Designing the supply chain capabilities to reduce the requirement for inventory is the first step in achieving the greatest amount of enterprise value. Inventory control is essential for managing the residual stockpiles of inventory and ensuring that the supply chain moves at the pace of international trade once this strategic job is finished. The fast use of automation and machine learning is the most significant trend in inventory management systems & importance of inventory management, as it is in many other sectors.
Inventory managers have an overwhelming amount of data to sort through since data is collected at every stage of a global supply chain. Only when you can evaluate the data and apply it for inventory optimization does it become useful for the supply chain management.
AI is widely used in inventory management systems to fully use large data. You can quickly make modifications to keep your supply chain flowing by analysing patterns in your logistics, raw material, and warehouse operations in close to real-time. Using predictive analytics to identify tomorrow’s trends today, big data can even grant you the ability to look into the future.
Despite these improvements in contemporary supply chain management, inventory control is nonetheless made more difficult by global supply networks. In light of this, effective inventory management is essential for supply chain strategies.
Companies need to do a better job emphasising the discipline’s value given the logistical and financial difficulties encountered over the previous year. Thankfully, efforts to use big data, AI, and machine learning are boosting inventory management solutions that let supply chain managers meet rising production and fulfilment demands quickly.
The COVID-19 pandemic’s irregular demand fluctuation dispelled any qualms the globe had regarding the value of a responsive and adaptable supply chain. Today’s supply chains need to be quick and flexible in order to provide benchmark inventory management capabilities where it is necessary. Careers in global supply chain management are more sought-after than ever.
Professionals with sophisticated inventory management skills have fantastic job opportunities. Even if inventory management is not your area of expertise, you may develop the abilities you need to wow potential employers with supply chain management.
Why Inventory Management Skills Are Important in Supply Chains
Although it is essential, inventory management is a frequently disregarded aspect of supply chain management. Experience with inventory management is one of a prospective supply chain manager’s key abilities. Companies should look for a supply chain manager with strong inventory management skills for the following reasons: Poor inventory control may have an impact on the entire business and have a negative financial impact.
For instance, the institution’s ability to deliver medical services would be significantly damaged if a supply chain manager for a hospital chain failed to ensure enough inventory of a vital medical commodity, such as syringes or personal protective equipment (PPE).
A substantial inventory management issue might also arise from having too much inventory. Overordering costs money makes managing the warehouse more difficult and poses the risk of a loss if the organisation cannot utilise or sell an old or expired good.
Consider a scenario where a supply chain manager for a clothes company neglects to carefully track client demand. If that happens, the business can find itself with unsold inventory from a previous season. The overabundance of discounted products might hurt the brand’s reputation with customers and have a major negative influence on its profit margins if the firm sells these things on the discount market to recover part of its expenditures.
By maintaining a consistent inventory flow, effective inventory management, on the other hand, may increase profitability, improve supply chain visibility, and improve operations. For supply chain management in the modern era, inventory optimization is the gold standard.
Risks of Inventory Management for Supply Chain Managers
- Poor forecasting of inventories: There is no such thing as a flawless prediction, but if you don’t have any knowledge of how your supply chain’s inventory is controlled, it’s very difficult to match supply and demand for your products.
Supply chain managers must solve the problems of inventory waste and liquidity by utilising contemporary SKU monitoring and paying close attention to data from retail partners and distributors.
- Driving sales and distribution throughout the product’s shelf life: The shelf life and expiry of vaccinations were among the top supply chain challenges that businesses, governments, and consumers were thinking about. States rushed to increase awareness and made significant investments to get vaccinations into the hands of the populace, yet there is still a sizable amount of product waste.
The bottom line spending is the main concern in the conventional approach to supply. We were concerned about the opportunity cost of not spreading the sickness in this instance as well.
- Carrying expenses since there aren’t enough warehouses: Although brick and mortar stores have faced considerable difficulties over the last year, the growth of e-commerce has continued to boost product demand across industries.
There is a massive grab for real estate.
This implies that governments will be under more pressure to rezone land or provide permits for further building, which isn’t happening soon enough. A scarcity of inventory storage space might result in higher costs owing to peak demand, thus it is crucial—possibly more so than ever—to maintain the flow of product from the warehouses to the final consumer.
Inventory Management Components
Long before the items ever enter the warehouse, inventory management begins. Let’s examine the components of effective inventory management for businesses that employ qualified individuals with a broad education in supply chain management.
- Inventory management: Think of inventory optimization as the process of balancing inventory depending on demand: ordering exactly the right quantity rather than too much or too little. Utilizing a dynamic inventory management approach can help you find the sweet spot with the appropriate inventory amount for each item you stock.
The visibility of the supply chain from raw materials to sales data is necessary for an optimal inventory management system. It necessitates flexible supply chain planning that can react immediately to shifts in consumer demand or disruptions in your worldwide logistics operations.
It will be your job as the supply chain manager to continually recalculate the ideal inventory levels to satisfy client demand. One of the things that make supply chain management such an intriguing profession is the fluid nature of inventory management.
- Management of transportation: Management of transportation and inventory are interdependent. Your supply chain’s transportation component generally moves goods from the production to the fulfilment facility or distribution hub. Because a transport delay may destabilise a carefully organised global supply chain, proactive and aggressive transportation management is essential to just-in-time supply chain management.
Maintaining insight into your logistics operations, developing repeatable transportation processes, and being prepared to quickly pivot in order to sustain inventory flow are all part of your duties as a supply chain manager.
- Management of the warehouse: Distribution, fulfilment, and storage are all included in warehouse management. Customer satisfaction depends on choosing the right warehouse sites to match customer demands for quick delivery and making sure that fulfilment processes go smoothly.
Effective warehouse management enhances inventory visibility and reduces loss from theft or damage. Instead of assuming that transportation specialists can deliver the calibre of fulfilment services your firm requires without sufficient control, it is crucial to incorporate your storage operations in your supply chain visibility.