INVENTORY MANAGEMENT

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riven by the heightened influence of consumer demandover the Iogistics process, retailers and manufacturersare increasingly seeing the supply chain as a source ofcompetitive advantage. Inventory management nowplays a huge role in harnessing that advantage.

"The modern consumer wants the option to choose how andwhen they will buy and how they pay for and receive theirpurchases," says DarrenWildman of Apex Supply ChainTechnologies. "This requires a new level of retailer flexibility,which fails or succeeds based on the accuracy ofinventory data."

Inventory management is certainly making an entrance, withnew systems and strategies flnding their way further into thesupply chain. "!\MS is moving beyond the warehouse to provideand support a growing number of business functions, such asdelivery conflrmations, and customer facing systems, Iike stockavailability to e-commerce platforms," says Alex Mills of ChessLogistics. "14MS are also supporting an increasingly complex setof multichannel supply-chain functions."

F.ithere is a deflnite

For the future of inventorymanagement, chief executive ofCulina Group, Thomas vanMourik, sees the lnternet ofThings (loT) playing a key role.

"Speed of inventory trackingand monitoring, and centralisedreal-time stock level andreplenishment management,"says van Mourik. "There is theexpansion of the use of RadioFrequency ldentification as ageneric medium for inventorymanagement to prevent over orunder stocking, to ensuringstock security and minimise

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pilferage, to ensure qualitycontrol, and out of stocksituations.

"There is the evolution ofcloud-based inventorymanagement systems, offeringflexibility and scalability. Mobileand tablet devices are alsobeing used for inventorymanagement."

He says that staff collecting,analysing and taking proactive

measures in inventorymanagement is happening morereadily with the help of mobileapplications. "Then there is the

Fanas-eqqn! syqteu qn4 whelllltreylan get fram a stan4ar4\!MS.."In the paS1", lhe iq-v9,{}!qryltra4agqareqt qyste_m provided as a

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stock thev were handlins nronerlv."Jh,igprgetes p,r"o!,1q]It._q-bgqqqgq qS a b*llqlqqqsgs glglvs irl sizer!I

if thc order proflles ehange Agaresult of e:cemmerce so oickersare--e-xBeetedlq pr-aags_s Iqtg qf !.44iyrdual itgrrt! cel]tEredJEIb-thetraditional bulk !ep.lepishrrre,nt ord_erq, or asjuqtqn0CLexp-ectatlo._n! to pr_Qvidq traceabilitv dara change, this way ofworki ns isn't sustainable."

Apcp_rdine-tq Qarter, inl/eqtory managel4gqt qyqteqqiqqq!p-qtqti!.1-g lrtplq rylqlq{Blity hqve their proq a11d c,qrls fqr theus9t.-"Whil.e ll$ers qaq-expect better funqtionaliw from soue,s-ys-tems,thisalqq_demquqttateothcdistin_cIioubetwe_enthe

nance information," he says. "In thean invento

The future of inventory managementintroduction of wearabletechnologies which are alreadybeing used within Culina Groupto provide added value clientsupport," adds van Mourik.

JDA's Jason Shorrock predictsthat in the longer term, theindustry will see developmentswithin 3D printing, end-to-endsensing (using loT) andprescriptive response (usingartificial intelligence). "These

developments will help retailersto run an incredibly agile, leanand cost effective supply chainand inventory model," he says.

XPO sees an exciting timeahead with technology beingthe big differentiator for 3PLs."The industry is starting tounderstand the art of thepossible - looking at newertechnology," says XPO's NigelRouch, "Looking at Al to push

the boundaries - it's nottraditional for logistics - butit's had to become morein novative."

Predictiverequisitioning issomething thatSAP Ariba's

Collaborationffiffi& Tony Harris, general

manager at SAP Ariba, says thatsupply chains are becomingmore global, complex and riskierthan ever.

"From natural disasters and

economic volatility to humantrafficking and geopol iticalevents, businesses are facedwith a number of challenges on

a daily basis that impact theirability to successfully manageinventory," says Harris. "They

are increasingly recognising thatto overcome them, they must bemore collaborative with theirtrading partners across multipleprocesses, systems andgeographies."

According to him, this isinfluencing companies to turn tobusiness networks.

"Just like the social networkswe use to manage our personal

connections and activities,business netvvorks provide asingle place where companiescan manage their tradingrelationships and activities," hesays. "More and morecompanies are now using thesecollaborative networks to worktogether on orders,confirmations, and scheduling

is keyagreement releases to advanceship and goods receipts notices,

financing and invoices."Harris says that these

collaborative groups can alsooffer insights and intelligenceinto how to identifu risk in thesupply chain. "Many are

beginning to leverage this datato drive a more predictive

approach to inventorymanagement," he says.

Beyond these businessnetworks, supply chains are

also trying to create moreconnectivity and col laborationbetween all parties involved in

the logistics process, from startto finish. "Supply chaincompanies want to createseamless information flows toexchange information withpartners, suppliers andcustomers," says Alex Mills,Chess Logistics. "But linkinginventory management and

WMS to other applications canresult in increased technicalcomplexity, which is undesirable.

"The best systems shouldbe able to integrate with otherapplications easily and willlittle or no bespokeconfiguration work."

.fr#ffi ffi Historically, the process took two,

three, four weeks - now rt's got to be muchslicker and quicker...

Nigel Rouch

capabilities of these two svstems,,bec-au,se an inventorvq]44age{nenl sys!9{n t94qq 4q! t9 bq qble 19 qqpq wl1lt !ll9- 19-v€1q

ol data complexiw that a WMS can," says Carter."Fo e datathan-they

qa! aatually u+q, qqlheyqeed eyqlen gh thi!aq{effestt\/ely strip back thctlayers of -tJle onion.. to€et at Lhe mostrelevarrt itfqrrlrAtiqn that aqtiralty Sqpp*qrts thelr deciSiqrlqekiqe,ll

Mohit Dubey, senior director product marketing at E2open, says

that shifting consumer behaviour is changing how retailcompanies are engagingwith the end user. Consumers demandsmaller packages, which drive costs up. But, he says, itt thecompanies that are able to keep costs down that are rewarded.

"Those changes lto retail behaviour] are signiflcant enough toripple upstream," he says. "\Atrat's happening is, companies moreand more upstream are having to enable some of thosecapabilities lto drive costs dor,m] in their or,r'n companies as

opposed to their 3PLs."Enabling the manufacturer to direct ship to the consumer in

the manner they expect."

The qhangins rqle-atth,e qupplier, sBeclf,qallv,the r4qvemeqt qti4vSqlqry baqk 4qt!4 ltre qupply qhei! tq ttre= qrigilrqlpr, iqsqpethi4s I4disqlq Eda cqrlgr qqes 4.q 44 irlqre4qi4sly rqslllartrend,'l Custqmers are t!piqallv erpgpting tbeir Eqppligrs tq hqldback stock deliveries for as long as possible, to avoid them having

their or,r,rr lvarehouses," says Carter. "Instead, the]r want to havq

_deliverv at lhp lest tnllrlrle, luhqn itqlliq qtq !qq4q4 lqt qqlq."This increases the complexity of inventorymanagement along

the sgpply chain for aII stakeholders."strategy EMEA at IDA,

agrees that inventory management is spreading out across thesupply chain. He says that many companies have, in the past,attempted to handle inventory management as a stand-aloneinitiative.

"This is no longer a viable option due to the increasingcomplexity of global supply chains," says Shorrock. "Instead offocusing on shoft-term results, companies are now aligning dayto-day inventory plans with top-level goals on an on-going basis,turning inventory management into a powerful strategicadvantage in a challenging economic climate."

Inventory management systems can offer users a lot moreinformation than they once did. "Today's technology can manageinventory dependent on consumption patterns, volume, revenue,margin, cost-to-serve, product maturity, channels, criticality, l>

purchasing data and withinminutes identify changes in

buying patterns or pricingtrends.

"Armed with this intelligence,buyers can more accuratelyplan and forecast and driveoptimal business outcomes."

However Syncron's Gill

Devine says that the adoptionof Al into inventorymanagement has been fairlysnail-paced. " Predictiveanalytics and loT are phrasesthat are tossed aroundfrequently, but manymanufacturers are stillwondering how to incorporatethem into their business

practices," he says. "Theseemerging technologies enablereal-time decision-making andforethought on both strategyand performance, and istherefore the next big stagewe'll see incorporated intosupply chain businessintelligence. Adoption to thispoint has been slow.

" Nevertheless, predictive

analytics will go mainstream in

the supply chain, particularlyafter-sales over the next severalyears. Predictive analytics andloT will play a key role aspreemptive maintenancebecomes more critical tomanufacturers' success."

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Tony Harris also believes willbecome a reality. "Stock outswill become a thing of the

past as artificial intelligencepowered bots minehistorical transaction datato identify items that needto be ordered and unless

directed otherwise,automatically purchase themin line with company policiesbefore supply gets low," hesays." Machines will analyse

billions of financialtransactions alongside

the historical andreal-time

Nigel Rouch

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A single viewffi A "single view" trend ininventory management is beingdriven by the growing challengeof next and same day delivery,according to JonathanBellwood, founder & chiefexecutive of Peoplevox. He

says that these deliveryoptions are creating demandfrom retailers for single viewsof all stock.

"The major benefit of thesingle view is being able tosee and therefore sell moreitems - more easily andquickly," says Bellwood. "Butthe risk here is selling out ofstock, or continuing to sellstock you no longer have, andhave not ensured a sufficientbuffer is in place."

He says that brands that

only have a few SKUs arebetter placed than those largerretailers with multiple SKUsand a large turnover of items.

"The smaller and mediumsize stores would very muchlike to adopt the single viewapproach to inventorymanagement but will often findobstacles in their paths - suchas not having enough stockroom/warehouse personnel tosee and track what's where, orthe financial clout to negotiatefavourable terms with carriers,who will understandably prefermaking large collections fromstrategically placed

warehouses - rather than lotsof small ones from hard to get

to premises in the middle offar flung towns and villages,"

says Bellwood. "lt's a catch 22which is tough to get out of- for such retail businesses itwould be advantageous 1o go

back up the supply chain andarrange to list, view and sell allstock directly from their

suppliers' warehouses - andhave them arrange deliveryof it.

"This will save on storagespace, de-risks fonvard buyinglots of inventory, and saves ondistribution costs."

velocity and other key attributes," says Shorrock.Historically, the ability to identifr exactly where a product is in

the supply chain seemed impossible. But nowadays, it's essential.Nigel Rouch, IT and project director at XPO Logistics, says that

the ability to pass information much quicker is more and moreachievable. "Even flve to six years ago, a lot of 3PLs were givinginformation out twice a day; it's now much more about the enduser being able to see inventory, so they have the ability to orderwhat theywant," he says.

AccuracyRouch says this is being driven mainly by next day delivery whichin turn maximises the accuracy of inventory systems.

"We've got to be slick these days," says Rouch. "It's more aboutthe functionality and using it in a better way. Historically, theprocess took two, three, four weeks - now it's got to be muchslicker and quicker - you have to have the processes in place.

"You're putting as much investment in as out."XPO has a location in France where it has invested in a pilot

that uses heat map technology similar to that used forfootball matches. "You can focus on where youdropped the last pallet and map to where the palletis dropped," says Rouch. "It's wasted time lookingfor the pallet - we now have more ability to knowwhere the product is, and go and find it."

E2open's Mohit Dubey agrees thatfacilitating track and trace is crucial. "Theability to keep track of every.thing that ishappening at every level as transactions comein," says Dubey. "Then you're able to track how

r.i'' "4. ...companles are now

aligning day-to-day

inventory plans with

top-level goals,..Jason Shorrock

it's being handled by the 3PLs, customers, on the port, on atruck... notjust on the distribution side ofthings, but alsoupstream - tying these two areas together, and processing thesteps of that raw material."

E2open has been looking at this track and trace capability as adatabase that can be queried. "\iVhat is possible now, because it'snot just a database, is that you can actually do something aboutit," says Dubey. 'A repository as well as an actionable system;raising alerts in real time and tying it back to your ERP systems."

Dubey says that pharmaceutical companies are starting toadopt this kind of detailed traceability. "However, thesecapabilities are relevant for all consumer facing industries - notjust life sciences, food & beverage and cosmetics, but evenhigh-tech and consumer packaged goods, where product defectscan become health-and-safety issues for end consumers," saysDubey. "This is a matter for the end-to-end supply chain, not justthe logistics and material handling functions."

Uwe Hennig, chief executive of Detego, says that users areclearly looking for real-time insights. "The time for

out-dated reports is over," says Hennig. "People areincreasingly requesting real-time analltics across the

whole chain to better manage their businesses."We're also seeing a shift towards more item-

level and RFID inventory management systems,thanks to the falling cost of tags and near 100

per cent inventory accuracy."It's not only the businesses themselves that

are looking for visibility in the supply chain.

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May 2017 | wlvw.lo$istic

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