Technology
The Covid-19 pandemic and a string of geopolitical shocks forced nearly every business to take a hard look at how it manages inventory. The supply chain disruptions exposed weaknesses that older methods couldn't absorb. In response, companies across industries have adopted more advanced, more efficient ways to keep property inventory at the right levels. Here are 14 of the trends shaping that shift.
Key Takeaways
- Inventory management systems are becoming more spread out yet also more connected.
- Artificial intelligence, data analytics and cloud-based software are essential to modern inventory management.
- Trends are toward faster, more cost-efficient and more reliable supply chains and distribution networks.
What Is Inventory Management?
Inventory management is how businesses make sure they hold a steady stock of goods, whether those are supplies, finished products, or other assets the operation depends on.
Most successful owners and managers don't rely on a single approach. They combine several processes into a system that handles inventory level, location, pricing, logistics and supply chain factors at once. It's time-consuming work, and for manufacturers and enterprises it pulls in plenty of users and intermediaries along the way.
Why Are Inventory Models Important?
Inventory models are the frameworks businesses use to work out the most efficient way to hold the stock they need. There are many ways to maintain inventory levels, and no single one fits every situation.
A model helps you decide which method suits your circumstances, then squeeze the most efficiency out of it. Some of the models businesses commonly turn to:
| Just in Time (JIT) | Useful for minimizing storage and inventory overhead, but susceptible to supply chain disruptions and price changes. |
|---|---|
Day Sales of Inventory (DSI) | Useful for managing perishable goods and space in smaller retail outlets. |
| Materials Requirement Planning (MRP) | Useful for reliably sourcing manufacturing materials across complex supply chain processes. |
| Centralized Inventory Model (CIM) | Useful for controlling inventory levels and tracking movement of goods, in order to minimize shrinkage. |
| Economic Order Quantity (EOQ) | Useful for minimizing inventory costs, including order costs, shortage costs and holding costs. |
| Economic Production Quantity (EPQ) | Useful for managing costs and shrinkage in manufacturing and other production. |
Plenty of other models exist for specific situations, and technology keeps producing hybrids that borrow strengths from several at once.
Top 14 Trends in Inventory Management
1. Cloud Technology for Hybrid Work
The cloud makes inventory management more efficient. With a third party running the servers, and often the program updates too, businesses have far fewer IT headaches to track. The cloud also keeps inventory levels, purchases and other data in sync across supply chain, warehouse and store locations.
As cloud computing has matured, its use in inventory management has climbed steadily. The move to remote and hybrid work accelerated that adoption. An inventory management app is one of the simplest ways to sync inventory details across business sites and employees' homes.
The best inventory management software isn’t just compatible with the cloud, but is mostly or entirely cloud-based.
2. Internet of Things for Complete Connectivity
The internet of things (IoT) is one of the most consequential trends here. It extends cloud technology across every location. Computers talk to one another, but so does almost everything else on site. Scanners, loading bays, equipment, even the goods themselves can join a location's IoT network.
3. Artificial Intelligence/Machine Learning for Improvement
Artificial intelligence (AI) and machine learning (ML) keep getting better as the software learns more about a particular business's inventory system. They integrate inventory movement and levels across complex networks, and they flag the weaknesses that quietly drive up costs. AI/ML might reveal, for instance, that one product's packaging leads to above-average shipping damage rates.
The more IoT technology a business layers in, the more powerful AI and ML become, because every sensor feeds them more data to work with.
4. Data Analytics for Predictive Picking
Once enough data is recorded and analysed, that information can sharpen picking rates in the warehouse. Analysis shows which products customers tend to buy together, and which buyers exhibit particular behaviours.
Products that sell together can sit next to each other, so pickers cross fewer aisles. Sometimes you can even pick orders before they land. The payoff is twofold: faster picking and faster delivery.
Predictive picking leans on IoT, ML, and AI. As those three advance, more businesses will be in a position to attempt it.
5. Warehouse Automation for Labor Reduction
The more of a warehouse you automate, the less you spend on wages. In most cases, a robot costs less to maintain than an employee costs to pay.
Several forces are pushing automation forward. Advances in AI, ML and robotics open up more possibilities, and falling prices for equipment and software make them easier to reach. Rising wage rates only widen the potential savings.
6. AGVs and AMRs for Better Automation
Automation runs on equipment, and that equipment includes both automatic guided vehicles (AGVs) and autonomous mobile robots (AMRs). AGVs have worked warehouses for well over half a century and still earn their keep. AMRs go further than their predecessors ever could.
For deeper automation, both are indispensable.
7. Multi-Warehousing for Distribution
Distributed inventory management spreads stock across multiple sites within a region, a country, or the world. Holding supplies this way streamlines supply chain management geographically, and holding products closer to customers speeds up delivery. It's also easier to scale, grow, and handle emergencies.
Amazon built its fast-shipping reputation on exactly this, using many warehouses to cut transport costs along the way. Now that customers expect those delivery times everywhere, more businesses are following. The pandemic drove the point home: multiple locations are a buffer when a lockdown or natural disaster hits one region.
Multi-warehousing depends on the cloud, so it keeps getting more viable as cloud-based inventory software gets cheaper and more capable.
8. Third-Party Logistics for Affordability
Getting the most out of some inventory methods means buying specialized software, equipment, and warehouse layouts. Many small- and medium-sized businesses (SMBs) simply can't justify that outlay.
Outsourcing to a third-party logistics (3PL) provider sidesteps the capital investment entirely. The specialist already owns the resources and charges an ongoing fee that fits a tighter budget.
9. Smart Inventory Forecasting for Improved Purchasing
As AI and data analytics surface more detail about sourcing and sales, purchasing decisions get sharper. Smart forecasting lets businesses project how much inventory they'll need as conditions change, then hold the right amount.
10. Personalization for Better Anticipation
Personalization is where smart forecasting hits its peak. It nudges customers with product suggestions drawn from their past habits, and it sometimes pre-orders products based on what they're expected to buy next.
11. Safety Stock for Fluctuations
Safety stock is surplus inventory kept on purpose as a hedge. Also called buffer stock, it cushions a business against swings in production or sales.
If machinery fails or a supply chain stalls, that buffer keeps products selling and existing orders moving. If a demand spike drains normal stock, it keeps sales going while production ramps back up, so you don't miss the surge.
Some businesses have always treated safety stock as best practice. After the supply disruptions and demand swings of the Covid-19 waves, far more are seeing the case for buffer goods.
12. Sustainable and Resilient Supply Chains for Greater Dependability
Advances in cloud capabilities, AI, and IoT let information flow more freely across inventory management networks. Decentralizing tactics like multi-warehousing cut a business's dependence on any one region.
Together, these shifts make supply chains more sustainable and more resilient, both across industries and for individual companies.
13. Omnichannel Customer Service for Better Communication
Customers want to know where their orders stand, and they want a heads-up the moment something might slow delivery. Omnichannel customer service keeps them on the most current information available.
It does more than reach customers through whatever channel they prefer. It opens up supply chain, warehouse and distribution data, so customers are genuinely in the loop rather than just acknowledged.
Buyers have had plenty more questions since the pandemic, and many logistics services answered with exactly this. It's a change that's here to stay.
14. Investing in Inventory Managers for Improving
All this change lands on inventory managers, who have to keep pace with new technologies and methods. Since a manager's skill set directly affects the bottom line, many businesses are reinvesting in their people.
Courses, certifications, seminars and on-the-job training all give managers practical, results-driven steps for running the inventory process well.
Improve Your Asset and Inventory Management With ToolSense
Looking for software that keeps pace with these technologies and trends? ToolSense is a brand-independent asset and inventory management software solution built around many of the trends covered above.
It gives you what you need to reduce downtime, lower equipment maintenance and replacement costs, cut labour hours, and improve order fulfilment. Put IoT data, QR codes, reports and more to work for efficient, modern inventory management. Managing inventory well has always mattered, and as the technology advances, companies have more ways than ever to turn these insights into a competitive edge.
FAQ
What Are the Latest Trends in Inventory Management?
Emerging trends in inventory management largely focus on incorporating new technologies and mitigating supply chain disruption risks. Technologies such as cloud computing, artificial intelligence, machine learning, internet of things, and data analytics are all used to better maintain inventory levels. The most advanced methods go so far as to predict what inventory will be needed based on past demand and consumer habits. Methods such as safety stock and multi-warehousing have long been used in certain situations. More businesses are adopting these, as the Covid-19 pandemic and geopolitical situations have shown that even UK supply chains can be significantly disrupted.
What Are the Four Types of Inventory?
Which inventory management methods work best for a business depends partly on what inventory the business has. The four types of inventory are raw materials, works-in-progress, finished goods, and maintenance, repair and operations (MRO) goods.
What Are the Three Major Inventory Management Techniques?
While there are many different types of inventory management techniques, most rely on one of the three major ones in some way. The three major techniques are just-in-time (JIT), economic order quantity (EOQ) and materials requirements planning (MRP).
What Is the Future of Inventory Management?
The future of inventory management continues to evolve. Advancements are making systems more automated, more efficient, faster, and more connected even as they’re increasingly spread out.
