The Future of Inventory Management: What You Need To Know
August 14, 2023 - 12 minutes readWhat you need to know this year, and beyond
In the modern world of retail and eCommerce, driving maximum efficiency across your most vital logistical processes will help you gain an all-important edge on the competition.
Without a doubt, one of the most overlooked but potentially business-boosting areas you can invest in as a retail or eCommerce business owner is inventory management.
By integrating the right inventory management software with your existing tools and sharpening your processes, you can accelerate your business’s commercial growth in a number of ways.
To get your inventory management processes right, getting to grips with the latest innovations and emerging trends is always a good idea.
So, to help you on your journey, we’re going to explore the essential inventory management trends you need to know in 2023—and beyond.
But first, let’s talk about the importance of having a solid inventory management strategy.
Why inventory management matters
Inventory management is a critical component of any successful retail or eCommerce business, as it’s centered around handling your business’s most important tangible assets: the products you offer your customers.
If you manage your inventory poorly or without a clear system in place, you will lose money through poor stock purchasing decisions, perished products, and sluggish fulfilment times. To succeed in today’s competitive digital age, consistently meeting your customers’ expectations is key.
Armed with the right inventory management strategy, you will improve the level of customer experience (CX) you offer to consumers—boosting your brand reputation in the process.
Leveling up your inventory management processes will also:
- Help you discover your most in-demand products to make better stocking, merchandising, and marketing decisions
- Ensure you avoid running out of products or storing redundant items that take up warehousing space
- Significantly improve fulfillment and customer shipping times
- Boost overall productivity and eliminate any financial inefficiencies that are draining your budget
- Improve your long term growth and profits
Read: Our essential guide on inventory management best practices for practical tips on how to improve your processes.
Essential inventory management trends for 2023 and beyond
Now that you know why inventory management matters, let’s look at the essential trends you need to know in 2023 and beyond—starting with a little something called third-party logistics.
An upsurge in third-party logistics (3PL)
The first of our essential inventory management trends for 2023 is based on outsourcing certain aspects of your logistical operations to third-party providers.
While this is by no means a new concept in retail or eCommerce and it won’t apply to every growing business, this year we’re likely to see an upsurge in third-party logistics (3PL).
Today’s technology is more streamlined than ever, offering scaling businesses 3PL solutions that allow them to outsource specific parts of their inventory management operations to providers that can handle anything from warehouse management and goods loading initiatives to automated stock control, inventory accounting, quality control, and beyond.
By cherry picking certain parts of their inventory management processes or supply chain to 3PL providers, many modern businesses find that they can focus on more strategic initiatives that drive the organization forward.
Did you know? The 3PL industry is set to grow at a CAGR of 7.1% from now until 2027. That’s quite an impressive increase.
Advanced inventory management analytics
The next of our essential inventory management trends comes in the form of growing advanced analytics adoption.
The most forward-thinking retail and eCommerce businesses are investing in inventory management solutions that serve up a wealth of accessible insights into every conceivable logistics or supply chain process.
The best inventory management solutions automate once laborious processes like quantifying stock levels, tracking the movement of goods, and looking at product sales data. Advanced inventory management analytics provides a wealth of data-driven insights from one central dashboard—not only helping with swift decision-making, but uncovering trends that will help you make consistently beneficial strategic decisions.
Armed with tools like predictive picking, for instance, it’s possible to uncover buying trends to ensure the right products are stocked in advance of the right sales periods (and in the right quantities). In turn, advanced inventory management analytics features like predictive picking will prevent unwanted stock outs from occuring while making sure you earn a healthier return on investment (ROI) for your efforts.
Read: Our guide to choosing the best inventory management software for your business to choose a solution that aligns with your aims and goals.
A greater push for personalization
Many business owners overlook this fact, but by weaving inventory management data into your marketing strategy, you can improve your personalization efforts across channels.
90% of top marketers state that personalization significantly contributes to ongoing growth and profitability. Gaining a clear understanding of the items or inventory categories that are performing best with certain customer demographics will empower you to make personalized content recommendations or serve up relevant content to people at the right times in their journey.
Having access to this information will also help you optimize your warehouse storage strategy to ensure in-demand items are always readily available. Personalization is key to ongoing commercial growth in today’s world—and this year, an increasing number of businesses are leaning on their inventory management data to improve their marketing communications.
Read: All about how proper customer segmentation can lead to more sales and level up your marketing personalization efforts.
“Sustainable development is the development that meets the needs of the present without compromising the ability of future generations to meet their own needs.”—Gro Harlem Brundtland
Supply chain sustainability
Another inventory management trend we’ve seen emerge in 2023 is the rise of sustainability in the supply chain.
Taking measures to be more sustainable has never been a more pressing matter—and the world’s most forward-thinking brands are developing greener, more efficient supply chain strategies.
As we move towards the end of the year and beyond, we’re likely to see more sustainable supply chain practices, including:
- Switching to a more energy-efficient shipping fleet
- Working with tools, machines, and technology powered by sustainable energy sources
- Outsourcing a portion of inventory to third-party services including drop-shipping suppliers
- Using sustainable stock storage and shipping materials
- Working with analytics to drive down any inefficiencies that could result in greater carbon emissions or energy wastage
Given the fact that 83% of modern consumers will choose a brand committed to sustainability, going green will benefit your business success as well as the planet.
Read: Our guide on how to Grow Your Audience by Making Your Business Greener for essential tips on creating more sustainable processes.
Living in the cloud
Last but certainly not least, as we move through 2023, we’re likely to see the adoption of cloud-based inventory management solutions increase.
Inventory management processes were once manual and disjointed, resulting in costly human error, poor communication, and the poor use of logistical resources.
As the likes of AI-powered automation and smart tech solutions become more accessible, retail and eCommerce businesses of every size are likely to start living in the cloud when it comes to inventory management.
Rather than working with a broad range of separate platforms or solutions, cloud-based inventory management allows you to track, assess, and take action from one central location without being chained to a specific geographical location.
In addition to improving supply chain communication and reducing operational costs, cloud-based solutions ensure that every single area of a business’s inventory management strategy is primed for long-term success.
The best cloud-based inventory management solutions will also scale seamlessly as a business grows to ensure consistent growth free from operational snags or teething problems that can stunt progress.
Read: All about how ChatGPT and AI will impact retail businesses in 2023 for more essential insider retail trends that will push you ahead of the pack.
Final thoughts
“Any sufficiently advanced technology is equivalent to magic.” —Arthur C. Clarke
In many ways, your inventory management strategy is the beating heart of your entire organization—from an organizational perspective, at least.
By keeping your finger on the pulse and keeping on top of emerging inventory management trends, you will ensure your strategy continues to evolve—boosting your bottom line in the process.
Inventory management is more than buying, stocking, and shipping goods. It’s about creating solid operational foundations for your business, improving your customer experience, and delivering on your brand promises. Level up your processes and you will see your business thrive now and long into the future.
We hope these trends help you on your quest for success and if you’re looking for an inventory management solution to level up your business, please do get in touch with one of our solution experts to learn how inventory and order management software can help you operate more efficiently and increase your revenue.
