“You will not find it difficult to prove that battles, campaigns, and even wars have been won or lost primarily because of logistics.” - Dwight D Eisenhower.
Whether you have just embarked on the business journey, or are already in the market trying to win as many customers as you can, then kudos to you for your current and future endeavors. It’s pretty obvious that, being an entrepreneur, you want your customers to come hunting down the products. The only thing is that neither should they leave empty hands nor should your bank remain empty.
In order to keep the business on a profitable track and increase revenue, it is necessary to evaluate the product inventory regularly.
Inventory acts as the backbone of any business, be it an established one or a budding one. An efficient inventory proves to yield growth and skyrocketing revenues. As the business expands, so does your inventory increases with time and requires a warehouse to store additional inventory.
While the traditional method can suffice in the starting stage of the business, it can create havoc once the number of orders increases daily. To keep track of the changing status of your inventory and maximize the cash flow, AI-based inventory management software comes to your rescue.
Utilizing the inventory management software will ease down the tedious operational flow of your inventory operations.
In this article, we are going to deep-dive into the latest inventory management trends. As we move forward, we will understand how some of the most globally famous brands are utilizing the latest inventory management trends in 2023 to fulfill their daily business operations. The article will also highlight a few mismanagement of inventories by the leading brands, along with fixes.
What Is the Big Deal About Inventory Management Software?
In layman’s terms, an inventory is a treasure trove of lists of goods that are owned or stored, perhaps to resell or use as raw material for the manufacturing of the final product and then sell through various channels.
Businesses have understood that success does not come easy, especially when you are running an imbalance of inventory. It’s a major concern that can act as a deciding factor for businesses.
Retailers of all types and sizes are keen on scaling their businesses. They demand efficiency in tasks and optimal growth and revenue that can sustain in the long run. Considering how inventory is the soul and backbone of the business, we cannot stop emphasizing how crucial it is to integrate a robust inventory management system into your business.
An inventory management system aids businesses, retailers, and firms in tracking the inventory level, production, sales, deadstock, and deliveries across a predefined period of time.
Having the right amount of stock in the warehouse will help retailers in delivering the maximum number of orders and manage the inventory management process smoothly.
At the same time, the retailer should avoid understocking and overstocking the goods. The former will leave the customers dissatisfied, while the latter will raise the expenses related to the warehouse.
The latest AI-based inventory management system decked with the latest technologies is proving to be bliss for business entities. It removes the discrepancies by anticipating the demand, predicting the trends, reducing the risk, and streamlining the inventory, supply chain, and logistics at minimal costs. Now let us see the latest trends in inventory management systems, along with an insight into how a few top brands are leveraging technology to attain a high level of inventory efficiency.
Inventory Management Trends to Watch for in 2023
(Exploring How Top Brands are Leveraging the Strategies)
1. Artificial Intelligence in Inventory Management
Artificial intelligence is gathering a lot of attention because of its latest innovations. Businesses facing inventory issues can utilize AI to improve visibility and perform smarter. As per the Forrester report commissioned by Bounteous, businesses that fail to utilize digital transformation can affect revenue growth by 51%.
With its vast problem-solving capabilities, AI in inventory management can improve business by creating data-driven decisions for the distribution and manufacturing of products. Using AI-based inventory management software can bring a revolutionary change by predicting the scenarios through historical data, giving strategic solutions, and even performing tasks for you.
By 2025, the global market of AI-based services, software, and hardware will reach USD 130 billion at a 15% to 25% annual growth rate. Companies are iterating the usage of AI chatbots, object recognition, AI-based robotics, and other applications to deliver a satisfying customer experience.
"In the distant future, we will have to work less than today" - Bill Gates, as mentioned in a podcast.
Here’s how AI gives an edge in inventory management.
a. Demand Forecasting
An AI-based inventory management software harnesses the usage of logic and analysis to navigate through everyday business situations. It can be used to decipher customer data based on the location, season, and current market trends to sustain top over your competitors. Additionally, AI can also collect data from social media and other reviewing platforms to generate algorithms for the prediction of future inventory needs for online platforms and brick-and-mortar stores. 60% of retailers believe that using AI in the ical retail store operations like stock management and demand forecasting is crucial.
Inventory management is beyond stocking and supplying the products. There's a substantial amount of data required to plan the process that will eventually generate revenue and save on other resources like time, money, and human workforce.
Usually, the understocking and overstocking of the products result from failure to understand product emergence in the market. This requires business planning by experts through insights like location-specific product demands, warehouse management, and more.
With Artificial Intelligence, it becomes possible to gauge the demand–supply accurately. Additionally, it will predict the demand for particular products among the customers, be it location specific or seasonal - AI is capable of analyzing the elements for the successful planning of the inventory management process.
b. Fosters Productivity
With AI on board, companies can foster productivity by automating the workflow without any human interference. AI can track down item quantities, temperatures, stock errors, cycle times, downtimes, and so forth. This permits the inventory associates to focus more on valuable tasks that promote company growth and enhance overall product quality.
c. Streamline Warehouse Management
AI-based warehouse management software will streamline the process and reduce the stakes of human errors. Inventory managers can integrate AI with cloud-based capabilities; accurate information can be obtained and make informed decisions. According to Research and Markets, the research company’s report, globally, AI in supply chain management is projected to reach $17.5 billion by 2028.
One of the biggest challenges in warehouse management is to conduct the logistical tasks that consume time, prone to human error and data breaches. AI manages the logistical tasks by following the inventory pallets and freeing up human resources, and saving up on a budget.
d. Customer Support via Bots
By 2023, the robotic industry is estimated to be worth $10 billion or more. AI algorithms guide robots in moving, selecting, or ordering the products in the inventory. This saves a big chunk of time which is nearly impossible to conduct manually. Through robot automation, it can inspect goods by gathering information for regular operations. This permits the workers to focus on the vital tasks that call for human comprehension.
Now let us understand how Amazon leverages artificial intelligence for the optimization of inventory management.
Brand That Follows AI in Inventory Management - Amazon
Amazon has been around for more than three decades now. What started off as a book-selling platform in 1994 has emerged as one of the largest online platforms that offers a diverse range of products and services to its customers across the globe. By becoming the adopter of artificial intelligence, Amazon consistently rules digitally in various domains like logistics, warehouse management, and inventory management for streamlining operations. The company is all set to launch a ChatGPT-based product search in its online store.
How Does Amazon Embrace AI for Inventory Management?
Starting from smart robots to Alexa-based conversations - Amazon stands as a strong testimonial for utilizing artificial intelligence. To improve its overall operations and keep the customers at the top, here are a few ways Amazon is using AI for inventory management.
In 2021, Amazon Logistics delivered approximately 4.75 billion packages in the United States. To manage this process, the trillion-dollar company invested in artificial intelligence, machine learning, and big data analytics for routing and fulfillment of orders.
Proteus
Amazon launched Proteus, a fully autonomous mobile robot that works alone in the same physical space as other employees and is not bound by restricted areas. The AI-based mobile robot will enhance inventory management by offering a collaborative approach through its advanced facilities.
The mobile robot will move automatically within the warehouse to perform its tasks or actions per se. These tasks are performed when a specific action is triggered. One of the best benefits of using Proteus is to navigate through the daily tasks of inventory without human intervention. It will automate the lifting and movements of the GoCarts to move the packages in the facilities. In a Forbes interview, a robotic lead from Amazon stated that the idea is not to replace people. Instead, it is to build a safer workplace.” Replacing people with machines is just a fallacy” that could actually shut down the company.
Cardinal - A Warehouse Robot to Sort Packages
Before the robotics were deployed in the warehouse for inventory management, workers carried out the heavy packages through roll cages. This specific area occupies a lot of time, energy, and expenses and increases the risk of injury among the workers, especially when there’s a need to move a pile of packages in a restricted area.
The eCommerce giant believes in catering to a sustainable and safe working environment. For this Cardinal, a robotic work cell was introduced that maneuvers advanced-level artificial intelligence (AI) and other computer capabilities for the package movements within the warehouse. The robotic work cell will pick packages from the piles of packages, read the label, and use GoCart to deliver the package to the requested location. With Cardinal, the inventory management process becomes hassle-free and reduces the risks linked with employee injuries who manage the heavy packaging.
Another added benefit that Cardinal offers to Amazon is the faster shipping process. As the robot will sort out the packages on its own, the operations run effectively. Advanced AI-based shipping software can fulfill orders through its automated process.
Multimodal Identification
When it comes to Amazon, employees use the barcode scanning system to scan the products in the inventory and other various facilities. Several times, barcode scanners were damaged or perhaps went missing. The same scanning process is repeated across millions of product catalogs which itself becomes a tedious task, and the reliance is staggering. Here’s where Amazon decided to introduce Multimodal Identification, or MMID, which uses multiple modalities of information like withdrawing the dimension of the product and appearance for automation.
An applied science manager from Amazon’s computer vision in Berlin stated, “Solving this problem, so robots can pick up items from inventory and process them without needing to find and scan a barcode is fundamental. It will help us get packages to customers more quickly and accurately. And MMID is a cornerstone for achieving this.”
The entire process consists of using machine learning and AI learning algorithms to detect the mismatch and rectify the error. If there’s no mismatch, the process runs smoothly within the inventory, warehouses, and other facilities.
The warehouse is a safe sanctuary the businesses with high inventory levels. While inventory is an invaluable asset that tackles tons of waste materials that often get dumped in open land and water bodies. The global energy-related CO2 emissions grew by 0.9% or 321 Mt in 2022. Here’s where leveraging sustainability in inventory management is the key. By doing so, it will offer heaps of benefits to the company and the customers. Additionally, it also reduces the global waste of resources that contributes to pollution and carbon emissions.
2. Sustainability in Inventory Management
“Sustainability encourages wise and equitable uses of resources such that those resources will continue to be available for the future generations,” as mentioned in a book titled, “Sustainability - Approaches to Environmental Justice and Social Power, edited by Julie Sze.
Ecosystem services, Resilience, and Environmental Justice are the theoretical realms of sustainability, says the book.
Sustainability in inventory management refers to minimizing the environmental impact and optimizing the inventory processes with an eco-friendly vision. It minimizes the waste while saving on financial resources. Additionally, by incorporating other technologies like AI and automated tracking systems, companies can keep track of inventory, and upcoming shipments, which will prove to be cost-effective functions.
Here’s how manufacturers incorporate sustainability trends in their inventory management to reduce pollution and harmful impact on the environment.
a. Electric Transportation
To start the initiative in sustainability in inventory management, start by reducing the carbon footprints through procthe ess. Using airways for transportation will lead to greenhouse gas emissions rather than other transportation like a boat or a train.
Thanks to the advancement in technology, today, there are electric vehicles that can transport goods via supply chains. Check out how Amazon introduced electric vehicles for sustainable transportation delivery.
b. Circular Economy
A circular economy is a system that removes the waste generated using finite resources. In the context of inventory management, a circular economy is all about eliminating waste and pollution. Businesses can achieve this by implementing the usage of products and materials that can be recycled or reused and sourced through sustainable suppliers.
c. Reducing Inventory
For sustainable inventory management, manufacturers should focus on minimizing the inventory and producing the goods to match the demand and supply chain. This prevents inventory from becoming obsolete over time and frees up the warehouse space. Certain inventory management software integrated with data analytics will present you with the reports to manage the inventory. Another way to manage the extra/obsolete inventory is to share the excess materials with other factories or dispose of them to sustainable companies that will recycle them for production.
Let us understand how IKEA is following the sustainability trend in inventory management.
Brand That Follows Sustainability in Inventory Management - IKEA
IKEA is a multinational corporation that has become a household name in designing assembled furniture and home appliances. The company is famous worldwide for its modern, sleek designs and environment-friendly products. From a middle-class family to a wealthy family, there’s something for everyone that fits in the budget while preserving quality. This begs us the question, how does IKEA achieve great success consistently, mitigate supply chain issues efficiently, and give exceptional customer service?
Circular Business for Sustainability
By 2030, IKEA aims to fully move towards the circular business model. This will realign their values and ethos for the growth of the company while keeping the key factor of sustainability at the center throughout the design process. Circularity refers to the designing of products that can be reused, refurbished, remanufactured, and recycled. To navigate the approach, the team has developed a Circular Product Design Tool that will guide you in understanding the circularity of the products. As per the Financial Sustainability Report of IKEA, the climate footprint in FY22 is estimated to be 25.8 million tonnes of CO2 eq – a decrease of 5% compared to FY21. Also, IKEA has started buying back used products from customers. This will eventually lead to the refurbishment of the products, and consumers can purchase a new product in replacement of the older one.
Using Robotic Drones
The Swedish furniture giant has incorporated 100 drones in their inventory for accurate details regarding the product. In 2020, IKEA partnered with Verity for the production and deployment of drones in the warehouses.
One of the major benefits of using robotic drones in inventory management is to save the time of coworkers and allow them to focus on other useful tasks. This also enables faster and more sustainable delivery of the products in an affordable way. In 2023, the spending on robotics and drones is expected to total about 241.4 billion U.S. dollars. The robotic drones also calculate the packages and products in the inventory racks, thereby eliminating the chances of human errors.
“We are investing in technology across the board so that our stores can better support customer fulfillment and become true centers for omnichannel retailing. Introducing drones and other advanced tools – such as, for example, robots for picking up goods – is a genuine win-win for everybody. It improves our co-workers’ well-being, lowers operational costs, and allows us to become more affordable and convenient for our customers,” says the Head of Retail at Ingka Group (IKEA).
3. Predictive Analytics in Inventory Management
As per the report, the predictive analytics market is forecasted to grow to 41.52 billion U.S. dollars by 2028. This information can be a guiding light for the supply chain and inventory management leaders in improving overall service quality.
As the name suggests, predictive analytics is all about predicting future trends. It could be related to the sales or on which day the customer is likely to respond to a marketing email. In reference to inventory management systems, predictive analytics will help the managers in staying top of the inventory, product distribution, and resources. Alongside this, the predictive analytics will also align shipping strategies in finding out the real-time traffic spots, weather forecasts, or in-transit road conditions. Predictive analytics represents results based on statistics, past performance, data mining, AI, and machine learning prediction. By incorporating predictive analytics software into an inventory management system, companies can learn more about their audiences, and channel mediums and overall improve the supply-chain process.
What Value Does Predictive Analytics Bring To Inventory Management?
a. Forecasting Analytics (All the more with Explainable AI)
Predictive analytics will predict the demand for a particular product based on consumer behavior and past purchasing patterns. This becomes especially handy when there’s seasonal demand for products across different locations. Warehouses today are unable to process huge volumes of data. But predictive analytics-based software can certainly assist in navigating through the process. This becomes much more advanced when the AI explains how it arrived at a decision. Converging different sets of data with real-time information enables AI to explain its decision. This becomes an added advantage for inventory management.
b. Inventory Optimization
Predictive analytics tools alerts out-of-the-stock situations as well as overstocking by predicting future demands. The tools present consumer data insights that will steer in making better decisions for stocking inventory.
c. Data Refinement
Through predictive analytics and data analytics, businesses are able to connect the data by extracting it from different sources like seasonal demand, financial reports, operations, and so forth. Companies are able to leverage these data statistics in making better-informed decisions by refining data.
d. Customer Service
Predictive analytics can assist businesses in improving their customer experience by storing the products that consumers will demand in the future. This also improves warehouse operations in storing the products and providing them efficiently to the customers when required.
Brand That Follows Predictive Analytics in Inventory Management - PepsiCo
Over the years PepsiCo has successfully maintained a reputed image in the field of beverages. It’s because of the company’s commitment to efficient planning and investing in the latest technologies for betterment and growth. Starting from its global distribution to preserving the refreshing flavors - PepsiCo continues to shine through in the industry.
In order to boost its supply chain strategy and take it to the next level, the company has opted for digitization and automation. In the third quarter, 2022 financial results PepsiCo CEO Ramon Laguarta and Chief Financial Officer Hugh Johnston mentioned that the company is focusing on “automating and digitizing our supply chain to support our innovation pipeline with greater agility and speed-to-market.”
PepsiCo relies heavily on the data for accurate prediction, which leads to supply to its retailers. For a brand that serves billions of customers every day, it becomes certainly difficult to manage the stock levels while continuously maintaining the sales graph. In order to strike a balance between the stock levels and the supply-demand chain, PepsiCo consistently utilizes demand forecasting to understand a broader perspective for sales and inventory.
Vikram Somaya, Chief Data Analytics Officer at PepsiCo said, “ We’re uncovering insights that can provide breakthroughs that ultimately allow us to bring more value to the consumer and make our associates’ work easier.”
Here are some of the innovations at PepsiCo using predictive and data analytics.
Real-time Updates About Food
It takes only a few minutes for the fresh food to get stale. Through predicted data, it becomes possible to deliver the food faster, track the shipment, and check and set the temperature at which the food can/is stored. The renowned food and beverage company incorporates the usage of bluetooth-enabled sensors that can actually pinpoint the shipping location. Through the predicted data, it enables the company to understand where the resources are located, what’s in the demand, and how to be more efficient in the entire supply chain process. This entire process helps the company in saving fuel, minimize the waste and stay updated with the customer demands.
Pepviz - A Data Practice
PepsiCo wanted to understand the customer's shopping process. How do store owners know which product is in demand and which is gathering dust on the shelves? For this it becomes essential to gather data through the advanced technologies like artificial intelligence, predictive and data analytics. Through the defined algorithms, it will give suggestions on what the customer is likely to add solely based on the previous clicks. PepsiCo developed Pepviz, a data practice that utilizes predictive analytics and industry experts to recognize the growth potential and align inventory management as per customer demands.
By using Pepviz, PepsiCo is making an impact on the shoppers.
Consumer Insights
As per the IDC, 77% of brands believe that customer experience and insights can break or build the brand. Pepviz gives consumer-centric insights to keep up with increasing demand. The usage of predictive analytics will forecast what products should remain on the shelves. Failing to understand the product demand will ultimately lead to overstocking the inventory and not meeting the customer expectations.
Identifying Local Requirements
For the suppliers, Pepviz acts as a biggest strength as it understands the requirements of location specific customers. The store owners are able to check whether the savory flavors are working well or not. They can also receive a custom plan using the analytics to get the desired results that are location specific and line up the products in the inventory.
4. Automation in Inventory Management System
Intelligent Automation in inventory management will automate a range of inventory processes like tracking the stock levels, repurchasing the stocks, and preserving the warehouse inventory, especially during crises. Businesses of all shapes and sizes can opt for automated inventory management software that is tailored to their specific needs. As per MHI and Deloitte's launch 2023 Annual Industry Report survey, automation in inventory and supply chain tops 80% of usage in the last five years.
With an automated inventory management system, companies can merge their existing accounting, POS systems, and other crucial systems into one for real-time access. This also guides in making informed decisions regarding the stock levels and boosts scalability. A reliable automated inventory management software is Orderhive, which automates tasks and guides you in widening the eCommerce space.
Businesses who have been following the traditional methods of spreadsheets or performing ABC analysis for arranging the products in the warehouse for inventory management might question - is it totally worth it in investing in an automated solution?
Let’s understand how an automated inventory management system offers value over the manual ones.
a. Scaling Business Hassle-free
As the business continues to expand so will the complexities arise. An automated system will put the data at one place and make it hassle free for you to scale the business. Through a centralized and automated inventory system, there are fewer chances for the breach of confidential information. Hence the data remains secure and safe on the cloud. Additionally it also mitigates the requirement of hiring a professional to manage the software.
b. Saving Valuable Resources - Time & Money
An automated backed inventory management will give you back your time and money by automating the processes. For instance, if you are running low on the product, then the system will signal in real-time and even send a reorder if scheduled for the inventory management. This saves time otherwise done by manually checking the stock levels or even requesting to fill up the orders.
Physical counts in the inventory can be error-prone and time consuming. However, an automated system comes in with built-in reporting capabilities that will maintain the record of each and every product. If a customer acquires a product, then the software will automatically update the number in the inventory. The only time a physical check-ins might be required is if there’s a discrepancy related to it or even yearly audits.
PS - Say goodbye to the Excel Spreadsheets. All thanks to automated inventory management software.
c. Data Driven Decisions Over Gut Feelings
You cannot work out a business based on gut feelings. One needs to have a solid stance on data, statistics, numbers, and other market insights for decisions. An automated system will present you with accurate information that will help you in taking informed decisions regarding the inventory.
Let’s consider that you are trying to launch a new product line. Now as enticing the idea sounds, if it has not retained the success in the market, it is futile. Without a proper data foundation or the insights from the past sales, the product might not serve to the expectations of the customers. Here’s where an automated inventory management system helps you with apt insights whether to take plunge in the market or not.
d. Merging Online & Physical Sales
In today’s eCommerce marketplace, brands need to diversify their sales stream. This means to utilize different platforms like Amazon, Etsy, eBay or even investing in a personal website, brick and mortar stores.
Now, the real struggle arises when these vendors will have different reporting systems across the inventory and sales channels. Combining the sales number manually with the main sales point can be error-prone and time-consuming.
By bringing in an automated inventory management system within your sales channels will stir transparency and real-time sales insights. It also predicts which platform sells products the most. This way it becomes easy to supply the inventory to the physical and online stores with accurate stock information. According to Gartner, machine automation will double in the next five years.
Brand That Follows Automation in Inventory Management - Walmart
Walmart is one of the largest and renowned retailers in the world. There are many reasons for the MNC to be successful in the competitive market. What really connects the customers with Walmart is how an individual can buy from high-end items to products as low as $5. Alongside, sheer brilliance involved in managing the inventory and warehouse through the latest technology brings a harmonious experience for the customers.
Walmart has been expanding through multiple chain locations in 20+ different locations. Over the years, the company’s inventory management, warehouse management, and few other capabilities have advanced to a next level by giving a competitive edge to Amazon, eBay, and Target. So, how does the retail giant has continued to thrive against all odds?
Recently Walmart stated that by the end of Fiscal Year 2026, Walmart believes roughly 65% of stores will be serviced by automation, approximately 55% of the fulfillment center volume will move through automated facilities, and unit cost averages could improve by approximately 20%.
Tech-Powered Omnichannel Retailer
Walmart has been automating the supply chain process to improve the customer experience and increase the productivity of the associates. Through the automated inventory management system, there’s an increased storage capacity which permits the distribution to run more efficiently and reach at a higher delivery speed. It also preserves the in-stock inventory accurately irrespective of whether the customer shops from stores, online or have a pickup delivery. As the automated inventory management system is implemented across different facilities, one noticeable outcome is there’s less physical labor involved for the workers.
Expanding Regional Distribution Centers
Walmart, has reportedly partnered with Alert Innovation for the automation of the order fulfillment process. Through this partnership, Walmart is able to expand their regional distribution centers and reach a wider audience. The automation in order management software will also fasten the packaging of the order, smooth pickup and drop shipping process. This will eventually save time, financial resources and mitigate the supply chain disruptions.
Wrapping it Up
Inventory management was there years ago, and it is there now, and will be there in the future. But, the way we manage inventories have transformed, and the future will see better transformations. New, better, and reliable ideas will pave the way for great innovations. Technology is sure to help industries to remain competitive in the race. It is promoting how to deliver a better customer experience and provide the best products that will sustain them for years to come. As companies are embracing the new technologies, customers are enjoying better services. In the above blog, we have summed up some of the inventory management trends of 2023 and the repercussions of not utilizing them. If you are an organization who wants to make the best of emerging technology, reach out to us and check out the software directory to find the software that matches with your capabilities.
