Managing inventory in 2019 has become an even more complex challenge according to our industry peers and PINC customers. In my past article titled “The High Cost of The One Percent Inventory Accuracy in Your Supply Chain”, I explored important challenges, costs associated to inventory management, and what one percent of inventory accuracy represents to your operation. In her new podcast, Lora Cecere of Supply Chain Insights provides expert advice on how to effectively manage inventory in today’s dynamic business environment. In the next paragraphs, I will try to summarize her key points and offer some insights.
Your customers want their shipments delivered in a day or less. Your suppliers expect you to stock up to meet those demands without their help. And your CFO is wondering why in the world inventory levels—and their associated costs—have been going through the roof lately. If this describes your current operational environment, you’re not alone. According to Supply Chain Insights’ Lora Cecere, total business inventory levels climbed to pre-recession levels between 2010 and 2018.
When presented with this data, one supply chain leader questioned how her company could be investing 1.7% of its total revenue on technology, but still not be able to improve its inventory management processes. Describing this scenario in a recent Straight Talk Supply Chain Insights podcast—and acknowledging that many companies are in the same boat right now—Cecere says there are some key reasons why inventory levels are higher than ever right now.
5 Reasons Why Your Inventory Levels are too High
Holding excess inventory may seem a logical solution to today’s fast-paced fulfillment environment. Customers are placing smaller orders and wanting them within a day (or less). Meeting these demands without having to over-stock requires a constant balancing act: lower inventory costs, guarantee delivery capability and maintain high levels of customer service.
Cecere says these five things hold companies back from achieving this balance, and shares her expertise on how organizations can do a better job in these areas:
When you couple these critical factors with the labor shortage, warehouse vacancy rates and the impact of tariff policy, managing inventory effectively will become an even more challenging activity in 2019 and beyond for everyone in the supply chain industry.
The Right Technology
Technology is a broad concept. It can mean a software system that requires manual entry, and it takes years to deploy or a handheld scanner that needs to be operated by a human that the attention span is less than a goldfish these days according to science. It can also mean a sophisticated robotics system that does a repetitive and manual activity way faster and more accurately than a human can do or systems that process information and share actionable data with other software without the need of any human interaction.
Having access to accurate inventory information and location in almost real-time is, in my opinion, a challenge that can only be solved by technology. As I mentioned in my last article, that’s precisely why digital inventory solutions are becoming so popular. These robotics solutions might not solve all the problems associated with inventory management, however, they allow companies, large and small, to apply autonomous drone technology and robotics, coupled with computer vision technology, artificial intelligence, RFID sensors, and cloud computing to improve accuracy significantly. Besides gaining an edge in understanding inventory levels and being able to move inventory faster throughout the supply chain, these companies are also creating safer working environments, redirecting their staff to handle high value activities and empowering their teams with rich information, which can then be revisited at any point and time and can be used to make better decisions.
I can guarantee you that the day when “robots take over the universe” isn’t coming anytime soon, but the idea of humans and robots working side by side is already coming to fruition in factories and on warehouse floors worldwide creating a true Bionic Supply Chain.