How can we use inventory management software to make better business decisions?
In 2015, business leaders are coming around to the notion that business intelligence is a non-negotiable factor for success. Understanding the full complement of factors that influence business outcomes is essential. So too is having access to the right tools and to reliable data to turn these key factors into levers for business success. Inventory management is no exception to this trend; innovation in technology is producing features that can help improve decision making and ultimately the bottom line. So, what are some of the ways that a modern, best of breed inventory management package can help inform to better set your business’ decision making up for success?
Accurate and current information
Although accurate source data does not seem like the most impressive or ‘sexiest’ feature of specialised inventory management software, it is critical to ensure reliable reporting and analysis. Inventory management software often supports serial numbering and barcodes which can improve the speed and accuracy of data entry. A key advantage over using pen and paper or spreadsheets is that once data has been entered it is less easily corruptible as users cannot accidentally delete or overwrite a cell in a spreadsheet - although data can still be updated or corrected, it is safeguarded against erroneous changes. Moreover, inventory management systems (especially those in the cloud) typically update inventory records in real time. Confidence in the source data as well as any subsequent movements means that managers can rely on the reports the system produces, and can use them to give the business an information advantage in decision making.
Lower cost of information
A key barrier to making more information-led decisions is the availability of the required information within a reasonable timeframe. Because information is updated in real-time, the business can rapidly incorporate it into its decision making. Reducing this delay means you will never have to make the difficult choice between proceeding without the full picture and having to delay a critical decision while further information required is obtained. A further benefit for many businesses is that with cloud-based inventory management software, all your data and all of your reporting is available to you on the road or wherever in the world you happen to be.
Looking to the future: Big Data
For all of the power of the extant inventory management technology, inventory management software is likely to become even more helpful in the near future. As Morris Cohen recently discussed in the Harvard Business Review, advanced machine learning and optimisation algorithms will be able to take inventory managers well beyond just recording and reporting on inventory data.
Cohen identified three key future trends:
1. Inventory management is on the verge of a tipping point due to real-time ICT data now routinely available.
2. Supply chain processes will need to be redesigned to take full advantage of multiple data sources across the entire spectrum of demand and supply data, customer referential data (e.g. product reviews, customer feedback metrics), as well as external data inputs via APIs and cloud interconnected systems.
3. Emerging patterns can then be exploited with machine learning and optimisation algorithms, which are playing their part in the emerging field of prescriptive analytics, to “find the best relationship between all possible decisions and full range of the data. Use of this relationship can lead to better operational performance”, according to Cohen.
The inventory management systems of the near future will thus be able to glean deeper and better insights from inventory management data than are typically possible at present. While inventory management software already provides visibility of a number of trends, sophisticated software will soon be able to identify even those levers of inventory performance that are neither obvious nor intuitive.
If your business could do with some extra visibility of your inventory performance, consider trialling an inventory management software package. Your business will benefit from faster access to accurate inventory information in real time, and can use this information edge to make better and more profitable decisions going forward.