Online businesses must manage their supply chains efficiently to maintain a competitive edge in the face of globalization and technological advancement. Companies now consider AI inventory management more due to the variety of client demands, international competitiveness, and market competition.
There is an urgent need to improve inventory management as we emerge from a supply chain crisis that has had a global impact for over two years. Artificial intelligence (AI) is now a tool and solution for many businesses.
In the next 20 years, new AI technology is predicted to boost the global economy by $1.3 trillion by improving the efficiency of the supply chain. The projected increase in global spending in the sector grew from $1.67 billion in 2018 to $12.44 billion in 2024.
eCommerce companies must deal with the fundamental problem of managing supply and demand levels at both physical locations and fulfillment sites. Logistics managers must ensure the inventory are in sync to manage expenses and customer needs effectively. Today, we have a network that is much bigger than what traditional inventory management systems intended to monitor and control.
Inventory management is the practice of keeping track of inventories in a business. This includes the acquisition, production, storage, and consumption of goods. Inventory control keeps track of them from their origin to your warehouse and beyond.
This process is regulated by inventory management software, letting you monitor and track inventory levels, orders, sales, delivery, and receiving. Purchase orders, bills of materials, and other production-related papers can be produced using inventory management technologies.
Shipping products to customers is simply one aspect of inventory management. Instead, the goods are ready before customers place orders. But doing this necessitates extraordinarily accurate forecasting. But understocking results in shortages and disappointed customers, while overstocking results in lost revenue.
Businesses benefit from AI software’s ability to predict consumer demand for particular goods precisely. Additionally, when it monitors inventory, the software responds to shifting trends and considers seasonal variations and regional demand. Algorithms can reliably predict whether products will fly off the shelves or spend time in the back room by analyzing sales in the industry.
Five Ways AI Inventory Management Can Help Your Business
Due to the development of data-driven manufacturing and distribution facilities, AI inventory management software has significantly enhanced processes. Compared to conventional human approaches, AI is revolutionary because of its ability to comprehend real-time inventory control dynamics that impact inventory stock levels. AI is capable of scenario prediction, solutions recommendation, and even action plan implementation.
Computers constantly work with vast volumes of data in transport vehicles, cash registers, cargo ships, and warehouses.
When AI is used in inventory management, it doesn’t mean that only robots do all the work. AI also comprises devices that learn. These devices have software to analyze complex circumstances using logical reasoning and advanced analysis methods. They interact with other computer systems, use clever algorithms, assess situations, and create solutions. They plan, choose a course of action, and execute it.
1. Hassle-free Demand Forecasting
AI inventory management systems can identify demand trends. They can use this information to estimate demand more precisely and optimize warehouse replenishment schedules.
Real-time data-based artificial intelligence inventory management offers improved and immediate forecasting. Internal and external sources can be used to gather this information. Demographics, the weather, online comments, reviews, and social media included.
Businesses adopting AI in inventory management should outperform those using manual processes and human data analysts by using external data and machine learning algorithms.
Reports say firms can decrease supply chain errors by 30 to 40% when AI supports demand forecasting. Businesses will always need to deal with rapidly changing consumer demand. By avoiding inaccurate stock counts and having timely forecasting with AI, merchants can see a decrease in missed sales.
2. Automatic Product Procurement
Every manufacturing company needs a complex and effective procurement procedure. However, the sheer volume of required paperwork and communication with vendors overwhelms any human employee. Dealing with too many things can result in errors and inefficiency.
Artificial intelligence can automate procedures such as getting the best quotations and moving items through the supply chain. A recent McKinsey analysis said that businesses that employ AI in their procurement process claimed a 35% to 65% improvement in inventory and service levels. AI even helped reduce logistical costs by 15%.
3. Improved Productivity Through Algorithms
Artificial intelligence is quickly becoming a crucial component of everyday business operations. AI algorithms, for instance, can manage and supervise labor, reducing the need for human employees to perform menial, repetitive activities. As a result, productivity increases, and resources are used more effectively. With less time spent on time-consuming tasks, lead times, quantities, and operational inefficiencies are better tracked.
4. Better Safety Stock Management
Businesses in the modern market must dynamically adjust their stock levels to leverage and respond to incoming demand. Managers will want sophisticated systems that can balance fulfillment costs against service demands. Data from these systems can improve customer experiences, boost return on investment, and promote repeat purchase behavior. Doing so helps achieve profitable results across all your fulfillment channels.
AI in safety stock management can also help prevent inventory problems, including overselling and over-purchasing inventory. Accurate stocks can prevent promising customers things that cannot be fulfilled. AI can also provide information you need to avoid overstocking on “unpopular” commodities.
5. Lower Storage and Shipping Costs
Poor inventory management can cost businesses more than $82 billion in lost revenue annually. However, they may significantly reduce operational expenses and boost cash flow by utilizing AI tools to enhance inventory management.
AI inventory management solutions can assist in prioritizing crucial procedures to clear bottlenecks and satisfy constantly shifting consumer requests. It can even reduce expensive hazards. As a result, there will be a significant decrease in costly rental storage expenses, disgruntled consumers due to inventory shortages, and unsold goods. AI can also help you expand your product line and inventory with little to no additional cost.
Top Features of AI Inventory Management
At every stage, business processes can be improved with the use of artificial intelligence. By incorporating AI into procedures like item-level tagging in inventory management, inventory accuracy can be improved.
AI and other automated data science tools can never fully replace the strategic insight and in-depth understanding that decision-makers have. However, these technologies will strengthen their resolve to move forward with new initiatives in the future. In other words, AI will become more prominent in the future. But each company must decide where it fits in their logistics processes.
Data Mining and Processing
AI can examine client data and turn it into insightful knowledge that might help a company react to particular trends. AI systems can advise a business to overstock or understock specific products. These decisions could increase sales and lower the danger of dead stock. The AI does this by assessing many characteristics, such as trending topics, global events, or other things that could increase demand for a specific product.
Controlling Warehouse Robots
More warehouses are incorporating the use of automated robots into their day-to-day operations. AI makes the integration and operations of these machines a simple task. They can be programmed to take efficient routes while automatically locating items for shipping out.
AI robots use scanners that help them see and understand their environments. Autonomous Mobile Robots (AMRs) can quickly sort through warehouse bins and inspect items using RFID scanning technology, doing the work much faster.
Stocking Management and Delivery
Additionally, factory-to-warehouse and warehouse-to-client transportation can be made more efficient using AI inventory management systems. Streamlined processes result in on-time deliveries and higher customer satisfaction. These tools can also evaluate a company’s distribution procedures and recommend enhancements.
Additionally, factory-to-warehouse and warehouse-to-client transportation can be made more efficient with the use of AI inventory management systems. Streamlined processes result in on-time deliveries and higher customer satisfaction. These tools can also evaluate a company’s distribution procedures and make recommendations for enhancements.
eCommerce businesses can gain a competitive edge and ensure long-term growth by utilizing AI solutions throughout their supply chain. Automating tedious activities and providing insightful data can make inventory management easier for retail, warehouse, and logistics companies.
AI-powered techniques will become necessary as online merchants expand to enhance inventories and ensure sustainable scaling. Using AI will be crucial to your company’s success, along with a solid cloud to safeguard your data and swiftly spin up workloads. The earlier you implement AI inventory management, the sooner you can gain an advantage over the competition.
ZhenHub simplifies your logistics operations through the use of several AI-powered technologies. Built for eCommerce businesses, acquire complete control and visibility over your inventory with our online dashboard. Gain access to real-time insights when you sign-up for free at our website.