Fed up with guessing when it comes to ordering inventory?
Picture this. You wake up one morning to find out that you’re missing out on revenue because you didn’t have enough of the right products in stock when customers were looking to buy. Sound familiar? Or you may have piles of unsold stock, tying up your working capital unnecessarily.
Then there are the wider business implications. Missing out on sales or having to discount overstocked products eats into your profits. Not having enough of the right products in stock turns customers away, tarnishing your brand reputation and damaging customer loyalty.
But what if there was a better way?
Enter predictive inventory tools. These are the game-changing technologies that are empowering businesses to plan for the future rather than constantly playing catch-up. Predictive inventory tools use data, machine learning, and advanced algorithms to predict what you’ll need and when you’ll need it before it’s too late.
What you’ll learn:
- Why Predictive Inventory Tools Are Essential Right Now
- How Predictive Inventory Tools Work
- Key Benefits of Using Predictive Tools
- How to Get Started Using Predictive Tools
Why Predictive Inventory Tools Are Essential Right Now
Inventory is one of those things that business owners are only fully aware of when it’s wrong. Too much or too little of the wrong products at the wrong time. But the status quo is no longer good enough.
Businesses that continue to manage inventory the old-fashioned way with gut instincts and historical averages are going to find themselves left behind. The reason? The pace of change in the modern marketplace has far outstripped traditional inventory management methods.
Think about it. Customer tastes are fickle and changing all the time. Market dynamics shift in the blink of an eye. Weather events, geopolitical issues, and economic uncertainty all conspire to make things more challenging and unpredictable.
But how can you plan for that uncertainty?
That’s where predictive inventory tools come in. By leveraging data, algorithms, and machine learning, these tools enable you to look into the future and plan accordingly. Implementing demand and supply planning software gives businesses the inventory optimization capabilities they need to stay ahead of demand.
How Predictive Inventory Tools Work
Predictive inventory tools use a variety of data sources, algorithms, and machine learning to provide accurate forecasts of what you’ll need and when you’ll need it.
Some of the data sources these tools analyse include sales history, market trends, weather data, social media sentiment, and much more. This information is then fed into predictive algorithms which use machine learning to spot patterns and make predictions.
For example, you may notice that a particular item sells more when there’s bad weather. Armed with this information, predictive inventory tools can ensure you stock up on the right product before the next rainy day.
Predictive inventory tools aren’t magic, of course. It’s about applying tried-and-tested data science techniques to one of your business’s most important operational challenges.
Key Benefits of Using Predictive Tools
There are a number of benefits that come from using predictive inventory tools. But for the purposes of this article, we’re going to focus on the most important ones for small business owners. These include:
- Reduced stockouts
- Lower carrying costs
- Improved cash flow
- Enhanced supplier relationships
Reduced Stockouts
Stockouts are a major headache for businesses of all sizes. The problem with a stockout is that it directly translates to lost revenue. If your customers can’t find what they want on your shelves, they’re just as likely to take their custom elsewhere.
According to one study, 69% of online shoppers will abandon a purchase and shop with a competitor if an item they want is out of stock.
Predictive inventory tools help to avoid stockouts by providing an accurate forecast of demand in advance.
Lower Carrying Costs
Carrying costs are a business’s silent killer. Keeping too much stock on hand is not only an unnecessary tie on your working capital but also racks up additional costs, including storage, handling, insurance, and more.
Predictive inventory tools keep stock levels as low as possible, reducing carrying costs while still ensuring you have what you need to meet demand.
Improved Cash Flow
Cash is king in business. When you’re over-investing in inventory, you’re unnecessarily tying up working capital that could be used in other areas of your business, including marketing, expansion, recruitment, and so on.
Reducing the amount of capital tied up in unnecessary inventory can have a material impact on your cash flow. The result? More cash in the bank to grow your business.
Enhanced Supplier Relationships
Predictive inventory tools help you plan for the future with confidence. When you have greater visibility of future demand, you can place more strategic orders. This, in turn, allows you to give suppliers longer notice.
Suppliers like that predictability and will reward you with better terms and preferential treatment when things get tight.
How to Get Started Using Predictive Tools
So, you’ve made the decision to start using predictive inventory tools. That’s great, but you’ll need to take some practical steps to make it a reality.
The first step is to conduct an audit of your existing data. The better your data, the more accurate your predictive tools will be. Once you have a clear picture of your data quality, you can then clean up any inconsistencies.
The next step is to choose the right predictive inventory tool for your business. This will depend on factors such as the size of your business, the complexity of your inventory, and your existing systems.
Once you’ve implemented your new predictive inventory tool, it’s important to train your team on how to use it. The best predictive inventory tools are only as good as the people who use them.
Finally, it’s critical that you measure results. Use key performance indicators (KPIs) such as inventory turnover, stockout rates, and carrying costs to track your progress and identify areas for improvement.
Wrapping It Up
Predictive inventory tools are no longer optional for modern businesses. If you’re serious about competing in today’s rapidly evolving markets, then you need to be looking to the future.
The winners in this space are going to be the businesses that can anticipate demand, optimise their inventory, and react quickly to changes. That means you need to do better than spreadsheets and gut instincts.
Key Takeaways:
- Traditional inventory methods can’t keep pace with modern markets
- Predictive inventory tools leverage data, algorithms, and machine learning to forecast demand
- Key benefits of predictive tools include fewer stockouts, lower carrying costs, better cash flow, and stronger supplier relationships
- Getting started with predictive tools involves an audit of data, selecting the right solution, and training the team
- You don’t need to change everything overnight. Start with your biggest problem areas and build up gradually
The tools are out there. The data is there. The question is whether you’re going to use them to future-proof your business or let your competitors do it first.
The choice is yours.
