keeping costs in check and staying ahead of the competition.
However, this task is a complex challenge that requires constant attention and adaptation, especially in today's rapidly evolving business landscape. The modern market is characterized by dynamic consumer preferences, supply chain disruptions, and technological advancements—all of which exert significant pressure on inventory management practices.
Fortunately, emerging technologies—from AI to RFID to the Internet of Things (IoT) to 3D printing—are transforming how businesses approach inventory management, offering new tools and capabilities to enhance efficiency, transparency, and customer satisfaction.
How Inventory Remains Challenging for Businesses
Inventory challenges are nothing new for businesses but have become a hot-button issue in recent years after COVID-19 illustrated the many inefficiencies in the supply chain. While things have improved, they aren’t necessarily fixed. Many businesses still struggle with various inventory management challenges, including:
- Inefficient Processes — Fluctuating demands and supply chain disruptions can undermine the efficiency of inventory management processes, leading to errors, stockouts, or overstocking.
- Changing Consumer Demands — The dynamic nature of consumer preferences necessitates agility in inventory management strategies.
- Labor Issues — Labor-related challenges can impede efficient inventory management even with adequate tools.
- Lack of Visibility — Inadequate visibility across the supply chain hampers efficiency, increases costs, and compromises the customer experience.
- Outdated Systems and Data — Manual inventory handling is no longer tenable in the face of modern demands, prompting the adoption of updated systems offering advanced features and cost efficiencies.
According to a recent report by Linnworks, 33 percent of online resellers in the U.S. struggle to manage warehouse, fulfillment, and logistics across multiple platforms. When aiming for an efficient commerce operation, the ultimate objective is to achieve a seamless flow of capabilities that enable selling across various marketplaces.
The uninterrupted execution of logistics is crucial. Many online sellers need a dedicated logistics infrastructure or warehouses, and their inventory is often dispersed globally. Connecting all channels and partners facilitates a streamlined process, empowering sellers to scale their businesses efficiently.
Inventory trends in 2024
The inventory management and supply chain issues businesses face have garnered considerable attention over the past several years. In response to these challenges, many innovative trends have emerged, reshaping inventory management practices and offering solutions to reduce costs, enhance efficiency, and elevate customer experiences.
Below are some of the top 10 inventory management trends of 2024:
- Cloud-based inventory systems. A notable shift toward embracing cloud-based inventory systems is underway, allowing accessibility from any wireless device and facilitating real-time updates. These systems enable seamless data updating, often through automated means like RFID tags, and ensure instant access for all authorized users, fostering collaboration and data accuracy.
- AI and machine learning. AI and machine learning represent cutting-edge innovations that are increasingly finding applications across various industries. These transformative technologies empower businesses to discern and capitalize on market trends, streamline inventory management workflows, and mitigate avoidable errors, driving operational efficiency and competitiveness.
- IoT sensors. Businesses are shifting away from manual product inspection and barcode scanning by employees, opting instead for IoT sensors to streamline inventory management and order fulfillment processes. These sensors can swiftly read RFID tags attached to inventory items, providing real-time tracking of product movements within warehouses, preemptively averting stockouts, and ensuring seamless operations.
- Automation and robotics. Implementing automation and robotics has revolutionized distribution centers and warehouses. These technology solutions allow businesses to streamline all inventory management and order fulfillment processes. Solutions like automated sorters and drones can reduce errors and improve overall efficiency.
- Predictive analytics. The power of predictive analytics is revolutionizing inventory management across diverse industries. With access to vast amounts of data, businesses leverage sophisticated algorithms to anticipate potential disruptions in the supply chain and forecast future demand.
- Blockchain technology. Blockchain technology is often misconstrued due to its association with Bitcoin, but they are not the same. Blockchain is a decentralized distributed ledger, enabling businesses to record every transaction and movement within the supply chain. This transparent record-keeping system mitigates risk and fosters trust by giving stakeholders visibility into the entire process.
- Omni-channel. Omni-channel inventory management is a trend that is gaining traction. It entails businesses overseeing inventory across multiple channels, including remote warehouses and local brick-and-mortar stores. This approach offers customers flexibility, allowing them to buy online and pick up in-store (BOPIS) or opt for quicker delivery from nearby locations.
- On-Demand 3D printing. Instead of ordering every item necessary for inventory, some businesses use 3D printing technology to produce parts and products in-house. For example, 3D printers can produce simple parts on demand, like gaskets or trim. This eliminates the need to pay for shipping or factor in turnaround time. In the future, 3D printing may also be used for product personalization at the warehouse level.
- Vendor-Managed Inventory (VMI): Yet another trend emerging in inventory management involves entrusting vendors with greater responsibility. Vendor-managed inventory (VMI) entails adopting a collaborative approach to inventory management, wherein suppliers play a more active role in monitoring and restocking products by sharing data with your business.
- Reverse Logistics. Many companies overlook the return process's impact on inventory management. However, adopting a proactive stance towards reverse logistics can yield various benefits, including cost reduction, decreased return rates, heightened customer satisfaction, and a reduced environmental footprint. Minimizing returns leads to a more efficient inventory process with fewer chances for errors.
Effective inventory management is imperative for businesses striving to maintain competitiveness, meet customer expectations, and optimize operational efficiency. It plays a pivotal role in controlling costs, ensuring timely order fulfillment, and minimizing waste throughout the supply chain. By embracing forward-thinking technology solutions and adopting best practices, businesses can unlock new opportunities, drive growth, and position themselves for long-term success.
Founder and CEO John O'Kelly began Newcastle Systems in 2005. The company's mobile carts are used in manufacturing, retail, and shipping and receiving applications by companies including Walmart, UPS, DHL, Wayfair, Tesla, and Amazon.
