With consumer spending and demand growing at 30% year-over-year, over 72% of all businesses have said their new priority is to leverage real-time inventory solutions. One that has been making waves for its wide reach and scalability is artificial intelligence (AI) empowered inventory management software. The AI solution recently reported a staggering value of $215 billion following its rapid adoption.
Why AI Should Be Top of Mind
The U.S. Chamber of Commerce explains that 73% of small businesses are not familiar with digital solutions, which is why it’s understandable that AI may seem too extreme for some. However, recent data shows that smart inventory solutions can improve inventory accuracy by up to 95% for those who choose to integrate it. This is in stark contrast to the mere 63% inventory efficiency that the average non-AI-enabled business reports.
How Exactly Can AI Help with Inventory?
Enhances inventory replenishment
Lackluster inventory replenishment manifests in either overstocking, understocking, or dating your inventory. In total, this is believed to cost businesses over $1 trillion worldwide. To address this concern, AI creates an integrated ecosystem that tracks how much stock is available, makes intelligent order estimations, and predicts which items will be in demand soon. This means that every penny of your inventory capital is actively accounted for and moving, rather than stagnating on stock that will not produce any profit. In some cases, you can even choose to automate your inventory management transactions so that your stock is actively topped up and moved to the selling floor with little to no human intervention.
Improves inter-departmental employee performance
AI software also helps non-supply chain employees because a well-replenished inventory can drastically reduce performance pain points. Surveys reveal that employee productivity can spike by over 40% with AI assistance. For instance, having a well-stocked inventory with AI software helps customer-facing employees make accurate and timely product recommendations leading to positive conversions. The effect of AI software on overall performance is so significant that even modern business education highlights such tools. Online business administration programs offer concentrations in management information systems alongside traditional courses on management and finance. This supports recent studies that state how utilizing AI across departments can boost profits by around 38% while reducing average workloads.
Supports data accessibility
One of the most common data-related inventory challenges is the lack of visibility, which leads to gaps or inaccuracies in pertinent information. This issue may stem from the fact that 43% of smaller businesses still use legacy systems or manual processing, which breeds data silos and human error. As a result, 34% of businesses have shipped orders late, and 46% have experienced human errors due to inaccurate reporting. Conversely, teams can automate the collation, storage, categorization, and dissemination of all inventory-related data with AI management solutions. This includes supplier delivery times, product tracking, item locations within the storage facility, and product information. Plus, on an AI system, all this information is accessible 24/7, anytime, and anywhere.
Reduces costs and improves cash flow
More than $300 billion in revenue is lost simply due to poor inventory management, so having a seamless inventory system is an absolute necessity. With AI software, businesses can eliminate the additional costs of last-minute small orders, excessive storage space rental, and loss of business due to dwindling stock. At the same time, because these solutions are designed for scalability, making additions to your inventory or product line-up can be done immediately, with little to no added cost. In total, studies have shown that implementing such digitally-backed solutions can result in a 10% reduction in inventory costs and an 8% increase in revenue.
Following the harsh wake-up call that was 2020, it’s time for businesses to set aside their hesitations around digitalization. Rather than diluting or impersonalizing operations, these modern tools such as inventory planning platforms are customizable solutions that future-proof your business.