2022 brought more disruption and change than anyone could have expected, with much of the United States reeling from events from the pandemic and then the Russian invasion of Ukraine – supply chains further rattled.
Best practice inventory management – and the wider world of supply chain management – has played a big part in business survival in these disrupted years – and what constitutes best practice has changed too.
Here’s our pick of the 10 most important inventory management trends of 2023.
- Just in Time has become Just in Case
Research has revealed that the volume of stock held by manufacturers has doubled, without overall business activity rising in step. The data compared stock on hand values and quantities from Q3 2019 with Q3 2022. This appears to signal a shift towards holding a greater quantity of safety stock as a strategy to circumvent disruption within the global supply chain caused by Brexit difficulties and – more recently – Russian military action in Ukraine.
As supply chain disruptions, worker strikes, and inflation continue to shake the globe, we’re predicting a continued commitment to Just in Time strategies from manufacturers worldwide.
2. Acceleration in Cloud Technology
Cloud technology is nothing new anymore, but as the technology continues to grow and becomes increasingly easy to set up and use, its adoption rates keep climbing. Global spending on cloud services grew from US$332 billion (2021) to $490.3 billion (2022) and is expected to reach $591.8 billion in 2023.
For manufacturers and other organisations looking to improve their inventory management processes, cloud technology represents a major opportunity – especially when it comes to remote working.
The benefits of cloud technology for inventory management
By signing up to a cloud service provider, you gain access to new computing power, data storage and smart technology functions that can be set up in minutes and don’t require costly on-premises hardware. Cloud services also:
- Eliminate data silos by connecting disparate business functions (e.g. accounting, inventory, customer service) to a central database.
- Easily connect high-value tools that utilise new data capabilities, like ERP, inventory management for manufacturers, smart accounting software, CRM, etc.
- Set up new services and scale up or down based on demand with very little extra cost (little to no on-premises hardware is required)
And in terms of inventory management the cloud is key to:
- Tracking inventory location and levels in real time, even for remote warehouses
- Accurately plotting costs based on live data
- Managing supplier and other vendor relationships in one place
- Improving efficiencies with data analytics
Accessing systems and documents anywhere in the world
3. More widespread use of multi-warehousing
Multi-warehousing does what it says on the tin: inventory managers store goods in distributed warehouses across the region, country, world (whichever is relevant), while still monitoring and managing the business from a central location. Customers and suppliers have a single point of contact – while materials are stored closer to where they’re needed, at lower cost.
A multi-warehousing strategy is only realistically possible for businesses that invest in smart cloud technology, like inventory management software.
This is because in order to keep the organisation running smoothly and give customers or suppliers that central point of contact without causing severe delays, each node in the organisation’s logistics and warehousing network must be able to communicate in real time.
4. More widespread third-party logistics
For growing businesses, the cost of operating warehouses and owning vehicles can be limiting – so for SMEs in particular third-party logistics (3PL) are an attractive solution.
Technology such as cloud software and IoT has made 3PL a more appealing offer in recent years, leading to strong growth in this sector.
Indeed, the 3PL industry is projected to grow at a CAGR of 7.1% through 2027 (Allied Market Research).
Where once it might have been tricky to rely on third parties for vital logistical functions, now real-time communication, inventory tracking and data sharing have made it easier for different businesses to work together with no loss in service quality or delivery times.
5. Inventory Analytics
Data analytics generally requires the use of cloud technology to properly function – if key datasets are held in disparate silos across systems, they can’t be compared with one another and potentially vital information will be lost.
It’s no surprise, then, that as a cloud-based technology BI is growing, with its market size expected to reach US$18 billion by 2025 (up from $15.2 billion in 2020, according to Statista).
It’s also a trend that has reached the world of inventory management. With a digitised supply chain, and managers connected to the metrics that matter, companies are now able to access screeds of business-critical data that was previously unavailable.
Being able to track figures like product margins by warehouse, or production waste by location – and all in real time – empowers managers to make better decisions, faster.
6. Inventory forecasting
Being able to predict the future means being able to plan for the peaks and troughs of your business. This is why inventory forecasting is getting more popular, as smart technology (such as data analytics) enables smarter purchasing decisions.
Quantitative analysis of historical data is a common way to predict the future.
What peaks and troughs occur in customer demand each year? What products were popular, and at what time? Additionally, why do you think these changes occurred, and are they likely to occur again?
If you can see where spikes are likely to occur, you can pre-emptively order the right materials or stock to ensure you can meet demand without stocking out.
Likewise, if you know when troughs are more common, you can avoid over-purchasing goods – especially goods that might spoil – to trim costs and reduce wastage.
7. Warehouse automation
Warehouse robots, co-bots and autonomous vehicles are becoming the norm rather than the exception in larger warehouses, raising efficiency in these traditionally labour-dependent environments – and improving worker safety.
Less glamorous, but potentially more cost-effective, is TEMPO’s vision based inventory management system. Advanced location tracking features and live capacity tracking for shelves are helping keep warehouse costs down – and fulfilment times low.
8. Connected omnichannel services
One of the big trends of the last decade, which will only increase in 2023, is the concept of omnichannel customer service – that is, providing customers with a variety of channels to choose from to purchase goods.
Customers are increasingly expecting a full and consistent shopping experience across the web, social media, apps and in-store – and this goes beyond the purchase point into deliveries, returns and post-sales service as well.
We’ve talked about real-time communication before in this article, and here again it’s vital. From suppliers to manufacturers to logistics and retailers, everyone in the supply chain must be connected and talking to each other for a customer to receive an omnichannel experience.
For instance, customers should be able to go online to look at price and stock levels at the store of their choosing, then travel to that store and see that the online data was accurate. This sounds simple, but it means a few different systems must be communicating in real time, and the system must be updated as that information changes.
This requires the coordination of factors such as:
- Inventory reconciliation
- Supplier management
- Demand planning
- Distribution and logistics tracking
9. Sustainable supply chains
Sustainability is a key concern for consumers. Research conducted by Wunderman Thompson revealed that 83% of consumers will always choose a brand with a better sustainability record. And although 90% of business leaders think sustainability is important, only 60% of businesses have a sustainability strategy in place.
10. Resilient Supply Chain
Since the start of the Covid-19 pandemic many businesses have learned their supply chain is not as resilient as they thought. With restrictions on the movement of people and global trade, getting the right goods to the right place at the right time has proved a challenge.
We anticipate that supply chain resilience will be a continuing theme throughout 2023, as organisations work their way through rising costs and extra disruptions.
Supply chains aren’t just physical anymore – they’re also digital. What software do you use? Who owns it? Is it a cloud-based service? Who is updating it and maintaining its security?
Cyber security should be a concern of all organisations concerned about digital supply chain resilience. As you map out the physical supply chain, consider also your business software – think about any risks to those vendors, how reliant you are on their technology, and which services pose the least risk.
It may be a lot to taken in, but with digital taking over the world, it is time to prepare for the future. Talk to us today, we Bridge the Technology Gap Between You and The Future.
