Growing businesses have various sources of inventory that require receiving and sharing their ‘available-to-promise’ picture in real-time. As such, inventory management has become increasingly complex due to accessing information on a global scale. According to Forrester, omnichannel fulfillment is a high or top priority for 94% of retailers. To effectively manage costs and buyer needs, companies must address the basic issue of tracking quantities of supply and demand at both physical locations and ecommerce sites to ensure that the inventory pictures are in sync. Ultimately, this a much larger network than what traditional inventory management systems were designed to track and manage.

Identify the inventory pain points

It’s no longer just a B2C world where one seller is engaged with multiple customers. Instead, we’re seeing a B2B world amongst the broader supply chain where multiple inventory organizations need to share or connect inventory pictures with an intuitive, seamless user experience for configuration and modification. Sharing and receiving available-to-promise inventory with, and from, specific suppliers requires access control to reduce lead times and gain multi-enterprise visibility into each source of demand and supply.

As external partners read data from an inventory database, they need to understand how much of their inventory is still at the retailer so they can better plan their production. With accurate insights, they can use data to predict propensity to buy. This critical information supplements forecasts for future inventory needs based on historical sales, contextual information, and promotional plans. It allows key leads to plan inventory purchases from suppliers based on forecasts from demand planners and changing supply and demand. The top goal of planning inventory replenishment is having enough inventory to fulfill all customer orders, while minimizing excess stock on hand. Retailers can harness this information to understand how much inventory is needed to increase incremental sales opportunities.

Accuracy is equally important. When an organization runs a national marketing campaign, not having enough inventory safety stock can directly impact revenue, customer experience and even brand reputation. At the highest level, a control tower can help ensure the accuracy of, and provide visibility into, the performance of inventory across various channels, marketplaces, and sellers. This helps identify any anomalies (low performance) or issues (delayed supply, low inventory) that course correction can proactively adjust rather than react too late.

Although architecture to connect various solutions is an initial pressing issue for most companies, there’s a clear need to interact with inventory from a business standpoint in three ways. First, addressing the problem of having inaccurate or hidden information (clear visibility) since users need to constantly monitor supply, demand and inventory levels to identify potential inventory shortages and stale inventory. Second is being able to take action in real-time – saying ‘yes’ to the sale. Finally, applying AI insights to create inventory optimization and remove manual processes.

How AI helps optimize inventory management

1. Planning inventory replenishment – Fulfillment forecasting is particularly challenging in predicting demand — even more than supply. In order to predict allocation, data science is acritical application towards historical supply and demand because there are uncertainties and anomalies associated with each data set. Anomalies come from both supply and demand data since there will be unexpected fluctuations in each. This customer-behavior-centric model needs to consider not just where, but how and when, people want to receive their products.

By applying AI, inventory management solutions can improve store inventory levels by analyzing consumer fulfillment choices and shopping behaviors.

2. Estimated time to arrival – Knowing the quantity and location of available-to-promise inventory and where it resides is critical for businesses to meet and exceed customer expectations. Being able to communicate to customers the estimated time a product will arrive is increasingly valuable and necessary in this highly competitive age, with businesses like Amazon that can offer guaranteed delivery windows. There are countless inputs to improve the accuracy of these models and retailers must be able to simulate and drill into how each calculation was reached. This will help to ensure each fulfillment decision is aligned with the business’ priorities, whether it is cost or time.

3. Safety stock management – Businesses historically set a static quantity or percentage for their inventory levels. This means defining a minimum par that is reserved for walk-in sales and is not factored into e-commerce or other channels of fulfillment. With today’s ever-evolving consumer expectations, on top of omni-channel engagements, it is no longer enough to use generalized information. Stock levels need to dynamically shift to leverage and react to incoming demand. With automated re-balancing, tarnished brand loyalty from promising inventory to customers that cannot be delivered, or fear of overselling then over-purchasing inventory and leaving money on the table are two huge problems that can be tackled. Companies like REI use predictive rules to access in-store and warehouse inventory, going beyond linear, rules-based sourcing to meet seasonal customer and margin needs.

To achieve profitable omni-channel results, retailers need capabilities that can intelligently balance fulfillment costs against service to enhance return on investment, improve customer experience and increase repeat purchase behavior.


More from Manufacturing

10 manufacturing trends that are changing the industry

5 min read - Manufacturing has undergone a major digital transformation in the last few years, with technological advancements, evolving consumer demands and the COVID-19 pandemic serving as major catalysts for change. To maintain their competitiveness and overcome today’s challenges, manufacturers have had to make agility and adaptability top priorities. Here, we’ll discuss the major manufacturing trends that will change the industry in the coming year. 1. Digitalization and Industry 4.0 Digitalization has had a profound impact on the manufacturing sector, enabling businesses to…

The future of order management solutions: freedom of choice and flexibility

5 min read - In the wake of the pandemic and global supply chain issues, businesses have realized the importance of technology innovation to deliver truly superior retail customer experiences. But without real-time reliable views of inventory, shipments and automated order orchestration processes, retailers are unable to deliver on order promises. Businesses need robust order management solutions (OMS) that can drive customer satisfaction, increase fulfillment profitability and support new digital and in-person customer experiences. These solutions must enable businesses to pivot quickly to support…

The missing link: Why visibility is essential to creating a resilient supply chain

5 min read - Supply chain visibility has been the missing link since the shockwaves of 2020 rippled throughout the world and consumers felt the impacts of broad-based supply chain issues. But what does supply chain visibility mean? It’s generally defined as the trackability of parts, components or products in transit from the manufacturer to their destination—with the goal being to improve and strengthen the supply chain by making data visible, actionable and readily available to all stakeholders, including the customer. While it’s clear…

The future of fashion is fashionably transparent and sustainable

4 min read - Today’s shopper is eminently conscious and willing to pay a premium for sustainable, conscious fashion that helps make a positive contribution to the environment and promotes fair labor practices. Choosing a gorgeous dress in the perfect color and style is even more satisfying when it comes as a by-product of sustainable and well-intentioned production. In fact, Gen Z are not only poised to drive the momentum even further towards sustainable shopping, but they are also influencing older generations to similarly…