Overcoming Modern Inventory Management Challenges

One of the most effective ways to reduce overhead is by reducing inefficiencies across the supply chain, from inaccurate stock data to excess inventory.

Blue Planet Studio Adobe Stock 460414692
Blue Planet Studio AdobeStock_460414692

The current “cost of living crisis” has become a “cost of doing business crisis,” with some businesses forced to manage inflation by passing increased costs on to customers.

However, those unwanted cost increases can also increase reputational risk. Price hikes might alienate customers already facing a significant impact on their standard of living, and that customer impact will ultimately affect the company’s bottom line.

To sidestep the negative impacts, businesses need to consider new ways to offset costs. One of the most effective ways to reduce overhead is by reducing inefficiencies across the supply chain, from inaccurate stock data to excess inventory.

Increase visibility Inaccurate, bad and missing data costs businesses a staggering $600 billion each year by contributing to supply chain disruption, logistics difficulties and waste.

Firms that fail to effectively manage and harness the power of their data risk missing out on valuable trading opportunities, in addition to being unable to mitigate the costs of accruing and holding excess inventory.

To work at peak efficiency, businesses need complete visibility over all their data. And to get that kind of visibility, they need an inventory management platform that records and presents data in a way that informs better decision-making.

Solutions that incorporate real-time and historic sales and inventory data allow businesses to understand their current ability to fulfil orders and proactively prepare for future disruption and peak periods of demand. These solutions help businesses avoid recurring waste by making it possible to adapt their inventory accordingly.

But internal data alone is not enough to drive consistent and efficient decision-making—businesses must be able to tap into trading partner data to avoid delays and bottlenecks, ensure order fulfilment and meet sales KPIs. But with 69% of businesses lacking total visibility over their network, communication throughout the supply chain is notoriously strained.

To combat the strain, businesses are looking at digitization to combat the inaccuracy and inconsistency associated with manual data-sharing. Not only does a digital solution ensure the latest and most accurate data is being used, but it can also standardize and validate that data, delivering key information in consistent formats that allow businesses to get a bird’s-eye view of critical supply chain information.

The result for retailers is more accurate forecasting, reduced costs from unfulfilled orders or excess stock, and greater visibility over performance across the supply chain.

By making goods available during peak periods of demand and ensuring a consistent delivery experience, digital solutions can drive cost savings and greater customer satisfaction.

Modernize outdated processes

Inefficiencies in the supply chain often arise from outdated processes, like manual stock-taking or paper-based data collection and sharing. These processes encourage mistakes and inaccuracies in addition to delays and mismanaged orders.

Businesses looking to streamline costs by tackling these inefficiencies should consider digital inventory management solutions.

This means moving to a paperless model with inventory data recorded and stored on a digital platform. But despite the challenge of moving systems, implementing a digital inventory solution alleviates a number of challenges, including inconsistencies associated with each internal department and branch, paper-based inventory management models that can bottleneck operations and increase inaccuracy and delays that cause businesses to lose out to quicker competitors.

Using new digital platforms, businesses can map data seamlessly between internal teams, distribution locations and trading partners to save time compared with manual data entry – helping them drive inventory decisions with accurate, up-to-date information.

This is especially valuable for companies looking to reduce their current cost of business by expanding stock lines and warehouse locations, keeping inventory management under one digital roof even as operations diversify.

Respond swiftly to challenges

Even the smoothest supply chain operations will experience disruption – especially when retailers rely on multiple partners to fulfill orders accurately and on time. Having the right data from suppliers at the right time allows retailers to proactively address any challenges.

To prepare for and prevent disruptions, retailers should partner with their suppliers to exchange critical supply chain data. For example, communication about order status is essential. After sending an order to a supplier, retailers should receive automated order acknowledgements from suppliers. Understanding a suppliers’ ability to fulfill an order prevents time-consuming and costly inventory management issues, such as ordering and holding more inventory than needed or not responding to inventory shortages in a timely fashion.

Further, retailers should expect suppliers to communicate information about what products they are shipping and when. With this data, retailers know that their order is en-route to the requested delivery point, what products will be shipping, when they will arrive and how each order is packed. The increased visibility from order acknowledgements and shipping notices allows retailers to efficiently receive inventory, and move goods to the right place, at the right time.

As businesses seek to offset the rise of operating costs, digital solutions offer an unmatched array of options for new efficiencies that forward-thinking leaders should consider. With innovative solutions for emerging challenges readily available, the cost of adapting to shifts in the market is less significant when compared with the cost of inefficiency.

If you’re looking to improve inventory management, start by getting complete and accurate data from suppliers. Automating your data flow can help you get inventory through your supply chain and to customers as quickly as possible.