Expanding businesses have different inventory sources, such as finished goods and raw materials, and these inventories need sharing and receiving goods to maintain an optimal inventory level. Inventory planning has become complicated as information has to be held across multiple sales channels and warehouses. Satisfying customers’ expectations across all the sales channels is a top priority for businesses, thereby managing expenses and tracking quantities of supply and demand at all the physical locations and E-Commerce sites. Thus, inventory planning systems are essential for monitoring this extensive network which is much more complex than what manual inventory panning could establish.
The integration of Artificial Intelligence is in high demand across every industry. One such industry is eCommerce, in which retailers and other businesses utilize it in their inventory planning systems. AI and machine learning recognize past trends by analyzing massive datasets to estimate the upcoming demand accurately.
What Is Inventory Planning?
Inventory planning is the method of identifying the optimal level of inventory and the time when the inventory has to be replenished. This is done to align the inventory quantities with the sales and production capacity. Inventory planning influences a company’s cash flow and revenue inflow and contributes to an effective supply chain.
For proper inventory planning, organizations and businesses should take care of three things:
- Cost Control – Businesses need to consider things such as automating the purchase order operations, choosing suitable suppliers, minimizing the situations of locked up resources in dead stock, etc.
- Demand Forecast – By utilizing past sales information, KPIs, and variables such as promotion, seasonality, and market predictions, demand must be accurately forecasted.
- Efficient Storage – Storing the right quantities of products in the right places for organizing the order fulfillment routes efficiently when you have different store locations.
How Can Artificial Intelligence Optimize Inventory Planning?
Enhanced Productivity Through AI Algorithms
AI algorithms can enhance the efficiency of the workplace. Machine learning can help a machine learn to function on its own. AI constantly acquires knowledge and constantly improves operations, making them more productive. Artificial intelligence can monitor cycle times, lead times, temperatures, plan downtime, errors, quantities, and so on through complex algorithms. With AI integration, employees no longer need to go through repetitive and mundane tasks.
Dynamic Safety Stock Calculations
Organizations have a fixed quantity for every item in their inventory, setting a minimum level for fulfilling walk-in sales, eCommerce, and other channels. With rising consumer demand and multiple sales channels, using generalized information is not enough, and stock levels should shift dynamically to meet the fluctuating demand. With AI, businesses can determine what quantities to stock for every unit and avoid circumstances of overstocking and understocking.
Organizations can implement AI-powered inventory planning systems to manage suppliers and choose the ones who provide goods at a low price and have low lead times. Businesses need replenishment orders to be fulfilled immediately as they have to meet consumer demand. Knowing which supplier is reliable can help businesses to save cost and increase efficiency.
Improved Customer Support with Chatbots
With Artificial Intelligence chatbots, businesses can stay updated on their inventory, track orders, and receive updates. Chatbots can assist in providing top-level customer support, and you can achieve much more than instant messaging. The customer support efficiency achieved by AI enhances the customer experience by providing instant answers and can increase retention rates. Chatbots can help with delivery requests, issuing billing, processing orders, tracking orders, and solving customer queries.
Accurate Demand Forecasting
Manual demand forecasting can no longer yield good results as businesses generate massive data. AI-based inventory planning systemscan recognize demand patterns and utilize this information to generate precise forecasts and streamline warehouse replenishment operations. Such inventory planning systems can also allow you to get instant forecasts depending on real-time information. It can be obtained from internal and external sources such as online feedback, demographics, reviews, weather, etc. AI-based software can assist in eliminating supply chain errors by 30-40%. This accuracy level helps minimize lost sales because of issues such as fluctuating consumer demand and inaccurate stock numbers.
Reduced Downtime with Predictive Analytics
Decision-makers rely on predictive analytics to make informed decisions with valuable insights. Organizations can detect discrepancies and failure trends, learn from past mistakes and estimate future failures. This helps to achieve a lower downtime as the estimated issues can be avoided even before they occur.
Impact of Promotion Planning
A significant advantage of AI-based inventory planning system is that it offers valuable insights which can contribute to better marketing strategies. AI can estimate the short-lived demand for products, and machine learning can detect sporadic shifts in interest for particular products. You can customize marketing strategies and frame them according to your ideal customers. With AI, you can keep up with the existing trends and insight into which products are going out of demand. Businesses can earn a more significant profit margin with better marketing strategies led by data-driven decisions.
Fountain9 assists retail businesses in planning their inventory accurately to satisfy consumer demand at the right time. Their AI-powered inventory planning system, Kronoscope, can accurately predict demand for each SKU unit and determine the quantities which should be stocked to meet demand effectively. With this software, businesses can achieve more significant revenue and satisfy consumer expectations.