Real-time Inventory Management in a Global Economy
February 4, 2025 - 11 minutes readConquering the inventory management challenges of our global economy.
Over the past half century, real-time inventory management and globalization stand out among the significant developments changing how businesses operate, bringing meaningful supply chain information to our fingertips more easily while expanding options for purchasing and selling products around the globe. E-commerce and multi-channel commerce are at the crossroads between these two monumental developments, as data accessibility complements diversified logistics and outsourcing options.
At the same time, vast distances and supply chain complexity can muddy the waters of real-time inventory visibility, making it more difficult to maintain accurate and timely information across multiple time zones. Cloud-based inventory management software, improved collaboration, and effective supply chain management practices help to bridge these gaps.
“Globalization is not only something that will concern and threaten us in the future, but something that is taking place in the present and to which we must first open our eyes.” – Ulrich Beck
Why real-time inventory management is important
Real-time inventory data was once just a goal. Advanced, cloud-based inventory management software, mobile apps for tracking point of sale (POS) transactions, cycle counts, and warehouse transactions are bringing real-time closer to reality every day. Enhanced inventory visibility is essential for avoiding costly situations like stockouts while ensuring customers receive their orders when and where they expect them. Additional benefits of real-time inventory data include:
- Improved demand forecasting to ensure the right quantities are ordered
- Increased inventory turnover to reduce dead stock and decrease carrying costs
- Greater real-time awareness to support customer demand from multiple locations
- Support for programs like just-in-time (JIT) inventory management that improve overall efficiency
Challenges of global supply chains
The concept of globalization extends well beyond commerce to include the spread of people, ideas, technology, and cultural effects around the world. The advent of affordable air travel may have marked the true beginning of modern globalization, but the internet and wireless communication channels have taken it to the next level. These recent developments have allowed businesses to expand their horizons by leveraging internal and external resources within other countries and tapping into new customer bases to unlock financial opportunities.
The global economy is also one of the driving factors behind the rise of E-commerce, with many of the 26.6 million (and counting) online stores knowing no regional boundaries. Despite the many benefits of globalization and global supply chains, this paradigm shift has also created challenges for retailers that include:
- Language and customs barriers that create communication and transport roadblocks
- Unforeseen regional social and environmental conditions that threaten the flow of goods
- Complexities of multiple currencies and exchange rates impacting pricing
- Widely dispersed inventory locations and monitoring systems lacking cohesion
The drawbacks obscuring real-time visibility go far beyond the time and distances data must travel between point A and point B. Globalization also adds complexity and unknown factors that can hamper the flow of information or lessen confidence in information sources.
Maintaining real-time inventory in a global economy
Many of the tools and practices used to improve inventory visibility locally, such as centralized inventory management databases, cycle counts, and mobile data collection tools, are equally important for maintaining accurate data globally. Overcoming the impediments to global visibility requires a focus on the specific tools and practices that are most impactful in breaking down regional barriers.
1. Supplier collaboration
With suppliers and logistics partners halfway around the world, it might seem as if supplier relationship management would have little value, when in fact, the opposite is true. Building strong partnerships with overseas suppliers is essential, especially when they are entrusted to act on your behalf or fulfill customer orders without your direct involvement. Most importantly, improved supplier relationships help to safeguard the flow of timely and accurate inventory data.
Collaboration with suppliers should include clear communication (and documentation) of goals and expectations, along with the establishment of incentives and key performance indicators (KPIs) to baseline and monitor supplier performance.
2. Demand forecasting
The additional variables associated with global supply chains, including currencies, changing fashions, customer preferences, and regional economic conditions make it extremely difficult to accurately predict demand across geographies. Rather than relying on chance or reacting to trends after the fact, software platforms with demand forecasting capabilities counter this uncertainty to keep present and future inventory requirements more manageable. Demand forecasting combines historical data with available information on conditions and trends to produce forecasts that are as accurate as possible. With a boost from statistical techniques and machine learning, these forecasts also make it easier to optimize and track inventory levels more reliably.
3. Warehouse management
Millions of E-commerce retailers have entrusted their inventory management, transportation, and order fulfillment processes to third-party logistics suppliers (3PLs) in distant locations, as the global E-commerce logistics market grows at a rate of 22.3% annually.
The trend towards outsourcing can make oversight nearly impossible while potentially degrading visibility. One of the ways E-commerce retailers and other businesses can minimize the risks from outsourced logistics is by ensuring sound warehouse management practices are followed, including:
- Floor and rack space optimization to prevent part loss and delays
- Regular cycle counts to verify inventory level accuracy
- Real-time data sharing for all material movement within or outside the warehouse
- Effective hard order allocation practices to segregate inventory status categories.
4. Data sharing
Keeping track of real-time inventory levels with thousands of miles separating warehouses, branch offices, or supplier locations becomes nearly impossible without adequate data sharing practices. E-commerce platforms reaching customers around the world rely on data sharing between the retailer and their customers to ensure delivery and availability information is up to date.
Dispersed supply chains require an equally strong commitment to data sharing between partners and locations. The confidentiality and security concerns that can stand in the way of robust data sharing can be mitigated through strong data sharing agreements and access controls.
5. Risk management
Inventory risk management practices are used to systematically review and prioritize factors that can impact inventory integrity such as errors, expired product, shrinkage, damaged stock, and inaccurate information. Risk management practices allow the issues with the greatest impact on customer satisfaction and financial results to be identified and mitigated first.
In many cases, the factors posing the greatest risk are those with the greatest impact on real-time inventory data access. The lack of control inherent to many global operations makes ongoing risk management essential to ensure the roadblocks to visibility are identified and removed as soon as possible.
“Success is all about smart risk management, not wild risk taking.” – Michael Masterson
6. Advanced tools and technology
Technology has created a world where globalization and real-time inventory can be mutually beneficial, but the right software and technology are required to make this ideal state possible. This begins with cloud-based inventory management software to create a centralized source of truth and collaboration hub. The best inventory management platforms integrate seamlessly with E-commerce platforms, POS software, and shared supplier databases. Additional technologies that support the symbiotic relationship between real-time inventory and globalization include:
- RFID tags and barcode scanning to support faster and more accurate inventory tracking
- Internet of things (IoT) sensors to gather data from equipment and vehicles continually
- Global positioning systems (GPS) to pinpoint inventory, customer, and shipment locations
Real-time inventory in a global economy: Final thoughts
The barriers to visibility in global supply chains were once so great that moving towards globalization was synonymous with compromised inventory visibility and control. Thankfully, vast improvements to inventory management tools and processes have closed the gap while helping to dispel this misconception. With more businesses and their suppliers making a commitment to real-time inventory management, the challenges of the global economy can be turned into positives.
The comprehensive Agiliron software suite includes inventory management, warehouse management, POS, and full-featured customer relationship management (CRM) modules that integrate seamlessly with all your favorite E-commerce applications. Cloud-based software and mobile-friendly apps help to make real-time inventory visibility a reality, wherever you are. It’s no surprise that over 2,500 brands rely on Agiliron to power their business.
Maintaining real-time inventory visibility in a global economy is not easy, but the potential rewards and growth make it well worth the effort. Cloud-based inventory management software is the key to unlocking unprecedented visibility for retailers, suppliers, and customers. Contact us today and allow our solution experts to explain some of the new possibilities for your business.