How to Unlock the True Power of Inventory Management

Organisation is a valuable art. 

During the COVID-19 pandemic, the popularity of home-organising content, philosophies and services exploded. Professional organising consultant Marie Kondo skyrocketed to fame thanks to a surge in demand that continues to grow. 

Freedonia Group forecasts that sales in the home organisation market are set to rise to US$15.3bn by 2028, driven by the growing complexity, responsibility and time management needs of modern life. 

Here, the domestic mirrors the industrial. Warehouse costs are rising, supply chains are growing in complexity and manufacturers must provide speedy, consistent service to remain competitive. For these reasons and more, inventory management is a significant challenge. 

“Industrial manufacturers face many challenges when it comes to inventory management,” says Berend Booms, Enterprise Asset Management Advocate at IFS Ultimo. 

“Geopolitical tensions, natural disasters and other global supply chain issues are prevalent these days, making it challenging to keep sufficient inventory levels. 

“Inconsistencies in lead times from vendors further complicate efficient inventory organisation, which may very well lead to unexpected hindrance in the maintenance of industry-critical assets or even production stops.”

James Smith, Regional Director, Northern Europe at Autostore, adds: “The essence of inventory management lies in its ability to enhance efficiency and accuracy in the handling of products.

“By effectively managing inventory, companies can minimise the costs associated with excess inventory and storage, reduce the amount of lost or misplaced items and improve the overall speed of operations from receiving new stock to shipping orders.”

Managing inventory effectively is key to mitigating risk, maximising time, using assets effectively and future-proofing operations. 

Organisation here – as in all walks of life – is more than just an art; it’s a fundamental foundation for success. 

As Emperor Marcus Aurelius, the man who held Rome together during the Parthian war, Germanic wars and its first pandemic, said: “The secret of all victory lies in the organisation of the non-obvious.”

Building an effective inventory management strategy that addresses the non-obvious, unlocks efficiency and mitigates risk is hard and time-consuming. But it can be easier when you have expert advice on how.

Thinking outside the inventory box

Unlocking the full benefits of inventory management requires a very specific mindset. This mindset is characterised by the perception of inventory management as an overarching business strategy. It’s about more than maintaining operations; it’s about holistically improving them to better achieve specific business needs and goals. 

One area where the value of this mindset is clear is in manufacturing expansion. As the cost of space in factories continues to rise, many manufacturers struggle to pursue their expansion plans, feeling they must choose between growth and profitability. 

This is a mistake. With efficient inventory management, manufacturers can expand without any physical cost, optimising their profitability per square foot instead.

“Maximising the use of available space can significantly enhance efficiency,” James says. “This doesn't necessarily mean expanding the physical footprint of a warehouse but rather using the existing space more intelligently.

“The implementation of high-density storage solutions and the strategic placement of inventory improves storage capacity and the overall flow of goods within the warehouse while reducing the need for costly expansions or additional facilities.” 

This approach is at the heart of AutoStore’s services. A global company with more than 1,450 systems in 50 countries, it’s best known for pioneering ‘Cubic’ storage automation.

Using solutions from AutoStore, PUMA increased its warehouse capacity by more than ten times, enabling it to ship in excess of 100,000 same-day orders, even during peak times, with a 99% hit rate in order accuracy. This has not only boosted customer satisfaction but reduced organisational costs and elevated overall service levels. 

The value of a holistic perspective on inventory management is also apparent with the adoption of industrial robots. 

Robots organising your warehouse? Likelier than you think…

• Eighty-three per cent of manufacturing industries use robots for tasks like palletising and packaging

• Robots typically lead to a 95% increase in production speed and a 92% increase in production capacity

• According to World Robotics, 75,000 robots were used in warehouses in 2022. Last year, this figure increased to 114,000.

• Robotic automation can reduce costs by 20% to 40%, providing robust savings.

“Using robots offers several advantages,” James goes on. 

“Firstly, they can increase a warehouse's overall productivity by operating around the clock.  Secondly, robots reduce the margin of error, ensuring more accurate inventory counts and tracking. Thirdly, they also improve safety within warehouses by minimising the need for people to use heavy machinery.”

Inventory management principles should be built into robot integration, enhancing the speed, effectiveness and precision of overall factory operations. Manufacturers must invest greater research and focus into the value of robots as tools of organisation – a statement which makes one think of Marie Kondo, gesturing at an industrial robot and asking: ‘does this spark joy?’

Leveraging software, systems and data insights 

Embracing inventory management as a holistic business strategy requires oversight and knowledge. Experts in the field recommend specific Industry 4.0 software and systems to enhance access to data-driven insights and pinpoint the areas where inventory management could provide transformative benefits. 

“Leveraging advanced technologies like warehouse management systems, automated picking systems, and IoT devices can streamline operations, reduce labour costs and increase accuracy in inventory management,” James continues.

“For example, a warehouse management system can help track the movement and storage of goods within a warehouse while robots and conveyors can manage tasks like picking, packing and sorting. IoT devices can create a networked ecosystem where real-time data flows seamlessly between different components of the supply chain.”

Data analytics is game-changing for almost every aspect of manufacturing, from managing the supply chain to optimising the production line to enhancing training. 

At its core it’s all about organisation, putting results and observations into their proper place and context, playing a critical role in enhancing inventory visibility. 

“To ensure the best optimisation and utilisation of inventory, manufacturers must stay on top of their analytics and gain optimal visibility into materials, workflows and processes,” asserts Mike Bradford, DELMIA Strategic Business Development Director at Dassault Systèmes.

“This can enable manufacturers to improve productivity, balance supply with demand efficiency and reduce costs.”

Operations management platforms like Dassault Systèmes’s DELMIA Apriso can help with warehouse functionality, real-time visibility and historical analytics. With its integrated MES production and warehouse capabilities, DELMIA Apriso helps manufacturers synchronise materials with production in real time. 

“This provides increased visibility, reduced stock-outs and faster response to supply chain issues,” Mike says. 

“This allows for thorough monitoring of all warehouse activities, including internal operations such as picking and kitting, as well as external-facing operations such as vendor and customer interactions. “

Warehouse management pairs well with warehouse automation, according to James. 

“With warehouse automation, your business can eliminate many of the manual tasks associated with inventory management,” he says.  

“Automated inventory management can track sales, update inventory records, generate purchase orders and even forecast future demand based on historical data. It’s automation that will allow your business to keep up with the fast pace of the modern marketplace and make informed decisions quickly.”

Mike also asserts that mobile technologies have a vital role to play, arguing manufacturers will see significant efficiency benefits by equipping warehouse operators with devices running on iOS and Android. 

“These devices enable tasks such as scanning, picking and kitting to be performed with greater ease and accuracy, providing immediate insight into inventory status and boosting operational transparency,” he says. 

“Building a traceability platform through these technologies improves management efficiency and ensures all stakeholders have access to accurate and up-to-date inventory information.”

Other platforms capable of enhancing inventory management include enterprise asset management systems, as Berend Booms, Enterprise Asset Management Advocate at IFS Ultimo, explains. 

“Software tools like enterprise asset management (EAM) systems can help mitigate some of the risks that come with inventory management,” he adds. 

“For example, by registering multiple vendors to augment the possible purchasing options; or, by providing a centralised list of acceptable replacements to the main product, so that the impact of any supply chain issue can be abated.” 

With an EAM system, manufacturers can unlock significant integration and insights, enabling superior visibility into the status, location and storage of their inventory to maximise efficiency. 

“An EAM system supplements your inventory management with a range of industry-leading integration possibilities, such as the use of barcode scanners, track and trace and stock count features,” Berend continues.

“These benefits will help you gain insight into the availability and location of your inventory, allowing you to further optimise your business processes.”

Determining which of these software solutions will best serve your business needs is key to establishing a successful inventory strategy. With the right mindset, you too can organise both the obvious and non-obvious and lead your organisation to victory.

“Inventory management isn’t just about keeping track of how many items are in your warehouse,” concludes James. “It’s about understanding the lifecycle of each product and making informed decisions that can enhance the efficiency and profitability of your business.”

To read the full story in the magazine click HERE

​​​​​​​**************

Make sure you check out the latest edition of Manufacturing Digital and also sign up to our global conference series - Procurement & Supply Chain 2024 & Sustainability LIVE 2024

******

Manufacturing Digital is a BizClik brand.