3 Advantages of Managing Inventory in the Cloud

In its narrowest sense, inventory management comes down to the ability to find the right balance between tied capital (in the form of overstock or slow-movers) and high availability to fulfil every customer order on time. With this definition, inventory management sounds really easy, but in reality, it is quite complicated. Seasonal or sporadic demand, product innovations, unexpected customer orders, unreliable suppliers and many more factors contribute to the growing complexity associated with managing inventory. Many of these factors lead warehouse managers to keep high levels of safety stock in order to ensure product availability, even in the toughest of times. This, however, has a major negative impact on liquidity, something upper management typically frowns upon. And even with loads of safety stock on hand, that unexpected order from a customer who is scrambling to fill an equally unexpected order from one of its own customers will still threaten a stock out situation.

Common ERP-systems are already supporting companies at a basic level and help warehouse managers keep an overview of stock levels and current customer order situations. But inventory management, by extension, is also influenced by even more complicated circumstances. The latest market trends such as individualization and same-day-delivery require not only the right product in the right place at the right time but also well-organized supplier logistics and agile processes across the entire supply chain in order to stay competitive and keep costs at a minimum. In this context, ERP-systems often fail due to a lack of dynamic optimization functions. Furthermore, the growing amount of data associated with every single item and order shows the need for the implementation of an intelligent, fast and dynamic warehouse optimization software. Since very sensitive inventory data such as specific customer information, pricelists, arrivals and supplier information is included in the optimization processes, implementing a secure IT solution is of utmost importance.

As supply chains and their associated processes become more complex, it is becoming increasingly important to implement a reliable and scalable software system which ensures security and grows adequately with the business. In the frame of an innovative, future-oriented and dynamic business, companies are currently feeling the pressure to shape and optimize their inventory management processes and are increasingly turning to cloud-based solutions. Three major advantages can be associated with the use of cloud-based software solutions in supply chain management:

1. Fast and easy implementation

Software projects often require a significant amount of man-power from IT departments. Massive budgets must be set aside for the technical implementation, and the process is slowed down by long-lasting initial consultation. The development of an appropriate IT landscape and data interfaces as well as user trainings prove to be quite time consuming. To quickly start a software project and profit from its optimization features, cloud solutions are the way to go. A quicker Return-On-Investment can be realized since no heavy IT-modelling is needed and monthly client fees are typically low compared to the resulting amount of savings associated with optimized inventory levels.

2. Dynamically adjustable to keep up with growing requirements

Market developments change supply chain and logistics processes every day. Growing businesses that depend heavily on dynamic market trends must keep their operations agile and implement IT systems that are dynamic and easily scalable. Cloud solutions offer the optimal amount of support in this area. As customer requirements become more stringent and real-time service and delivery expectations rise, cloud-based tools offer the depiction of physical operations in real-time, allowing warehouse and procurement managers to react faster and in a cost-optimized manner.

3. Simplified Optimization

Cloud-based software tools can be deployed as an add-on which are easily connected to any ERP-System. Optimized decision proposals based on intelligent, self-adapting algorithms coupled with task-oriented workflows and target-aimed opportunities offer businesses an intuitive option to inventory optimization. Clear visualization of the most important information and to-dos at the item level supports users, which leads to productive work-flows and optimized buying decisions. The guess work can be substantially reduced when it comes to inventory management.

Conclusion

Inventory Management, at its most basic level, refers to the optimization of stock levels and availability at the same time. Locally implemented ERP-systems can help managers gain an overview of item movements within a warehouse, but they are limited when it comes to cost-effectiveness and the consideration of market developments as well as volatile demand situations. Therefore supply chain management should rely on cloud-based inventory management add-ons to not only profit from intelligent procurement and logistics optimization but also exploit modern and dynamic IT advancements to cope with today’s fast-paced digitalization and innovation requirements.