10 Inventory Management best Practices and the Role of Technology

Supply chain leaders are constantly looking for ways to improve inventory management, and the role of technology in the supply chain provides significant benefits. Instead of relying on traditional, outdated inventory management best practices, supply chain leaders should follow these 10 steps to leverage technology and improve inventory management.

1. Use ABC Analysis to Categorize Your Inventory

The use of ABC analysis to classify inventory is not a new concept. ABC analysis helps supply chain leaders to understand how stock activities and space utilization contribute to overall cycle time and productivity.

As explained by DearSystems.com:

“Organizing your stock within your warehouse according to how they sell and how much they value your business will help you optimize storage space and streamlined order fulfillment.”

Of course, using such analyzes requires a natural ability to gather, analyze, track, and manage data related to space utilization and inventory.

2. Identify the relationship between sales and inventory

The next step is simple. Supply chain leaders need to recognize the relationship between sales and inventory. As sales grow, inventory will flow faster. However, SKU proliferation and globalization of e-commerce makes tracking sales overwhelming. Again, the role of technology begins to focus on data and its application.

3. Leverage Technology to Understand Inventory Flows

Supply chain leaders need to leverage technology to understand inventory flow. Types of technology available from RFID-connected sensors via GPS-enabled systems. As supply chain leaders gain more granular detail and the ability to track data, such information can be processed with advanced analytical capabilities to understand how inventory operates within and outside your warehouse.

4. Deploy automation to reduce the burden of inventory management

With so much information available and the rise of globalized supply chains, inventory management must rise to a new level. Supply chain leaders need automated systems to complete the refill process, identify when trends are arising, and look for ways to avoid problems in fulfillment. For example, the use of drop shipping may reduce the concerns of carrying inventory and consumers receiving it, putting the process in the hands of manufacturers.
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5. Construction of Tech Stacks to enhance inventory management

The technical stack within your organization should also enhance inventory management. In other words, legacy ERP systems that do not offer inventory management capabilities or the ability to view inventory across channels must be upgraded. In addition, the tech stack should include inventory management functions within most systems, including labor and logistics management. Ultimately, inventory management best practices should include the necessary putaway and shipping procedures to keep inventory levels stable.

6. Tackle Surplus Stock

Another issue in today’s supply chain is surplus inventory. Surplus security inventory is an archaic notion that has been created when supply chains conducted from 1 end of the town to another. From the worldwide, e-commerce driven market, the surplus inventory is both expensive and insecure. In addition, the surplus inventory also has items that were sent back into the organization or don’t have exactly the exact same significance as similar goods, such as damaged or faulty products.

“Damaged and defective merchandise must be accounted for separately from other stock. Too much damaged or faulty products can reflect a systemic problem in the distribution chain, quality management problems, or issues with the supply, transport, or storage of merchandise.

When you’ve got no other choice, you might have to throw off the item. You most likely don’t wish to leave the sellable merchandise in dumpsters and generate a cottage industry of’dumpster diving’ on your shops. This may attract undesirable attention and might have a negative ripple impact on the safety of your shops and staff”

7. Manage inventory between physical locations, including brick-and-mortar stores

In the world of omnichannel supply chain, supply chain leaders need the ability to manage inventory at all physical locations, including brick-and-mortar stores. For organizations taking advantage of online purchases, choose In-store (BOPIS) fulfillment, the ability to manage inventory at physical locations is essential.
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8. Remember to count the list in transit

Tracking inventory in transit is also critical to supply chain success. Inventory in transit creates considerable assets for organizations in the global supply chain. Failure to track such inventories will naturally give rise to problems with replenishment strategies.

9. Use Data to Better Manage Lead Times and Plan for Demand

Technology and information also play a part in handling lead-times of transport demands and allowing for much better demand likely to meet fluctuations in the business. By way of instance, supply chain summit season preparation demands complex data analytics capabilities, and provide chains will begin planning for peak period , or even seasons beforehand.

10. Conduct Continuous Reviews of Inventory

Ongoing review of inventory makes it another best practice in successful supply chain management. Continuous inventory management relies on systems associated with complete re-request requests to identify current, real-time inventory levels, and without the need for human intervention.