Inventory management becomes a technology problem, often more quickly than one might expect.
The inventory data lifecycle may begin with a spreadsheet, but as products, orders, warehouses, and locations multiply, it becomes increasingly challenging to manually keep track of everything. The problem is no longer physical inventory, but synchronization of physical and digital inventory.
The technical and developer-oriented challenge then, consists of inventory control logic, data, and inventory processing, integration, and synchronization.
1. Real-Time Inventory Tracking
Inventory records are subject to becoming out-of-date in the time between physical counts.
A real-time tracking system attempts to ensure that physical and digital inventory data remain in sync.
One example of such a system would be a scanning device, an application, and a database:
Physical item -> Scanner/Sensor -> Application -> Database -> Inventory status
As inventory records must keep track of locations of products, inventory movements, stock of items, and incoming/outgoing items, in multiple warehouses and locations. However, the purpose of such a system is not the data collection per se, but rather the consistent application of inventory logic. The application may contain logic to process and update a physical item’s status in an inventory database.
2. Inventory Tracking With Barcodes
Barcode scanning represents an accessible and affordable method of associating physical inventory with digital records.
A barcode scanner can collect the unique identifier of a barcode, such as during receiving, picking, packing, shipping, or physical inventory counting. Subsequently, an application can use this identifier to update the inventory status and records of that particular item.
A simplified example of this process would be a scan and validation step, and an update step:
Scan -> Validate item -> Update database
Barcode inventory tracking aims to minimize manual data entry and collection, while also providing useful data about the movement of items.
3. RFID Inventory Tags
RFID inventory tags are another option to collect and relay information about a physical item.
A RFID system consists of a reader and tags, with associated middleware and software, which can provide information about items.
Using RFID tags for inventory management has advantages and disadvantages under various circumstances, while implementation-wise also involving databases, middleware, and associated software.
There are however several considerations when using RFID in inventory control, such as costs, environment, tag type, read range, level of detail, and visibility.
4. ABC Inventory Analysis
Not all inventory requires the same level of attention.
An ABC analysis helps classify inventory items, and this classification can than be used by logic to dictate and prioritize actions.
This application example shows how inventory control systems are not just about hardware, but also involve software aspects like data and inventory analysis.
5. Forecasting Inventory Demand
Historical inventory data can be used for forecasting demand and planning inventory needs.
A simplified version of this process would be:
History -> Data -> Forecast -> Planning, Inventory
It is worth noting that forecasting is only ever as good as the data it is given, and while forecasts represent no absolute guarantee, they nevertheless have value as an informative approximation of future demand.
6. Automated Inventory Reorder
Inventory control systems can analyze and react to inventory levels.
An application can use logic to determine when inventory needs to be replenished by comparing current inventory values to a threshold:
Inventory level <- Threshold -> Order
The specific reorder logic, along with available supply chain data, lead time, safety stock, anticipated demand, and open orders will affect the precision and value of the reorder functionality.
7. Inventory Management System in the Cloud
Inventory management systems can rely on the cloud to share data and information across multiple locations.
The use of a centralized database facilitates additional operations, like a API or other data exchange mechanisms, which allow for integrations and automated inventory operations in other systems.
Consistently keeping this data in sync represents the core of the technical challenge.
8. Inventory and WMS
A warehouse management system oversees the movement of inventory through a warehouse.
Depending on the implementation, such a system may involve:
Receiving
Put away
Storage
Picking
Packing
Shipping
Inventory movements
Inventory warehouse management systems share some aspects with inventory management systems, but are overall different. The focus of inventory management is on inventory itself, and its life cycle and status. The life cycle and activities in a warehouse are not limited to inventory, but also include its movement and organization.
Putting It All Together
There is no single best inventory management approach, but rather different options and levels of complexity and technical debt.
These options include scanning methods like RFID and barcode, methods of processing and analyzing inventory data, software logic for inventory analysis and control, systems like API and cloud integration inventory management, automated reorder systems, and forecasting.
Each such system or method can be applied or not, depending on a particular operation’s needs.
A typical data lifecycle may resemble this:
Physical inventory -> Data capture -> Processing, logic -> Storage -> Business logic -> Action
The common goal across each of these stages is reliable inventory data.
Once physical inventory can be reliably represented in digital data, applications can be built to help people make sense of it, take advantage of automation and intelligence, and make decisions.
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