For most distributors, manufacturers, retailers and wholesalers in virtually every industry, inventory tends to be the largest ongoing investment. From the short product life cycles of clothing, electronics and cosmetics, to raw materials shortages and simple miscommunication between suppliers and warehouses, inventory control carries with it a whole host of challenges. Omni-channel fulfillment and vertical distribution can add complexity to the supply chain. There are unexpected disruptions due to mergers, natural disasters and pandemics. Even a shift in customer expectations can be difficult to forecast. So what is to be done about all of this?
The solution is inventory optimization. Optimization involves striking a balance between lower inventory investment and superb customer service. Global supply chains and the sheer number of planning variables that must be accounted for have made traditional inventory optimization methods like spreadsheets altogether obsolete. Today’s solutions are far more wide-reaching and effective.
4 INVENTORY OPTIMIZATION SOLUTIONS
1. ADVANCED ANALYTICS
Advanced analytics is particularly useful for demand forecasting of your inventory. By creating models based on historical and seasonal inventory data, product life cycles, and different levels of production over various time periods, you can use demand forecasts to make your supply chain more agile and responsive to disruptions. Beyond that, forecasting can also help with marketing campaigns, budget calculations, purchasing decisions and managing variability in deliveries to keep your customers happy.
Focusing on replenishment is critical to inventory management. Replenishment involves balancing multiple channels of demand and facilitating the dynamic reallocation of products to account for changing inventory requirements in all of your locations. Developing safety stock strategies can help redistribute products in times of inventory imbalances while still staying ahead of production planning. Without imbalances to worry about, you can focus on identifying better buying opportunities, collaborating with suppliers and preventing any unnecessary inventory control expenses.
Through the use of various automation technologies like RFID, barcoding, voice-directed picking and warehouse conveyor lines, you can easily replace laborious, error-prone inventory tasks and improve stock availability. Automation shortens production lead time, simplifies ordering, reordering and order fulfillment processes, and can help prevent lost sales by increasing inventory turnover.
4. CLOUD TECHNOLOGY
Track your inventory levels in real-time across multiple channels and in multiple locations with a cloud-based inventory management solution. The cloud offers your team more comprehensive access to your data so they can manage your warehouses from anywhere. It can also yield tremendous cost savings by scaling back IT staff, eliminating overhead, enhancing quality control and keeping your warehouses more organized. Besides helping you make more informed, strategic decisions about your stock, the cloud offers more transparency so you can keep your relationships with 3PL providers and carriers on the up and up.
INVENTORY OPTIMIZATION TIPS AND BEST PRACTICES
In addition to the optimization solutions listed above, which should be included in a reputable warehouse management system (WMS), there are still some best practices you can follow to guarantee you’re optimizing your inventory in the most effective way possible.
- Create and implement contingency plans for emergency stock situations, such as unexpected changes to customer demand or volatile market conditions. This could involve maintaining seasonal safety stock levels, evenly distributing your inventory across all warehouses, or using reorder point formulas for stock replenishment.
- Make sure you’re tracking the right inventory KPIs. The most important inventory-related KPIs to track include inventory turnover, inventory-to-sales ratio, inventory days of supply, and inventory velocity.
- Conduct regularly scheduled inventory audits to help prevent problems with incorrect shipments and mislabeled stock. Audits can also ensure your inventory levels match your sales levels at all times.
- Carefully monitor ordering and carrying costs to help free up capital and better balance order sizes.
THE DATASCOPE WMS INVENTORY OPTIMIZATION SOLUTION
A warehouse management system like DATASCOPE WMS can provide detailed insights into every bit of inventory data and every product that moves throughout your supply chain. DATASCOPE WMS can be integrated with your transportation management system (TMS), Enterprise Resource Planning (ERP) system and any other systems you may be using to keep your supply chain scalable.
Through its host of inventory control modules, DATASCOPE WMS supports the integration of all types of barcodes, automated ordering and purchasing, cycle counting and demand forecasting. Cloud-based and highly visual, DATASCOPE WMS offers complete visibility into your inventory levels in every location so you can evaluate and manage your supply chain holistically rather than keeping people and departments siloed. All purchase order histories, shipping records, bills of materials, product expiration dates and contacts are maintained in a centralized location that all members of your team can easily access, view and share from at any time. And, as our software is fully customizable, you can quickly create advanced reports based on the relevant metrics you’re tracking, and send/receive instant messaging notifications to keep everyone updated on product movement.
If you would like to learn more about our inventory optimization solutions or try our software firsthand, schedule your demo today!