Technologies in inventory management help get a competitive advantage by optimizing the use of resources, increasing customer satisfaction, conducting detailed analysis, and minimizing losses. Therefore, 88% of retailers plan to upgrade their inventory by integrating new-age digital solutions like live-time tracking, detailed analytics, and data-driven demand forecasts.
In the post below, you will discover how emerging technologies in inventory management help optimize warehousing and improve customer experience. Also, you will learn more about essential and advanced inventory management technologies to adopt.
WHAT IS INVENTORY MANAGEMENT
Inventory management is a complicated process that needs to keep the correct number of items in a warehouse to avoid product shortage or oversupply. Moreover, it's required to manage all the processes effectively to deliver items fast to overcome competitors and keep recurring clients.
Usually, businesses use warehouse management systems to keep track of their inventory. Digital WMSs are advanced enterprise resource planning (ERP) solutions.
The role of technologies in inventory management and supply chain is vital. Inventory management features help companies that operate in the logistics niche achieve the following:
- Optimized resources usage
- Enhanced customers satisfaction
- Automated inventory management
- Data-driven analytics
- Reduced product delivery time
- Lowered operational expenses
- Minimized fraud and theft
Many types of inventory management techniques are applied to track all items and maintain a consistent supply chain. The top three are the following:
- Push strategy – Items are delivered from a manufacturer to a warehouse. To not run out of stock, retailers need to forecast the approximate number of products to store.
- Pull strategy – A store or warehouse requests products from suppliers when clients order them. Usually, this technique is applied to custom or expensive items.
- Just-in-Time (JIT) strategy – A warehouse stores the minimum number of items. All extra requests get processed by applying the pull strategy, which may cause delivery delays.
Nevertheless, there are also other inventory management strategies:
- Dropshipping – Product management and shipment are delegated to a third-party company that has a large warehouse.
- Bulk shipment – Products get purchased in bulk to avoid shortage and get a discount.
- Cross-docking – Items get sorted and shipped simultaneously after being delivered to a warehouse. The strategy eliminates the need to hold products.
- Consignment – A supplier delivers a certain number of products without upfront payments. A retailer pays for products only when they are sold to customers.
- Cycle counting – A small variety of items get counted on certain days. It helps monitor the number of different product groups left effectively.
STATISTICS ON ADOPTION OF TECHNOLOGIES IN INVENTORY MANAGEMENT
Indeed, modern technologies help optimize inventory management and make it more efficient. Let's take a deeper dive into the statistics to discover the benefits of information technologies in inventory management for business.
- 10% of cost reduction – Businesses can cut expenses by eliminating stock-outs and overstocks with the help of smart data analysis and accurate forecasts
- 57% of responders use inventory management systems – Less than half of small companies don't monitor their inventory or apply the manual management approach instead
- 88% of retailers plan to upgrade – Most supply chain managers don't want to lose a competitive advantage brought by modern technologies and plan to enhance their warehouses
- 37% of businesses monitor performance – Roughly a third of businesses are concerned about the performance of their warehouses and monitor them constantly to spend resources wisely
- 73% of warehouses plan to adopt mobile devices – Most businesses want to use logistics software installed on mobile devices to facilitate inventory management
ESSENTIAL TECHNOLOGIES USED IN INVENTORY MANAGEMENT
It's impossible to underestimate the important role of technologies in inventory management and warehouse maintenance. They help facilitate the process of goods ordering, storing, and shipping. Some of them have been widely used by businesses for many years.
Warehouse Management Software
These days, most digital solutions have the form of warehouse management software (WMS). It is a kind of information technology in inventory management with many features for seamless item ordering, storing, and shipping. It helps get rid of the need to use paper spreadsheets to keep track of every action.
Warehouse management software can be custom or ready-made. Also, a digital solution can be on-premises or cloud-based. It can have a lot of different features aimed to solve several problems of businesses.
The key features of a warehouse management system are the following:
1. Import and export of items
Indeed, an inventory management system should provide the opportunity to add products to a database manually. However, it should also be capable of importing and exporting many items to a database using a comma-separated values (CSV) file.
2. Inventory information
It is an essential feature for WMSs to track all the items. Data can be entered and updated manually or automatically. Inventory information can imply a lot of details like stock keeping unit (SKU) codes, name, availability, number of items, size, price, image, arrival date, etc.
3. Order fulfillment
A WMS needs to store information about clients and other crucial details to deliver goods fast. It helps properly organize reserving to speed-up cargo loading and shipping. Besides, the order fulfillment functionality helps manage returns.
4. Real-time tracking
It's vital to get accurate information on items stored in a warehouse. Real-time inventory tracking can help monitor all the processes efficiently and update them effectively upon the need. Real-time data facilitates warehouse management because managers can monitor all the processes remotely from one place.
The proper use of technologies in inventory management can help consume data conveniently. Moreover, a dashboard can be configured for different roles. Consequently, various users get access to insights arranged in different order to facilitate every user's work.
6. Picking and packing options
A warehouse management system should provide detailed information on the types of items and how they need to be packed. For instance, fragile or expensive tech items must be packed well to be safely delivered. Moreover, a WMS needs to comprise information on how a customer will pick up a delivery.
7. Billing and invoicing
A WMS should have the billing and invoicing functionality to send quotes, receive invoices, and manage all payments. Also, it should hold information about all the transactions securely.
8. Labor management
To run warehousing processes smoothly, a WMS should be capable of assigning tasks to workers. Also, it needs to help track the performance of employees with the help of key performance indicators (KPIs).
A WMS should have the reporting feature to get valuable insights on warehouse performance. A system needs to analyze large amounts of raw data gathered about a warehouse using custom algorithms to help businesses get detailed reports and data-driven forecasts.
Developers and businesses constantly come up with innovative ideas for inventory management systems, so they build a large assortment of useful features for efficient supply chain management. Therefore, you can develop a system that has a lot of useful and custom-designed features to facilitate warehouse management.
Barcodes are one of the most popular types of technologies in inventory management because they help make item tracking less time-consuming. A barcode is an image that helps assign a unique value that holds certain information to any item. Since a barcode is unique and can be scanned in less than a second, the system helps facilitate inventory management significantly.
Businesses can create custom barcodes that contain the required information and print them to facilitate inventory management. There are two types of barcodes:
It is the most widespread type of barcode that has been used since 1951. It is a one-dimensional type of barcode that has the form of vertical lines arranged in a certain order. Moreover, it implies digits for manual barcode input.
Different kinds of linear barcodes can hold various amounts of data. The most common information types that a linear barcode can keep are the following:
- SKU number
- Manufacturing and expiry date
- Manufacturer's name
It is an upgraded type of barcode that was introduced in 1994. The most popular type of matrix barcode is the Quick Response (QR) code. It is a two-dimensional type of barcode that can hold more information than linear barcodes. Nevertheless, it has additional benefits that are the following:
- 360-degree scanning
- Low background contrast requirements
- Automatic error correction
- Any scanning distance
QR codes are one of the most popular types of matrix barcodes. They get divided into two types:
- Static – A code cannot be changed once it is printed. Users get the same information when scanning a static QR code.
- Dynamic – A QR code contains a link that leads a user to a certain resource. Information fetched from an external resource can be updated, which is convenient for real-time tracking and more efficient inventory management.
The most common type of data that a matrix barcode can hold are:
- SKU number
- Text data
Barcodes can be read by scanners or mobile apps that use the devices' cameras. Also, managers can input the digits from linear barcodes to WMSs if there is no option to use a scanner.
Radio-frequency identification (RFID) is a technology that helps enhance inventory management by using radio waves. Every item gets a unique RFID tag that stores data and can be easily scanned.
This wireless technology helps increase productivity because many tags can be read automatically. Therefore, the use of radio-frequency identification tags is one of the top trends in inventory management because of real-time tracking and fast information update.
The technology needs a business to install an antenna, reader, and RFID tags on assets. The system foresees the opportunity to write information to chips and read it wirelessly. The minimum distance to a chip may vary from a few to thirty feet. There are two types of RFID chips:
- Active – An expensive and less popular type of RFID tag that requires a source of energy to transmit radio waves.
- Passive – Radio waves transmitted by an antenna generate current in a tag, so it can receive, update, and send information. It is the most popular type of RFID tag.
The data that can be updated facilitates real-time tracking. It is worth noting that the serial number of RFID tags is the only information that cannot be updated.
RFID technology helps find a product in a warehouse quickly because all the information about moving assets can be tracked and stored in a database. An RFID tag can store up to 2 kilobytes (KBs) of data. The most common data types that an RFID tag holds are the following:
- Serial RFID tag's number
- SKU number
- Serial product's number
Internet of Things
The Internet of things (IoT) is a concept of developing systems capable of connecting different types of devices. Various technologies integrated into one system can facilitate inventory management and warehouse monitoring by gathering different information types in one place.
The variety of IoT devices is wide. Most have the "smart" prefix to highlight the devices' capabilities of transmitting data over a network and being managed remotely by people or other digital systems.
The most popular types of IoT technologies used in the logistics industry are:
- Smart sensors
- GPS trackers
- RFID tags
- Smart cameras
- Smart HVAC systems
- Smart controllers
The implication of IoT technologies like smart sensors and controllers helps automate a lot of processes and improve management. For instance, IoT devices can measure the temperature or moisture in a warehouse and adjust the HVAC system to keep the required condition automatically.
The light fidelity (LiFi) technology is an alternative to a WiFi network. The technology uses sources of light and sensors to transmit information. It offers the opportunity to connect more devices into one system.
The light source is generated by LED bulbs that update the frequency to transmit data in the form of light. The frequency changes are not visible to the human eye. It is widely used for building warehouse networks because this technology can connect many types of devices without any issues. Also, the technology is applied for 3D positioning for robots.
ADVANCED TECHNOLOGIES USED IN INVENTORY MANAGEMENT
The logistics niche constantly adopts new technologies to enhance inventory management and cargo delivery. Industry-leading companies commonly adopt top-tier technologies and shape the future of inventory management.
Artificial Intelligence and Machine Learning
Artificial intelligence (AI) and machine learning (ML) are the leading technologies that can process a large amount of data and perform some human-like actions. AI can recognize the speech or analyze videos captured by cameras. Machine learning can identify patterns in the supply chain to automate labor force and assets management. For instance, it can analyze workers' behavior or wrong item placement.
However, in most cases, the technologies are used for analyzing data and getting valuable insights. AI helps get data-driven demand forecasts and predictive planning. The report prepared by McKinsey & Co states that AI-enabled supply-chain management can help cut logistics costs by 15%.
Automated Picking Tools
Enterprise-grade businesses that need to manage an enormous number of items in their warehouses integrate automated picking tools. Such systems use robotic manipulators, barcodes, or RFID tags to pick all the assets automatically. The technology helps reduce operating costs, enhance productivity, and minimize human error chance.
Automated Guided Vehicles
Automated guided vehicles (AGVs) are usually small devices that help move items in a warehouse from one location to another. It is an advanced technology that helps replace the need to have a lot of vehicles and drivers to move assets in a warehouse. AGVs work autonomously and can perform monotonous tasks 24/7. They navigate using floor stickers, LiFi technology, vision cameras, or wires.
Blockchain is a great technology that is used in many industries. It has become trendy in the financial sector because the distributed data management approach helps make secure and transparent transactions.
The adoption of blockchain provides a positive impact on information technology in inventory management. By adopting blockchain, businesses can enhance the security of their warehouse management systems and make safe transactions. It's tough to hack blockchain-driven systems.
GIObikes is a fully functional eCommerce platform from scratch that thousands of users use daily.
The client struggled because of the insufficient functionality offered by eBay to sell products online. He contacted our team, requesting us to develop an innovative platform for switching from eBay to a personal website, keeping eBay's auctioning functionality.
We’ve gathered a team of tech experts and selected a tech stack. Also, we’ve created an incremental solution development plan and implemented it. The core components of the web app are as follows.
- Online website — A site launched on a live server capable of managing more than 5,000 active daily users.
- Auction — The opportunity to add new products, share bids, manage auction fees, and buy products now.
- Warehouse management software — A comprehensive software for keeping track of all the items in a warehouse. Items' location, automatic barcode creation, and out-of-stock alerts are the core features of the inventory management system.
- Affiliate system — The system offers the ability to run affiliate programs automatically. Meanwhile, the admin users have full access to all the information about affiliate programs and their participants.
- Shipping integration — The system offers the opportunity to pick different shipping methods. API-integrated shipping calculators foresee the opportunity to estimate the cost of shipping simultaneously.
- Secure payments — Integrated payment gateways offer the opportunity to make stress-free payments using credit cards, PayPal, or bank wire transfers.
ConnectSx is a set of web and mobile applications for medical inventory management.
The client aimed to help clinics resolve poor medical inventory visibility by developing a forward-looking healthcare supply chain management solution. He hired and onboarded the CodeIT team to the existing app development project.
Our team was required to optimize it. Further, we were tasked with ideating a solution, selecting a tech stack, and developing new applications.
We conducted a technical audit and came up with the best option—to reboot the project. Our team has developed three standalone applications that enable seamless medical inventory management.
- Web inventory management app
- Mobile inventory management app
- Mobile UDI scanning app
The developed applications enable the opportunity to:
- Manage and track medical inventory
- Import data from external systems
- Track medical product expiration dates
- Check inventory usage statistics
- Submit transfer requests
- Scan barcodes using a smartphone
The adoption rate of technology in inventory management systems rises at a high pace. Technologies help automate many warehouse processes and make data-driven forecasts. Warehouse management and barcode systems are the essential technologies that help keep track of all the items meticulously.
However, there are a lot of advanced technologies that help increase performance and get rid of manual management. Enterprise-grade warehouses actively adopt AI and ML, automated guided vehicles, automated picking tools, and blockchain to deliver products fast and increase customer satisfaction.
Various technologies are used to manage inventory and keep track of all the items in a warehouse. The top technologies are:
- Warehouse management software
- Barcode system
- RFID tags
- Internet of things
- LiFi technology
- Artificial intelligence
- Machine learning
- Automated picking tools
- Automated guided vehicles
Technological inventory is a warehouse management approach focused on adopting new technologies to streamline different processes. The core characteristic of technological inventory is the use of data-driven forecasting, automated picking, barcode system, and digital inventory management.
The top three inventory management techniques are:
- Push strategy
- Pull strategy
- Just-in-Time (JIT) strategy