How companies are using real-time inventory management in their warehouses and DCs to meet customer expectations and keep them coming back to place more orders.
Real-time inventory management not only helps organizations keep close tabs on their inventory positions and avoid both stockouts and overstocks, but it also helps elevate the customer experience. The latter is becoming table stakes in a world where being known for accurate, on-time deliveries helps companies gain a distinct competitive advantage. And with the next competitor just one screen tap or mouse click away, even a minor edge can translate into higher revenues and better profitability.
What is Real-Time Inventory Management?
Efficient and effective inventory management is an elusive goal for many shippers and across most industries. According to Gartner, most businesses rely on manual methods (41%), spreadsheets (26%), or third-party software (26%) for their day-to-day inventory management operations, such as inventory tracking and goods distribution. Switching to inventory management software is driven by inefficiency (51%), limited functionality (31%), and unreliability (7%) in current methods and software.
Real-time inventory management goes a step further by leveraging technology to provide a constant, up-to-date view of all inventory. These dynamic systems automate the tracking of sales and purchases; giving companies a comprehensive understanding of stock levels; and enabling rapid responses to supply chain fluctuations, new opportunities and customer demands.
It’s those customer demands—many of which are dictated by the “Amazon Effect”—that are driving more organizations to reassess their inventory management techniques. “When consumers place an order, they expect to get their items as quickly as possible,” says JT Manget, Director, Warehouse Operations Support at Estes Forwarding Worldwide (EFW).
“Large retailers like Walmart and Amazon have cornered the market on executing quickly and providing accurate tracking information to their customers,” Manget continues. “We’re at a point now where if you don’t have real-time inventory management capabilities, your company is going to fall behind its competitors (if that hasn’t already happened).”
You Can’t Afford to Ignore this
The company that ignores the need for real-time inventory management could also be setting itself up for other problems. For example, larger retailers and sales channels may not even be willing to do business with sellers that don’t offer real-time tracking.
“Even if you have a great invention to sell, Walmart may not even take your call if you don’t have real-time inventory capabilities in place,” says Manget. Smart companies are increasingly turning to real-time inventory management systems to avoid this problem, maintain competitive advantage and keep their customers happy.
Third-party logistics providers like EFW have invested heavily in technology and offer those capabilities—real-time inventory management included—to shippers of all sizes. But not all 3PLs are the same when it comes to technology.
In fact, Josh Tench, EFW’s Manager of Warehouse Client Solutions, has worked with shippers whose previous 3PLs were still using Excel spreadsheets plus rudimentary inventory reporting systems. These solutions just don’t cut it in today’s shipping environment. “You can’t run a business without knowing exactly what you have on hand and what’s coming in soon,” says Tench, “and especially not in an environment where Amazon can deliver a widget within an hour.”
Harnessing the Power of Real-Time Inventory Management
Real-time inventory management may look different based on the company, its product mix and its end goals. For example, one EFW customer uses a project-based inventory approach. The company ships goods to the 3PL’s warehouse complete with a job ID already attached to the specific inventory. It keeps about 10% safety stock on-hand to accommodate changes or damage that may take place at the job site. For this particular customer, EFW manages the goods via lot tracking numbers. When a project is complete, the company can search its inventory for an SKU and know exactly how much stock is left and ready to allocate to another project.
Companies in the food and beverage or pharmaceutical industries may need their stock tracked by expiration date, knowing that their goods only have a certain shelf life before they have to be discarded and/or replaced. Using EFW’s real-time inventory tracking capabilities, these shippers know exactly when inventory is nearing its expiration date and can push promotions that drive sales and deplete that specific inventory—versus having to dispose of and sacrifice revenue over it.
“We can track all of that data and provide it to our customers who, in turn, can use it to make good business decisions,” Manget explains. The 3PL also sets up min/max reorder points, which means its customers never have to worry about being caught without inventory when an order comes in. This capability is crucial for importers who are dealing with production schedules that could stretch out as far as 120 days.
“Real-time inventory tracking lets them see their inventory positions ‘at a glance,’ implement improved purchasing processes and keep their on-hand inventory levels healthy,” says Manget, who is currently working with a customer that sells serialized pressure washers, generators and other products, each of which has its own serial number. The company, which sells through about 20 different retailers and channels, is using EFW’s warehouse management systems (WMS) to manage on-hand stock levels and reserve certain units for specific retailers.
The company can then adjust inventory levels to those selling channels based on which ones are selling more product. “We’re giving the company the best data possible to make those kinds of business decisions,” says Manget. Tied to warranties, the products’ serial numbers can be tracked across EFW’s and the customer’s systems and then used to determine whether the item is still within the warranty timeframe.
Out of the Box & Integrated
Companies gain a lot of advantages when they leverage EFW’s real-time inventory management solutions. The solution is offered out-of-the-box and needs no additional tweaking to accommodate specific shippers’ needs. “Once a company is onboard, we can start transacting and providing the real-time inventory data same-day,” Manget says.
Even better, EFW’s systems integrate directly with its customers’ own platforms, which means everyone always has the most recent, accurate tracking data at their fingertips. “They can see transactions as the goods are received and then shipped out of the warehouse,” he adds. “This capability has become table stakes for any company that wants to be able to compete effectively now and also future proof their operations.”
