Key Trends in Inventory Management

Inventory management involves the tracking, control, and management of business stock. The inventory might include raw materials, work-in-progress items, and finished products to be distributed for sale. Effective management is vital given the risk of tying up capital in too much stock or failing to meet customer demand due to an insufficiency. However, there are a variety of inventory management challenges to overcome, with global events having a direct impact on supply.

Read on as we highlight the key trends and potential to optimise inventory management with transformative technologies here.

Supply Chain Shifts

International events such as the pandemic and the Russo-Ukrainian war have severely impacted supply chains in recent years. Indeed, 73% of end-users responding to Automate UK’s Industry Insights Survey confirmed that supply chain issues had the biggest business impact from 2023 to 2024. Manufacturers have had particular difficulty sourcing vital components, with the costs of parts and freight continuing to rise.

In response, many businesses have looked to optimise inventory management through nearshoring and reshoring. This has involved the relocation of services and operations so that they are closer to home. As an example, some UK manufacturers have set up factories across Europe, making for a reduction of shipping times and costs. Other benefits have included the avoidance of tariffs and greater supply chain resilience. However, there’s also the risk of increased production costs and the need for supplier diversification.

Inventory Challenges and Solutions

Besides localisation, businesses have adopted a variety of strategies for inventory management optimisation. There’s a particular focus on the tracking of inventory, involving the regular review of KPIs such as the fulfilment of customer orders and inventory turnover. Other measures include the minimisation of obsolete and slow-moving stock, with orders being modified and cancelled accordingly.

Inventory management optimisation strategies also include:

• Forecasting demand and ensuring the alignment of inventory with market needs
• Keeping a level of buffer stock as a safeguard against market changes
• Streamlining and limiting the product offering based on customer demand
• Calculating and automating the reordering of stock based on lead times and average demand.

Technology and AI in Inventory Management

Inventory management can be further optimised through the integration of technology, and more specifically, AI. The adoption of such technologies reduces the need for manual input and human judgement, with the more comprehensive review of data minimising the risks of inaccuracies and re-stocking mistakes. AI allows for real-time analysis, with forecasts being rapidly generated and inventory management changes automated. Such benefits are being widely realised, with an EY report indicating that 40% of supply chain organisations are investing in GenAI.

AI supply chain applications include:

• Analysing sales data, market trends and other external factors for the accurate prediction of demand
• Confirming the availability of products and automating the re-ordering process as needed
• Simulating and assessing likely supply chain disruptions for the development of contingency plans and minimisation of risk
• Evaluating purchase data, supplier performance, and market benchmarks to inform suitable pricing strategies
• Analysing equipment data and highlighting the need for preventative maintenance.

The integration of AI enables manufacturers to better meet customer demands, boost efficiency, and reduce the costs of inventory management. Such benefits are bound to be more widely realised, given the development and continuous improvement of GenAI tools.

Automating The Supply Chain

Continuing the technological theme, we can expect to see the integration of AI with other advanced technologies, such as robotic process automation (RPA) and the Internet of Things (IoT). This will make for reduced reliance on an already stretched workforce, with improvements in supply chain responsiveness and resilience. There’s also expected to be greater investment in digital tools for real-time inventory tracking and cybersecurity safeguards for the prevention of data breaches.

Businesses must keep track and stay on top of such trends if they are to remain competitive across fast-changing international markets. The adoption of transformative technologies will allow for increased responsiveness, more rapid delivery, and greater profitability through inventory management optimisation. There will also be a continuing need for human input, with businesses encouraged to invest in training for the optimal use of digital systems.

Discover More at the PPMA Total Show

You can look forward to learning more about the latest inventory management innovations and developments at the PPMA Total Show. Being held at Birmingham’s NEC from the 23rd to the 25th of September, this must-attend event will provide the opportunity to discover a variety of technological solutions, network with fellow industry peers, and gain expert insights. Go ahead and register your interest today!