intelligence that enables a business to respond quickly to market changes and to scale. Using Radio Frequency Identification tags and Internet of Things sensors, items can be tracked and recorded, as well as made viewable by all the necessary personnel using Wi-Fi networking.
A significant upgrade to automated inventory is the predictive inventory system. In addition to collecting current sales data, this system uses historical data as well, enabling businesses to analyze multiple possibilities that can come up in the future.
Supply chains have been notoriously unpredictable, leading to unplanned delays and extended lead times. Predictive analytics have mitigated much of that risk by helping to plan for contingencies. For example, adverse weather conditions or geopolitical events could affect the ability to have products reach you— and thereby your customers— in a timely manner.
Predictive analytics enable a business to foresee these issues and make appropriate adjustments ahead of time.
The Balancing Act Likely the most common inventory problem that businesses face is concerns over having too much or too little stock. Only half-jokingly, industrial engineer and businessman, Taiichi Ohno, once said,“ The more inventory a company has, the less likely they will have what they need.” Heavy machinery uses thousands of parts, meaning that a supplier needs to have tens of thousands of parts available. While things have improved greatly since Ohno’ s day, shrink and swell continues to be a relevant concern for many businesses.
Most companies follow one of three common business models to determine inventory production and / or purchases.
The Pull Strategy gauges its inventory based on clear demand from customers. When a customer“ pulls” a product off the shelf, it is quickly replaced to keep pace with customer demands. Even though this strategy keeps inventory costs low, an obvious downside is what would occur when consumer demands suddenly rise, resulting in shrink and stocking out.
At the other end of the spectrum, the Push Strategy maintains inventory based on expected or forecasted demand. Using this method, a company would produce many products at one time,“ push” them onto the shelves and then wait for the customers to come in. This keeps operating costs low, but problems with swell can occur if consumer demand does not meet forecasted levels. Then the company is potentially left with a glut of inventory that they can’ t sell.
Some companies opt for an apparent compromise between these two methods by imple-