How Analytics Can Help Optimize Inventory

by | Jun 26, 2024 | Manufacturing & Supply Chain

Reading Time: 5 minutes

The aftermath of the pandemic revealed flaws in some of the analytics used by the supply chain industry. Because consumer buying habits became less predictable, the numbers became less predictable. As with any use of analytics, the process is only as good as the data that is being used. When the data is inconsistent, the analytics associated with that data becomes unreliable.

Organizations are still trying to apply the lessons they have learned from the post-pandemic supply chain. Many have taken the opportunity to re-evaluate their approach to data and analytics, and some companies are getting creative as they seek to optimize their supply chain. Here are some of the problems they’re trying to correct, and how analytics can help.

Problems with inventory

Many companies are still dealing with too much inventory. After supply chain shortages during the pandemic and unpredictable shipping costs and production, companies overcorrected by making sure they had as much as possible on hand as they tried to control their own inventory. As customer buying habits started to settle back into more familiar patterns, companies ended up having too much product.

This led to increased costs where companies were paying for storage they didn’t otherwise need and, in order to get rid of some of that glut, selling products for less than they were worth when they unloaded them. This desire to better manage their inventory has led organizations to invest in analytics solutions and to think more creatively about how to collect data.

Creative data

Almost every company is at a point now where it is trying to leverage its own data to drive insights. Everyone has plenty of information that will allow them to make good decisions if they can narrow their focus in a way that makes the data less overwhelming.

Other companies are casting a wider net when it comes to gathering information, going beyond their own data sets to find insights elsewhere. These include:

  • Social media: Some organizations are combing social media, trying to pick up untapped information or identify trends. By examining customer comments on social media or even reviews on company websites, organizations might be able to learn something their own data isn’t telling them.
  • Retail cameras: Some companies are examining customer behavior based on footage from inside their own stores. While it’s not the most revealing data yet, they think certain reactions could help them down the line and inform what they should or maybe should not have on their shelves.
  • Weather tracking: Most companies are already doing this in some fashion, but the more they can stay on top of weather conditions, whether that is in the areas where customers shop or how it affects the shipping of products or materials, the better prepared they can be for any kinds of problems.

Every organization is looking for an edge and hoping they can find the missing piece of information that others are overlooking. In many cases, the above examples are just scratching the surface of creativity. Some of the most outside-the-box ideas are probably held a little closer to the vest, especially if it is finding success, so that a company can stay ahead of its competition.



Finding success through AI

The biggest common denominator for companies finding success with inventory is an increased use of artificial intelligence. Whether it’s something like recognizing customer reactions or combing countless social media posts, the amount of information becomes too large for people to handle by themselves.

The companies that have managed to find success with a new approach to their data have done so by employing AI in some way. One recent example is On, a sportswear company. One is using drones in its warehouses to help gain full operational visibility. The drones scan products every day to ensure stock availability, which allows the company to immediately make clear to customers the availability of products, whether that is in store or online. In turn, On can maximize successful order fulfillment through on-time and accurate deliveries.

If they aren’t already, organizations should continually be working to use all available data when it comes to their work within the supply chain. They can go above and beyond that work by looking for new and innovative ways to collect data, and then making sure they have the digital infrastructure to process the data. Artificial intelligence, for example, is one tool that can help speed up the process of turning certain data points into actionable insights.

When it comes to On, the drones are only the first step in a larger supply chain strategy. It is continually looking for ways to streamline operations and better manage inventory. In that, it is not alone. Any company looking for an edge will follow suit. The companies that are likeliest to succeed in doing so are the ones that have the right analytics solutions in place.

John Sucich
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