Digital inventory management systems
Modern, cloud-based enterprise software solutions are designed to manage end-to-end business processes, automate transactions, and integrate data across multiple systems to provide an integrated view across an entire business process. Inventory management systems are complete materials management solutions that effectively manage the flow of goods across your company and its global supply network. In conjunction with specialized warehouse management systems, they provide accurate and timely visibility into inventory, efficient distribution, and improved productivity. Combined with supply chain planning systems, they take the guesswork out of inventory management by better matching demand with supply, ensuring more accurate stocking levels and improving working capital utilization and profitability.
A key benefit of modern enterprise cloud solutions is their ability to provide a view into inventory across multiple nodes of the supply chain, such as production facilities, suppliers, goods in transit, and distribution centers. This visibility gives decision-makers the key insights they need to manage demand, inventory levels, and ensure customer satisfaction. This is particularly critical for companies with extended supply networks comprised of suppliers, transportation providers, production facilities, and regional distribution centers. Having a real-time view of quantities on hand, goods in transit, and their location helps them better manage customer demand. For example, if a delivery is held up due to a plant shutdown or an equipment breakdown, managers can cover the temporary shortfall by shifting stock from one distribution center to another located closer to the customer. Inventory visibility is also critical to having real-time data on order volumes to help planners determine how much of a particular item they need, where it should be located, and how frequently they need to restock in order to meet actual or forecasted demand levels.
Warehouse management systems
A warehouse management system (WMS) provides specialized inventory management capabilities that streamline distribution center operations, such as streamlining receiving, stocking, order processing, and multichannel fulfillment. They can also manage materials in locations other than traditional warehouses, such as retail stores or stock rooms. A WMS provides end-to-end inventory visibility from inbound shipments through receiving, stocking, inventory cycle and physical counts, omnichannel fulfillment, and returns. Warehouse management systems also maximize materials handling efficiency and order fulfillment to ensure customer satisfaction.
Integrated demand planning
As supply chain complexity increases, companies are challenged to align supply with demand to determine inventory levels with greater precision. To accomplish this, they need sophisticated demand planning solutions, which can incorporate a wide range of item/location combinations and inventory policies into multiple scenarios for generating the optimal demand plan. The net requirements plan incorporated through manufacturing resource planning (MRP) into the demand plan must be able to handle the complexity that comes with global supply chains. At the same time, the role of inventory needs to be considered when applying manufacturing or distribution constraints to the plan. As discussed earlier, inventory policies for safety are directly implemented to manage supply chain exposure to demand fluctuations and simulations. What-if scenarios play a vital role in ensuring optimal inventory is included in the plan to meet customer demand, avoid stock-outs, and ensure resiliency.
Integrated business planning that combines statistical forecasts with actual demand signals helps ensure more accurate forecasts and inventory levels that meet your desired or target customer service levels. It helps you manage any uncertainty in demand and supplier lead times. Replenishment orders are generated whenever an inventory position falls below a minimum threshold. These orders incorporate estimated lead times to ensure adequate stocking levels. Based on the specified inventory policy, the replenishment order may be a fixed order quantity or computed quantity, calculated as a difference between the maximum threshold and inventory position, and can be adjusted for minimum order quantities.
Managing suppliers to optimize inventory management
Choosing the right suppliers is the responsibility of the procurement organization. Suppliers can have an impact on inventory. For example, achieving just-in-time availability depends on having reliable, qualified suppliers that can meet specific timelines for just-in-time delivery. If they cannot meet specific ship dates, production can be delayed and customers left hanging.