Supply chain leaders often interchangeably refer to both a warehouse management system and an inventory management system as one and the same. However, systems used to manage inventory refer to the combination of technology, including hardware and software, for the following:
- Product identification
- Product matching to orders
- Data analysis
- Product labeling and management
The use of combined supply chain systems ensures these processes continue disruption-free, even when those systems go outside the warehouse. While a warehouse management system may perform similar functions, it may be also be limited in its use. Ultimately, the WMS may serve an inventory management purpose, but when other systems and functions are involved, inventory management processes are more reliable and accessible in modern supply chain management. Supply chain leaders need to understand how the combination of technologies and capabilities promotes successful omnichannel fulfillment.
Challenges of Limited Inventory Management Capabilities
The challenges of inventory management without using a dedicated, standardized system are significant. Without a system to adequately track inventory, supply chain leaders may realize an unexplainable higher rate of returns. Safety stock may turn in to excess stock, contributing to higher carrying costs. Orders between channels may lead to the worsening of this practice, and perishable products may expire well before a sale. Shopify notes that the average retailer only has a 63% inventory accuracy.
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An Inventory Management System Connects Physical Assets With Digital Data
Regaining control over inventory is essential to omnichannel success. Retailers have spent years perfecting their channel-specific strategies, but in today’s world, a successful brick-and-mortar location depends on successful online order fulfillment and vice versa. Proper demand forecasting, allocation and replenishment, optimization of supply chain processes, assortment and space planning, and proper order routing will go a long way in reducing excess inventory and promoting lower cycle times. Unfortunately, gaps occur often, and when a gap exists, it results in delayed delivery. That does not mean safety stock goes out the window. The key to success lies in leveraging a proper system in a series of tools to effectively “grease the wheels” of your warehouses and all fulfillment centers, including brick-and-mortar locations. According to Camcode:
“Because inventory often consists of movable assets, inventory management systems are critical for keeping tabs on current stock levels and understanding what items move quickly and which items are more slow-moving, which in turn enables organizations to determine when it’s time to reorder with greater accuracy.”
How to Use an Inventory Management System to Boost Omnichannel Fulfillment
Supply chain leaders have spent exhaustive hours working to boost omnichannel fulfillment, and to that end, the biggest players have achieved success. However, finding the best way to leverage an inventory management system and drive more efficient omnichannel fulfillment is slightly more complex. It depends on recognizing the unique challenges in your operation and putting the right technologies and software in place to overcome such obstacles. To encourage better omnichannel fulfillment through the right inventory management practices, follow these steps:
- Bring all supply chain inventory management platforms or resources under a central software umbrella.
- Collect and analyze data to better understand appropriate safety stock levels for each fulfillment channel.
- Use all fulfillment channels as potential distribution centers to move more freight between channels and deliver on time every time.
- Work with suppliers to automate reordering, based on data, as well as fulfill orders directly from the manufacturer or when unloading a truck (dropshipping and cross-docking).
- Include returns management processes within inventory management to maintain better records and understand customer buying habits.
- Reconcile inventory automatically, recognizing when the inventory on-hand does not align with the expected number of orders shipped and vice versa.
- Use data from the supply chain system to increase transparency for customers, including inventory availability and realistic fulfillment options, as well as reassuring customers of potential risks in the supply chain, such as the coronavirus, for example, and how your company keeps them at bay.
Invest in and Integrate Your Processes With a Robust Inventory Management Strategy to Unlock Greater Growth
Your inventory management system is essential to success in modern omnichannel fulfillment. Instead of hoping your inventory will meet demand, guarantee inventory availability by following the steps above and putting the right inventory management strategy to work.