2 Inventory Management Trends to Watch in 2023
As 2023 kicks off, companies are being forced to adjust the way they do business to meet the demands of an uncertain supply chain, labor shortage, and increased reliance on technology for meetings, sales, and customer service.
But a collaboration between distributors and stockroom managers provides the opportunity to implement positive changes that can help businesses serve their customers better, fulfill orders more quickly, prevent backorders, grow existing-customer revenues and increase profits.
It’s a good time for inventory operators to rethink old ways of managing inventory and consider new methods to keep their customers satisfied and attract new business.
Two key inventory management trends are emerging in response to these priorities:
- Supply chain automation for self-service and no-touch services.
- The growth of solutions that support an omnichannel go-to-market model.
1. The Rise of Supply Chain Automation for Self-service and No-Touch Optimized Inventory Replenishment
Forrester recently released its predictions for automation trends in 2023 and what factors may drive this change, including improvements in artificial intelligence and greater utilization of robotic workers. The author argues that global worker shortages will be a priority for businesses this year and that a higher level of automation will drive “extreme innovation.”
Gartner recently released a report with its list of predictions for 2023 and found that hyper-automation (the continuous integration of automation into business operations) will be a factor in sculpting change in B2B businesses and will enable organizations to scale more efficiently.
Automation technologies can be placed into these categories:
- Fixed Automation: conveyor belts, automatic sorters, palletizers, pallet shuttles, and Automated Storage and Retrieval Systems
- Mobile and Semi-Mobile Automation: Automated Guided Vehicles (AGV) such as autonomous forklifts, Autonomous Mobile Robots (cobots), and Specialized/niche automation such as automated boxing and trailer unloaders.
As the labor shortage intensifies, low- and no-touch service will become increasingly important. According to the Bureau of Labor Statistics (BLS), fewer people are participating in the labor force than in previous years, and this trend is expected to continue into 2023. Automation will help B2B companies overcome labor shortages and improve typical warehouse operations such as receiving, put-away, storage, picking, packing, loading, and shipping.
Companies are also increasing their investments in software that streamlines inventory management and digitizes replenishment orders downstream from the warehouse – at the point-of-use in job sites, stockrooms, and trucks.
Also, referred to as automated inventory replenishment software for stockrooms and vans, the point of it is to go paperless and digitize your POs that get sent straight to the distributor’s ERP. The benefits are many: tracking inventory usage in storerooms and vans with accurate scans and sensors, getting calculated min/max settings that match your needs, managed consignment inventory, optimizing inventory levels as well as reducing inventory and carrying costs.
Whether the inventory is in stockrooms, service trucks, connexes or mobile carts, the eTurns TrackStock App automates replenishment of vendor managed inventory or customer managed inventory at the point-of-use and delivers these benefits.
Ongoing Adoption of Cloud Inventory Technology at the Point-of-use
Cloud technology connects systems and equipment in a digital environment. Stockroom managers with cloud systems have greater security, more available storage and remote connectivity options. In addition, when your ERP and stockroom management apps are connected to the Cloud, you don’t have to worry about housing costly IT equipment or performing constant maintenance and updates – with Cloud technology, all of the housekeeping is done for you.
According to Statista, the adoption of the Cloud is becoming more widespread and won’t stop anytime soon. Estimates show that global spending on Cloud services will reach $482 billion in 2023. As a result, suppliers and inventory managers looking to improve their management processes can use Cloud technology to increase efficiency, automate manual processes and access information remotely.
For inventory management, the adoption of Cloud technologies is key to:
- Tracking inventory location and levels in real-time – even for service trucks and remote stockrooms and job sites
- Integrating remote inventory management software
- Accurately managing and replenishing inventory based on real-time usage data
- Managing supplier relationships in one place
- Improving efficiencies with daily dashboards and data analytics
- Accessing systems and data from anywhere
SensorBins for No-Touch Optimized Inventory Replenishment
IoT inventory management offers a way to do “no touch” automated inventory replenishment, use less manual labor to count or track inventory, and adhere to Covid regulations.
With eTurns TrackStock SensorBins™, you can put IoT weight sensors under bins of supplies to digitally track stock levels. The software converts bin weights to quantity to allow complete physical inventory counts multiple times a day without human intervention. The sensors can measure weights as little as 0.1 grams to as large as 2,200 lbs. Setting minimum and maximum inventory levels allows the bins to detect when an item drops below the minimum and automatically trigger a replenishment order.
TrackStock SensorBins™ enables inventory managers to:
- Ensure the right parts are always in stock
- Reduce excess stock and storage space
- Optimize Mins/Maxes based on actual usage
- Remotely monitor inventory levels
- Set automated stock replenishment
- Better comply with COVID measures
- Attract and retain employees by reducing ‘grunt work’
Automation with SensorBins™ benefits both the supplier and the customer. This technology allows a supplier’s staff to do more selling and less accounting for products, while the customer can reduce carrying costs in overstocked inventory.
Electronic Shelf Label (eLabels) Systems For Digitization of Purchase Orders
Electronic Shelf Labels (eLlbels) are digital labels that interact with users. The labels display the most current information, such as pricing, quantities, re-orders in progress, and shortages. They can also connect to other devices to trigger commands or provide consumption reports. These eLabels can help stockroom and service truck managers keep track of stock levels, expiration dates, and other vital metrics. Because of these features, eLabels are growing in popularity as IoT inventory management tools.
2. Growth of Cloud Inventory Solutions That Support an Omnichannel Go-to-Market Strategy
Customers want to order when and where they want, and that trend only accelerated this year. As a result of this past year’s business disruption, many distributors are building a more resilient fulfillment network that provides speed, flexibility and innovation. The following are ways distributors and inventory managers can respond to this trend to strengthen their ability to serve customers more quickly and efficiently.
Predictive Planning and Demand Forecasting
Demand planners are constantly looking for ways to reduce forecast error and the more data they can feed into their systems the better. Many are realizing that it is important to collect data from the first 10 feet of the supply chain at an organization’s stockroom or forward-stocking location. There are VMI/CMI replenishment apps that can deliver this usage data.
The eTurns Precise Demand Planning Solution and the eTurns TrackStock Min/Max Tuning analytics can help you incorporate data on actual usage into decision making. Modern demand planners are focused on customer needs and usage, rather than simply stocking products on shelves “just in case.” This means suppliers can better respond to customers’ growing expectations to have the right product in the right place at the right time and nothing more.
How Do Distributors Optimize Inventory In Customer Stockrooms and Their Own Distribution Centers Using One Vendor Managed Inventory App?
Distributors can leverage the actual customer usage data collected in the TrackStock VMI replenishment app to optimize their own distribution centers, reducing their annual carrying costs and improving customer service at the same time.
Collecting usage data for a distributors’ Very Important Customers (VICs), which comprise typically no more than 10% of their customers but 80% of their revenue, provides:
- Which items the Very Important Customers are going to order
- The quantity they will order of those items
- The precise date those items will be ordered
All a distributor would need to calculate those valuable data points is a few critical metrics by item, tracked at the point-of-use.
- Quantity on Hand (QOH)
- Minimum Stock Levels (Min)
- Maximum Stock Levels (Max)
- Average Daily Usage
In addition, tuned mins/maxes allow a customer to take cash out of inventory and eliminate stockouts. Aggregating the product usage data combined with each customer’s on-hand inventories and Minimums and Maximums across the distributor’s Very Important Customers allows TrackStock to calculate precisely which products will be ordered in what quantity on what date. This removes the forecast error from traditional demand planning software tools.
Onsite Consigned Inventory
Distributors and other suppliers can elevate relationships with their top customers by using consignment inventory at the customer site. When distributors stock and manage inventory at a customer’s site, the distributor becomes an inventory lifeline for the customer in uncertain times. The benefit for customers is that they have stock available when needed, only paying for the inventory once it is sold or used.
Distributors gain from this strategy, as well. When the supply chain is no longer dependable and cash tight, having customers reliably supplied with a stash of inventory on-hand can make distributors heroes. And having a sophisticated cloud inventory app to manage consignment inventory, like eTurns TrackStock, provides real-time visibility of inventory at the point-of-use and automates replenishment, leading to greater efficiencies and lower costs.
Onsite Delivery and Services
With today’s shaky supply chain, the more suppliers can do to ensure timely delivery and service, the better. Suppliers with delivery vans that can reliably have critical products to an OEM the same day will be called first. Having a knowledgeable technician in a fully equipped service truck that can go to the customer site and conduct any maintenance or repairs on critical parts puts the supplier at an advantage when the customer thinks about purchasing a part.
The price from the supplier may be a bit more than purchasing it from another source, but knowing that a knowledgeable service team comes with it lends trust and security in the partnership.
By leveraging trends in inventory management and collaborating with their suppliers, stockroom inventory managers can position their companies to weather disruption and operate better with their current staff. These approaches and technologies will allow them to better serve their customers, increase productivity and profits, and keep ahead of the competition.