Updated: Jun 23
Over Stocking and Under Stocking is a result of inefficient Inventory Management. Out-of-stocks and Excess Inventory hurt your business more than you think. They are the biggest deterrent to growth and cash flow problems.
Globally, retailers recorded losses of a whopping $1.75 trillion due to mismanaged inventory.
If you are still using spreadsheets to manage inventory or do not have a process at all, you have noticed the difficulty in fulfilling demand and the increasing costs associated with it.
If you constantly run out of stock and you end up with more excess inventory than you expected, you are spending too much in fulfilling an order with barely any margins.
The average cost to fulfill an order is 70% of the average order value. With other inefficiencies and unexpected disruptions, the costs will only go up and your profit margins will be close to nil.
Having just the right amount of inventory on hand to meet demand without excess inventory building up, is achieved through streamline inventory management.
WHAT IS INVENTORY MANAGEMENT SOFTWARE?
An inventory management software automates the inventory management process to streamline operations and grow your business by monitoring and optimizing stock levels across your supply chain, whilst also tracking sales, lead times, trends and other factors and using techniques such as inventory forecasting and replenishment planning to plan ahead and prepare for any demand.
A good Inventory Management software uses technologies like AI and ML to automate, simplify and improve the process with speed and higher accuracy.
Whilst, previously, you had to use an Inventory Management Software with some expertise and manually processes and update it to keep up with changes in demand, automation has made it possible to remove manual repetitive tasks and implement Inventory Management Software with no prior expertise.
What's more is that a good Inventory Management Software dynamically adjusts inventory to keep up with changing demand without constant manual adjustments.
While spreadsheets are a good start to keep track of inventory, it can't keep up with the complexity of multi-channel businesses, and disruptions and volatile demand. It becomes needlessly complex and prone to human error.
BENEFITS OF INVENTORY MANAGEMENT SOFTWARE
An accurate Inventory Management Software will calculate the amount of inventory you need to stock for a particular period. With AI-enabled Planning and Inventory Forecasting, you can generate accurate predictions of the demand to help you plan for any volatility and fulfill all demand without wasting too many resources.
A good Replenishment strategy involves dynamically changing policies for different SKUs based on demand phases and supplier lead times and storage space utilization.
Crest Inventory Management Software automates replenishment and automatically creates/calculates dynamic safety stock for all your SKUs to give you enough inventory buffer to meet demand during high demand periods, and reduces inventory levels when demand is low.
Excess inventory bleeds capital, and can even end up turning obsolete which is an even bigger loss. A common strategy that we see among businesses that do not have a streamline inventory management process is to simply hold additional inventory to avoid stockouts. But, this is not a feasible strategy as excess inventory drains capital and expensive storage space.
A good Inventory Management Software uses AI and Dynamic Planning to enable you to know exactly how much to stock, helping you reduce wastage and grow your bottom line.
An Inventory management system which helps track inventory throughout its lifecycle can help you in identifying slow-moving stock that is more likely to become obsolete.
With the right metrics, you can make decisions to eliminate dead stock, such as discontinuing specific items, selling them at a discount, or bundling them with other products and running promotions to sell slow moving stock before it becomes obsolete.
Optimize Inventory to Reduce Costs
Inventory optimization can help forecast demand, optimize logistics and storage space, whilst ensuring best replenishment practices are met for achieving maximum profitability and keeping costs low.
An AI enabled Inventory Optimization tool like Crest can give you real time visibility into demand, identify items that are fast selling or slow moving, and help you make decisions to get strategic on storage based on variables such as sales volume and maintain healthy stock levels to keep operational costs low.
Remove complexities, and focus your time elsewhere
Inventory management entails constantly tracking inventory levels across all channels, tracking its lifecycle, forecasting demand, calculating safety stock levels, lead times, turnover rates, and much more in order to keep stock levels balanced.
Since the scope of inventory management is huge, it also includes a lot of repetitive tasks, which can slow you down and deplete your resources and drive up costs.
Crest inventory management software automates inventory management and optimises inventory levels across all channels, allowing you to meet demand and reduce excess inventory without wasting time and resources manually managing inventory levels.
Inventory Forecasting is the backbone of a good inventory management process. Without having an accurate picture of your future demand, it is impossible to plan inventory efficiently.
Demand can be volatile, and relying on historical sales performance is not enough to accurately predict demand. Predicting future demand for inventory with traditional methods of Forecasting such as Excel can be time consuming and affected by human bias, lack of visibility, and lack of agile adjustment of demand.
Without any manual intervention, Crest dynamically predicts demand for all your inventory across any channel, taking into account real time market signals, trends, seasonality and stock availability to ensure you are always sufficiently stocked for any market volatility.