How to turn emerging inventory management trends into opportunities.
The economy and everyday life began to return to normal in 2022 as the world emerged from the global pandemic, but the lingering after-effects were clear. Part delays, overcrowded shipping docks, and labor shortages continued to make it difficult to get materials from point A to point B, while rampant inflation turned purchasing and pricing strategies into moving targets. As we approach another exciting LEO (Leap, Election, and Olympic) year in 2024, what new inventory management challenges should we expect?
Technology buzzwords like artificial intelligence (AI), 5G wireless, and the internet of things (IoT) will move further into the mainstream, and their impact will be felt throughout the inventory management ecosystem. Beyond these technical advancements, fast moving customer service, omni-channel commerce, and logistics trends will also reshape inventory management in new and exciting ways. Let’s take a closer look at what 2024 has in store for us.
“You must always be able to predict what’s next and then have the flexibility to evolve.” – Marc Benioff
2023: The year that was
After reaching a peak in mid-2022, inflation continued to cool through 2023, signaling a return to normal for businesses attempting to keep inventory valuation and turnover ratios under control. At the same time, lessening part shortages led more businesses to return to leaner just-in-time inventory management practices that had been temporarily replaced by “just-in-case” strategies and stockpiling for a rainy day. Other trends we witnessed in 2023 included:
- The cloud and SaaS: Cloud-based services continued to rise in popularity, and inventory management was no exception as inventory software as a service (SaaS) gained market share.
- Working from home: With so many employees continuing to seek home-based work, employers were challenged to find qualified workers for on-site inventory management roles.
- Mobile inventory management: The use of mobile devices for inventory management brings efficiency, convenience, and data accuracy, and this trend has continued year after year.
- Sustainability: More businesses turned talk of sustainable inventory practices into action as energy-efficient transportation methods and eco-friendly warehouses gained traction.
The top 7 inventory management challenges of 2024
The inventory management trends we witnessed in 2023 led to greater productivity while presenting technical and logistical challenges for businesses. With the pace of advancement showing no signs of slowing, a similar pattern may be in store for us in the coming year.
Let’s review seven inventory management challenges we are likely to experience in 2024, along with some strategies to prepare for them.
1. Artificial intelligence (AI)
Is 2024 the year AI will redefine inventory management? ChatGPT and other generative AI tools used to produce natural language responses to complex human questions are getting a lot of attention, but other aspects of AI will influence inventory management more directly.
Predictive analytics allow stock levels, pricing, and purchase orders to be optimized based on a wealth of historical data and trends. Machine learning (ML) is another facet of AI that is quickly becoming part of the inventory management landscape. These capabilities use the data they collect to form a continuous improvement loop that impacts:
- Order delivery times
- Warehouse layouts
- Part picking rates
- Sales forecasting
Predictive analytics and machine learning can also be deployed in tandem for strategies like predictive picking, which is used to proactively pull materials based on expected customer orders. Only humans can tell when AI tools are yielding positive results, so embracing AI successfully requires a careful balance between computer intelligence and human guidance.
2. The internet of things
The internet of things (IoT) is transforming industries including healthcare and transportation by using smart sensors to continually communicate with the cloud. As 5G continues to alleviate IoT bandwidth and density challenges, the IoT will also have a dramatic impact on inventory management practices. Many businesses are preparing for this change by deploying smart sensors on inventory items to track location, storage conditions, and quality.
- Smart warehouses: Leading retailers like Amazon, Best Buy, and Walmart are already utilizing Radio-frequency identification (RFID) tags, each containing tiny transponders to track item position and quality in real time based on a unique identifier.
- Predictive maintenance: The intelligence provided by IoT sensors also supports equipment, tools, and transportation. Operating conditions are tracked continuously to optimize maintenance and asset management practices.
3. Reverse logistics
Reverse logistics is the process of moving returned products back through the supply chain to the retailer or manufacturer. Building efficiency into reverse logistics processes is becoming more important as E-commerce customers expect a hassle-free return process. Businesses are implementing intelligent return practices to meet rising customer standards. This includes automatic sorting and inspection of returned items and convenient order and label generation to make the return process smoother.
“When you serve the customer better, they always return on your investment.” – Kara Parlin
We should begin to see the next plateau of inventory management automation arrive in 2024 as part of “Industry 4.0”. With the help of AI and the IoT, expect a sharp uptick in autonomous robots deployed to stock shelves, pull parts, check inventory levels, and package orders. While businesses recognize a reduction in workplace injuries and errors, workers often see automation as a threat to their livelihood. Next level automation utilizes machine learning, advanced vision systems, and real time analytics to offload more inventory management tasks from human hands.
5. Data sharing
Global supply chain challenges tell us how information lags and siloed data only make matters worse when it comes to material shortages and processing bottlenecks. To improve communication, many companies are collaborating with suppliers to share inventory data more openly. Real time communication throughout the supply chain has been recognized as a key to minimizing risks and reacting to demand surges. Some elected officials are even calling for a national supply chain database to take data sharing to the next level.
6. Distributed inventory management
Distributed inventory management is a trend tied to the resurgence of just-in-time inventory management. The distributed concept involves setting up many small, local warehouses rather than relying on a centralized site that might be too far from some customers to enable quick delivery. AI and ML can help businesses decide what products to place at each location. Although the customer service benefits are evident, distributed inventory management can increase infrastructure expenditures, while complicating logistics and staffing processes. These challenges must be weighed against the potential benefits.
7. Risk management
The events of recent years have taught us that anything can happen, anywhere, at any time. Risk management practices allow businesses to analyze their existing inventory data to prepare for unforeseen circumstances and put the right systems and strategies in place.
Supply chain disruptions, natural disasters, and excessive holding costs are among dozens of risk factors that can be systematically quantified and mitigated through risk management. That is why many companies are implementing a structured approach to risk to improve their bottom line, even when it is not a regulatory requirement.
Are you ready for the next LEO year?
If there is a common thread that runs through our expected inventory management challenges of 2024, it is intelligence—not just the artificial kind, but the human variety as well. The value of real time data, transparency, and data analytics is unquestionable. Businesses that leverage their data intelligently and deploy the right set of tools will come out on top in the coming years.
Agiliron helps you bridge visibility and intelligence gaps with your employees, suppliers, third parties, and customers through innovative inventory management, POS tools, warehouse management, and CRM capabilities designed to integrate seamlessly with the leading E-commerce platforms.
- Inventory management software: Products capable of meeting the inventory management challenges of 2024 combine real time inventory tracking, mobile point of sale (POS), and multi-channel commerce features in one versatile solution.
- Customer relationship management (CRM): To better support direct sales efforts, CRM software platforms allow you to unify customer data across sales platforms, create targeted marketing campaigns, and enhance customer service through immediate information access.
2024 promises to be an exciting year for inventory management as supply chains stabilize and AI makes its presence felt. We are here to help you navigate the trends and challenges to ensure you won’t be left behind. Schedule a consultation today with one of our solution experts to make sure your inventory management processes are optimized for 2024 and beyond.Tags: inventory management