Using Information Technology in Inventory Management

Using Information Technology in Inventory Management

New generations of shopping options have come to the forefront of supply chain management through b2b e-commerce, connective e-commerce and m-commerce, making supply chain management a concern for many organisations. A brief definition of these areas of supply chain management is:

• E-commerce refers to online marketing, advertising, purchasing, and selling products or services. It includes the exchange of money and information to enable these transactions.
• M-commerce or mobile commerce involves selling and purchasing products and services using wireless handheld devices like smartphones and tablets.

However, effectively managing data and extracting insights requires specialised skill sets. Without the right expertise, technologically driven inventory management can be counterproductive for organisations. It is only beneficial when utilised expertly and appropriately.

The Evolution of Technology

The rise of e-commerce is heavily reliant on technological advancements in inventory management. This shift has blurred the lines between traditional retail and online order fulfilment, highlighting the importance of integrated inventory systems across various sales channels.

The evolution of e-commerce has led to a hybrid model where physical stores incorporate e-commerce platforms. This integration is only feasible with a comprehensive inventory management system that seamlessly tracks inventory across different retail channels.

Due to the rapid rate of change, keeping up with technological advances has historically been a challenge for organisations. However, advancements are now more accessible to all, leading to a complete transformation in organisations' operations.

Organisations now have a wide array of technology options, allowing them to tailor their inventory management systems to suit their needs without incurring excessive costs. Technology's scalability enables organisations to adapt as they grow, potentially creating new business models.

Despite the variety of technologies available, the primary goal remains consistent: organising, controlling, and providing inventory information. Automated inventory management systems utilise tracking technologies like barcodes and RFID to streamline information collection and goods flow.

These systems can be active or passive, with active systems offering automatic detection, tracking, and analysis capabilities. Innovative technologies and applications are crucial in advancing inventory management practices, although manual data entry can introduce errors. Nevertheless, these systems can be a flexible and valuable option for smaller organisations.

Each process, whether conducted physically or electronically, has its unique nuances. This is especially evident when comparing competitors offering the same products but having different operational approaches. Furthermore, the peculiarities within various industries contribute to the diversity of processes, even extending to third-party logistics organisations.

Supply chain management software has been designed and evolved to manage and enhance the exchange of information and data across various vital supply chain partners to attain such outcomes as:

• Just-in-time procurement.
• Reduction of inventory.
• Increase in manufacturing efficiency.
• To meet customer needs in a time-sensitive fashion.

Organisations can now leverage technological advancements to create comprehensive supply chain solutions that optimise operations, improve productivity, and address potential bottlenecks in the supply chain process. The availability of real-time information plays a crucial role in increasing the supply chain's efficiency and effectiveness.

Manufacturing

The evolving technological landscape and shifting customer expectations have underscored the significance of integrated supply management, particularly for manufacturing organisations aiming to expand their customer base. Digitalising business operations is no longer just an added benefit but a fundamental requirement in today's competitive market environment.

Manufacturing organisations rely heavily on their supply chain partners to deliver products, with stakeholders such as manufacturers, suppliers, retailers, shippers, and distributors playing crucial roles. The supply chain culminates in the delivery of products to the end customer, highlighting the importance of collaboration and efficiency among all involved parties.

To streamline the overall production process, a manufacturing organisation must clearly understand the status of products in production, anticipate any potential issues or delays, and adjust production schedules accordingly. Technology integration can enhance transparency throughout the process, giving manufacturing organisations greater control over product data and information flow across the supply chain.

Managing inventory levels optimally poses a significant challenge for all manufacturers. Excess inventory can result in financial risks due to waste and increased working capital requirements. In contrast, insufficient inventory may lead to production disruptions and business losses from stockouts.

Leveraging technology, manufacturers can establish flexible business processes that adapt to varying demand scenarios. Analytics can help manufacturing organisations achieve their financial objectives by effectively managing inventory and sales orders.

Through IT-enabled real-time information sharing, manufacturers can enhance collaboration and partnership efforts with critical suppliers. Improved visibility into supplier and distribution processes allows manufacturers to monitor activities across the supply chain more effectively.

This valuable information enables manufacturers to make informed decisions, anticipate future material demand patterns, and reduce costs through strategic decision-making in procurement and supplier contract management.

Ensuring timely material delivery is crucial for maintaining high customer satisfaction levels, increasing customer retention, and generating repeat business. Technology solutions play a pivotal and vital role in enhancing the delivery speed and keeping customers informed about the status of their product deliveries.

Implementing processes involving customers throughout the manufacturing journey, from order confirmation to fulfilment, can empower them to track and trace their orders and control their experience. This enhances their satisfaction and reduces the workload on the manufacturer's customer service team.

Establishing effective communication channels with logistics service providers can provide real-time updates on inventory shipments and product deliveries, helping to streamline the manufacturing process and minimise delays and costs associated with production obstacles.

Leveraging technology to gain comprehensive visibility across all organisational functions and utilising real-time decision-making data can significantly improve manufacturing efficiency. Incorporating technology into supply chain management can result in lower product costs, reduced working capital requirements, and, ultimately, higher customer satisfaction.

Warehouse Management

While different organisations provide blueprints for key processes using barcoding and radio frequency controls, these standardised methods only apply to reading and recording data. The actual handling of physical materials and the specific procedures followed in each warehouse are distinct and tailored to the individual business. This is driven by factors including:

• The magnitude of the warehouse operation.
• Storage capacity.
• Temperature.
• Order profiles.
• Legislative requirements.
• Organisational culture.
• Volume of goods moving through the facility.

The different processes that occur within a warehouse management system are fundamentally the same across many warehouse operations and typically consist of the following:

• Receiving.
• Put-away.
• Picking.
• Packing.
• Dispatching.
• Returns.
• Value-adding.

The complexity around handling value-adding processes and the changing nature of component products in and out-of-shelf locations can be daunting. Over the years, systems have evolved to assist. Yet, many companies find that recording value-adding components may be incompatible with how their logistics system or WMS is set up.

Inventory Management

Inventory management is a challenging and crucial task that involves constantly checking and verifying stock levels. It is never complete, as the inventory position continually changes. However, it is essential for the successful operation of any retail or manufacturing organisation. When issues arise with inventory, they can significantly impact the organisation in terms of cost and inefficiency.

Fortunately, technology has evolved to help address these inventory management problems. The goal is to eliminate the manual aspects of inventory management that are slow and prone to errors.

The traditional manual approach to inventory management in the past meant that accuracy was never achieved. The actual state of the organisation's inventory needed to be accurately represented. Staff had to manually compare incoming and outgoing orders and physically count the inventory to identify and correct errors.

Due to the nature of manual inventory counting, it could not be done continuously and in real-time. It was typically done during pre-determined periods set by the organisation. This manual process made it difficult to verify the accuracy of the inventory, and mistakes were inevitable, especially when the task was repetitive and laborious.

However, technological advancements have introduced RFID technology, which can revolutionise inventory management. RFID tags and scanners automate inventory management and continuously track all items entering and leaving a warehouse. Each time a product is moved, its movement is logged, allowing for precise tracking of its location.

For organisations that offer services in addition to goods, RFID technology can also be invaluable for asset inventory management. It eliminates errors, ensures accuracy, enhances customer service, and enables better decision-making.

Organisations rely heavily on inventory management decisions enhanced through insightful data analysis. This approach saves time and equips managers with the necessary tools to improve overall business decision-making processes.

Technologically driven inventory management enables organisations to collect and analyse data, providing valuable insights into product trends and demand patterns. This data-driven approach is crucial for making efficient sales decisions and leveraging big data in the future.

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