As a tech professional, you are laser-focused on keeping your company's network infrastructure working to optimal capacity. You also must consider the types of technology to leverage in operations to improve productivity while lowering costs. Supply chain optimization can leverage a range of tech to help track and monitor inventory levels. Yet keeping up with changing technology has become a challenge with retailers.
Roughly 46% of small businesses still do not use an automated system. Further, only 18% of small and midsize businesses had an inventory management system in 2020.
As consumer demand rises, and with customers having more ways to make purchases, your present technology may find itself struggling to keep the right inventory levels on warehouse shelves. Having an optimized warehouse could have a 20% to 50% impact on supply chain costs. It also helps avoid some of the common problems that could eat into potential profits.
Too much inventory
When you are not using effective inventory management technology, it becomes harder to understand the changes resulting from customer demand. Products that you believe will remain hot for the foreseeable future suddenly are not moving as fast from shelves. Inventory turnover rates plummet, as the products sit on shelves in boxes for weeks and months.
The company also starts to spend unnecessary capital that goes toward carrying costs to house the unmoving inventory. The excess inventory prevents you from obtaining new products that may be in demand due to a lack of storage capacity. As you hold onto the inventory longer, it starts to lose its value over time. The company may end up having to drastically mark down the prices just to get inventory out of the warehouse. In other scenarios, you may donate or dispose of the products at a loss in profits.
When you use technology to track inventory and customer purchase history, you have a greater snapshot regarding possible market buying trends. The warehouse management understands and can better predict demand to tweak the number of products ordered from the manufacturer. Also, workers may better track inventory when it arrives at the warehouse docks.
Too little inventory
On the other hand, without an inventory management system, you may end up having little inventory to meet customer demand. Not being able to track inventory from when it leaves the manufacturer to when it arrives at your warehouse leaves sales teams second-guessing when the orders will arrive. This problem leads to disgruntled and angry customers.
Missing sales opportunities will likely have a significant impact on your operations. Customers may go to competitors that will fill their orders, while the customers leave negative reviews about your company. The resulting PR nightmare may impact your reputation for the long term. Unfortunately, if the problem lies with the manufacturer running out of materials, the warehouse may simply have to wait until it works out issues with the supplier.
When it comes to an inventory management system, it allows you to better understand inventory levels during supply change shortages. You can adjust inventory amounts to have enough supplies to fill orders until the manufacturer can build up its production levels. Another advantage involves using this technology to search for additional suppliers that can send products immediately to help fill orders.
Technology available for Inventory Management Systems
Inventory management technology may involve a wide range of internal network systems, versatile warehouse dashboards, and personal handheld devices. The features may also provide varying benefits. They could allow for greater visibility and automation through barcode scanning options that update warehouse records in real-time or provide report generation for better demand forecasting. Workers and processes may boost productivity levels.
These tools and resources allow for more balanced inventory levels during hot sales periods and during the times when sales are slow. You can better control warehouse overhead costs so working capital can now be invested in the best places in operations.
A successful system should focus on allowing you to monitor the warehouse and supply chain's daily performance, inventory turnover rates, customer transaction history, and production rates. In this manner, the company may be able to discover inefficiencies in warehouse performance as well as ways to reduce costs that are better for its bottom line.
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