Manual inventory management and human errors negatively impact your business? Try AI-powered inventory management and let machines and algorithms do the work!
What AI stands for today?
Artificial Intelligence (AI) is a top-notch technology today used to help machines process large amounts of data, discover data patterns, and carry out tasks based on the human experience. Even 30 years ago it was considered impossible for a computer to perform human-like tasks, have cognition and reasoning of its own, solve problems, self-learn, and advance in data analysis that much, as it was simply beyond belief. However, nowadays, AI is used to:
- make repetitive learning and discovery automated through data
- increase product intelligence
- adapt algorithm skill acquisition through constant learning
- analyze wide capacities of information on the deeper level
- be a step more accurate the more you use it
- assist in getting the most value out of any data
AI-based technologies include self-driving cars, facial recognition, search suggestions, gaming platforms, algorithms of behavior, mapping applications, Alexa, SIRI, and chatbots. The top ten artificial intelligence stocks today according to the stock market news are Nvidia (NVDA), Alphabet (GOOG, GOOGL), Salesforce (CRM), Alteryx (AYX), Amazon.com (AMZN), Microsoft (MSFT), Twilio (TWLO), IBM (IBM), Facebook (FB), and Tencent (TCEHY). More about AI stocks can be found at Investor’s Business Daily. There are no boundaries to AI’s achievements with the current technological progress, humans’ curiosity to dig deeper, and the world’s pace.
With its vast capabilities, AI is highly demanded practically in every existing present-day industry. For example, in banking, healthcare, retail, and manufacturing, where it can ensure legal solutions, medical research, patent searches, and risk management, respectively. As a result, AI enhances the analytical skills of domains and industries, increases technology’s analytical performance, and eliminates language and economic barriers. Also, AI reinforces our abilities to become greater at what we can do, allows us to obtain profound understanding, broaden our vision, excel at memory support, and much more.
One of the greatest usages of AI falls onto the manufacturing and retail businesses, specifically, their inventory management. It is crucial for businesses that sell products to manage and control inventory starting from the manufacturing stage up to product distribution. Essentially, data inventory management is a postulate of running business coherence as it helps you gain a positive customer attitude by providing fast and quality services and growing the percentage of sales. Thus, smart cybernation has all the potential to become a crucial part of inventory management systems within the next 10 years or so.
Inventory Management: What? Where? And How?
Inventory management is the process of controlling inventory within every business. It includes monitoring of buying, manufacturing, storing, and using goods from the purchasing phase up to the direct store sales. By managing this process, you ensure that goods provided for customers are here and now, and of good quality. Correct management can significantly impact your ROI by spending fewer costs on malfunctions and creating an amiable atmosphere for client services based on the demand and expectations of the latter. There are five types of inventory a business can own. These are:
- finished goods
- raw materials
- maintenance, repair, operation goods and
- safety stock
Based on the types of inventory, there are also five inventory management steps. These are:
- purchasing of raw materials or ready-made products for further realization
- producing goods or semi-manufacturing products
- holding stock or storing manufactured goods or raw materials before realization
- selling goods to customers
- reporting statistical data and tracking profit based on sales
IT inventory management is one of the examples of how inventory management works. It enlists all the technical property of the company such as desktop computers, keyboards, servers, load balancers, routers, firewalls, switches, headphones, and other items that participate in internet connectivity or in carrying out developers’ mundane duties. Together with hardware, loads of references about this property require appropriate storage. For instance, the brand of any device, model or serial number, a configuration of the server, location of the equipment, data about assigned computers, and much more information, which the inventory management process monitors. One more inventory management asset in IT companies is the installed software on each personal computer, which also requires control. Accounting for an abundance of information, companies need specific tools to automatically obtain, optimize, and store the existing data in one place. That is when automated inventory management tools become handy. Inventory management is important for your company’s growth and profit accumulation, so it is vital to use the best artificial intelligence models to keep it cutting-edge.
Inventory Management Models
Generally, there are two models of inventory management. These are created to find out the perfect level of inventory that requires maintenance within businesses. These models are:
- independent inventory demand (perpetual inventory and periodic review)
- dependent inventory demand (e.g. EOQ – Economic Ordering Quantity, ABC – Activity-Based Costing, and JIT – Just-in-Time).
If independent models depend on a certain non-decisiveness based on the demand levels and time of restocking, dependent models are based on the assumption that everything is decided according to demand and restocking. Here, perpetual inventory is a process of reordering when the item stock decreases to its minimum level and periodic review is a regular process of stock management and reordering control. In comparison, the EOQ will give answers to questions of How often should you buy? When to buy? What kind of reverse stock should you have? ABC model will help you measure and position inventory items, where A will be the most valuable ones and C – the least. The JIT model helps in waste cost reduction as it prefers only produced and received goods of a certain quantity. Each model is designed specifically to meet the organization’s needs and control both the demand and supply to ensure a positive experience in inventory management.
What AI has to do with inventory management?
The inventory management process depends on its organizational structure and coherent actions. AI is the type of technology, which can add to the logistics and consistency and improve inventory supervision. For example, AI can offer such ways of inventory management enhancement as:
- inventory monitoring automation
- data mining
- robot automation
- error reduction in forecasting
- customer experience improvement
With the automation of AI-based inventory management, manual tracking of inventory becomes impractical. Thus, it is an extra advantage for employees, who can concentrate on carrying out other tasks and be more productive while machines do all the work. Therefore, automation allows real-time tracking of products, manual error reduction, and inventory optimization.
Data mining with the help of AI becomes an easier process of gathering information. Hence, by tracking and recording the interests of every consumer through algorithms, companies form a better picture of consumer demands and plan their business development. Thus, businesses get a pre-plan of future customer needs and stock products accordingly.
Inventory checking, fulfilling, and restocking can also be done with the help of AI inventory management. Algorithms guide robots to select and move orders with the help of their sensors and system requirements. Robot automation saves the day by retaining large amounts of time on task completion, which is impossible to do manually.
Error reduction in forecasting is a priority to businesses as it impacts supply chain management. Of course, companies make attempts to understand what amounts of products to stock optimally to gain consumer satisfaction and profit. It is where AI makes valuable predictions and updates data non-stop to ensure demands are being calculated and there are going to be enough products stocked in the future.
Dictating the demand, preferred product quality, and quantity, as well as deadlines, is inherent to customers, who contribute to business growth financially. Overstocking and understocking suggest that the company does not meet customer demand and, this way, makes consumers’ experience less decent.
There isn’t a good choice between overstock and understock. Both have a negative impact on your business
Quality Warehouse & Distribution Co., Inc.
Approximately 70% of consumers (or even more) will buy the product somewhere else (e.g. the Amazon Effect) and, the revenue of $1.75 trillion will be lost all around the globe annually. This number is not final and tends to grow without appropriate interventions. The downturn occurring leaves little space for cost accumulation and savings. Thus, conscious inventory management is a priority. Besides, the biggest focus in sales should be dedicated to input quality, timely delivery, and customer satisfaction with the output. Moreover, AI has the potential to search, scan, and identify the needed products or offers, which saves customers’ time and effort. These two factors directly influence customer satisfaction and leave big chances customers will come back to you again.
How can AI improve inventory management?
Though AI is an ideal deposit into inventory management, there is still space for improvement. For example, gradually improving inventory management will help your business thrive and accumulate profits. Therefore, the ways of improvement should consist of:
- focusing on your needs
- engaging with suppliers
- planning an inventory management system
- using only present-day data
- going mobile
With the right attitudes and actions, major improvements in inventory management can be achieved using AI, its scenario predicting capabilities, recommendations, and solutions to the problems occurring in the future. Analytics presented by AI and a bit of independent decision-making allows data enrichment, standardization, and consolidation, and, basically, everything that employees are incapable of doing within short periods, without human errors and, most importantly, manually.
Are there AI usage risks?
Unfortunately, AI technology advances and develops through analyzing consumer demand patterns and adjusts AI inventory management to well-known or forecasted data. However, sometimes customers change their preferences quite suddenly and AI cannot adapt to the new patterns and improve customer demand immediately as if it was a human. Artificial intelligence in inventory management acts on common knowledge and it becomes hard for it to adjust to the new algorithms of the consumption environment within short periods. With no references applicable to new knowledge AI is deprived of performing quick predictions.
Moreover, on implementing new AI-based inventory management software there is a chance it will be conflictual with the previous older software versions while the integration stage and result in unpredictable damage. Thus, human occasional presence in inventory operations control and constant monitoring of AI is rather a must to ensure a smooth course of events. AI rarely reports errors if the technology is given the right commands and information, but that does not mean errors never occur. Having the ability to produce cognitive tasks and reasoning, AI still needs human help to function better and improve inventory management.
Despite the AI usage risks, which are nominal, the advantages of this technological breakthrough are immense. Perhaps, nowadays artificial intelligence has limits to its functions in inventory management and more, but in the nearest future, it might supersede all the bold expectations. It is only a matter of time.
Our Company’s Experience
Inoxoft has met all the challenges and benefits of boosting enterprise logistics and organizational monitoring for an Israel-based company B.O.S. Better Online Solutions and produced a case study. The client’s request was to make inventory management more functional, reliable, performative, and supportive. Also, it required waste expenditure reduction. Hence, Inoxoft Team developed a web platform and a mobile app to enhance inventory and customize multiple types of businesses. For example, database and RFID readers’ communication improved reaching the highest possible optimization of 0.2 milliseconds!Inoxoft achieved the following:
- cutting-edge Android app
- inventory accounting configuration
- internal ERP systems integration through the web platform
- speedy database processing optimization
- Bluetooth, RFID, FTP data transfer support
- 500k row database management
- system setup boost
- online/offline barcode scanning
- 130% process performance improvement
More information on the case study can be found here.
To Sum Up
Artificial intelligence breaks into the future with unbelievable speed and power. Almost every business has shifted towards using AI daily. Especially, to AI-powered inventory management, as it changed the whole picture of stocking and storing for industries. With the help of AI, inventory management became automated, pre-planned based on customer demands, carried out by robots and machines, allowed employees’ productivity increase in other fields, reduced errors to a minimum, and further eliminated malfunctions by a set of appropriate algorithms. These interventions brought consumer satisfaction, high sales, and companies’ growth. As AI develops and advances its possibilities with every minute, there is still space for constant and gradual improvement in producing better and faster results. If you still wonder whether to use AI in your business, you can always try out the Inoxoft discovery phase. Your choice depends on the needs of your inventory management procedures as well as the sums you can invest to achieve bigger profits and save costs from unwanted waste. But results can be outstanding. AI is the future you should embrace to thrive.