As we emerge from a supply chain crisis that impacted the world for more than two years, there’s a pressing need to make inventory management more flexible, resilient and stable. Many companies are turning to artificial intelligence as a solution.
As a means of increasing the supply chain efficiency, it’s estimated that new AI technology will add $1.3 trillion to the global economy in the next 20 years. Global spending in that area is expected to surge from $1.67 billion in 2018 to $12.44 billion in 2024.
Innovations in AI are becoming integral to every stage of inventory management. On factory floors, in warehouses, on cargo ships, at cash registers, and in transport vehicles, computers are collecting and digesting massive amounts of data.
When we say that AI is being applied to inventory management, we don’t just mean that robotic machines are doing the work — AI involves machines that learn. These machines are equipped with software that uses advanced analysis and logic-based techniques to interpret real-world situations. They communicate with other computer systems, apply intelligent algorithms, analyze scenarios and formulate responses. They strategize, make decisions and take action.
How AI Tech Impacts Inventory Management
Inventory management isn’t just about shipping goods to customers. Rather, it’s about having the inventory in place before customers even order it, which requires extremely precise forecasting. Overstocking means lost revenue, and understocking means shortages and unhappy customers.
AI software is helping businesses by learning to accurately analyze consumer demand for specific products. In addition, it reacts to changing trends, accounts for seasonal shifts, and considers regionally based demand as it stocks inventory. By studying millions of purchases, algorithms can accurately foresee whether items will be flying off shelves or languishing in back rooms.
The technology allows businesses to get ahead of the game and keep the supply chain moving by ordering based on real-time demand, not stocking inventory according to a prediction. When businesses are able to increase efficiency in their inventory management, they can increase customer satisfaction while decreasing expenses.
When inventory runs low, technology enables businesses to react quickly by matching them with ready suppliers. AI software maintains a database of a business’s suppliers and updates it with current stock. In seconds, the technology can analyze an order based on multiple parameters such as cost, delivery speed and reliability to suggest the best possible supplier.
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