Artificial Intelligence & Machine Learning are two tools that have changed the way of working for many businesses. From IT to AI in Healthcare sector and from Education to Travel, every business nowadays needs superior accuracy and quick growth that is accessible through AI & ML. Here today, we are going to discuss the benefits drawn from the implementation of artificial intelligence in Inventory management.  

Inventory Management has become the pain of the neck for many entrepreneurs and companies. Human beings are not exact and prevailing fraud in stock management has led to the deployment of AI Inventory Management software. The system gives 100% accurate results, specifies the positions of the company, and also tells the draining or block of the cash reserves. 

What is Inventory Management?

We always enquire about things that we are going to start in the future or that are dream projects. It involves business type, place of executing the business, market size, and stock of goods. The role of stocking up things for doing business is the essential key. It is always required to have enough understanding about the quantity and warehousing of the products. 

Less stocked goods will result in less supply and insufficient business. On the other hand, elevated stocking of products will result in the blockage of cash reserves and hence will result in slow business. 

inventory management

Therefore, it is always better to have an understanding before putting goods in the warehouse for stocking. Inventory Management is all about exploring new opportunities in settling the goods and making the best out of the products. 

The professional definition explains “A mechanism developed to approach sourcing, storing and selling the material or product in both forms i.e. Raw or Finished. From the business perspective, keeping up the accurate stock at the accurate time with accurate pricing is known as Inventory Management. 

What is the Importance of Inventory Management?

This point “Importance” has always been a centerpiece when it comes to inventory management. Why does anybody need good inventory management? How to overcome the problem of un-necessary cash flow, wear & tear of products, etc. 

Said that any company feels the need for inventory management. In the light of successful business groups, the significance of stock management refers to acknowledging the inventory we have with us, what is its place in the warehouse, and last but not least what is the consumption level.

Read Also: Functions & Role of Inventory Management System in Warehouse

Below are few points which describe the importance or role of inventory management in the business:

  • Bring downs the Costs
  • Advance fulfillment
  • Excellent Customer services
  • Prevents Loss from theft, spoilage, and returns
  • The financial state of any company
  • Consumer’s Behaviour
  • Preferences, Product & Business Opportunities
  • Future Analysis, etc. 

What is Artificial Intelligence in Light of Inventory Management?

Those, who want to understand the definition in the light of Inventory Management, then must read the coming information properly. 

AI role in management

AI concerning Inventory Management:

The general definition explains Artificial Intelligence (AI) as the mechanism that reduces human interventions and performs tasks with accuracy and efficiency. This is by far the simplest definition of Artificial Intelligence solution.

But when we see AI for Inventory Management, we will conclude this term as any robotics or system developed or deployed to potentially analyze the stocks (inward or outward), cash flows, supply and demand, and the all-over financial state of the company, exactly without human intervention is known as AI.  

Artificial Intelligence (AI) is executed at various levels of the company like from Human resources to Stock Management, anything at anyplace is handled by AI or Robots. From maintaining the attendance and salary records to analyzing the stock positions, liquidity ratio, and then companies growth is something that is operated by these Humanoids. 

There are millennia of features that are incorporated in the AI-based system in any company. You can directly or indirectly get the benefits of these humanoids at some adjustable or slightly higher price. 

Now let us take a deeper dive into the sea of AI-based inventory management system development. Here you will get the features, cost, and role of Machine Learning in the upbringing of inventory and the company’s position.  

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How Does Artificial Intelligence Help in Inventory Management?

Major implementations of artificial intelligence inventory systems are given below. These are two pivotal ways of generating the best out of the humanoid system:

Predictions of Demands

The name already explains what the section conveys. This is the easiest way of detecting the growth of the business, but if executed flawlessly. The basic concept of this approach elaborates that it should be a timely prediction that can evaluate the demand in the coming days from all the stocks you have in your warehouse. 

Now comes the role of the app development team which is aware of the AI & ML technology standards and produces some high-performing time-based methodology like Item/run models with sliding windows, old school logistic regression, etc. 

Read Also: Use of AI & ML in Everyday Life Brings Future to the Present

Another major point of success here is executing the external data or behaviors to cross-check whether it tells upon the demand or not. Hence, artificial intelligence can give you an insight into many things related to stocks but if you have executed it most correctly. 

Reinforcement Learning 

This is another approach that allows humans the management of inventory. This is a phenomenon that takes care of stock operations involving human check and maintenance. Reinforcement Learning is a section in AI where the module not only makes assumptions but implements the assumptions or predictions.   

Some scenarios have seen where the team punishes the software for non-availability of any item on stocks, or inventory stocked on too high values on high prices. These require expertise and hence are difficult to get implemented without any professional panel. Simultaneously, if you are familiar with RL then no other software can beat its awesome results. 

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With all the information being said above, You need to focus on three more steps that impact inventory management:

Integrations:

The integrations with popular apps like SAP, Xero, and other software are quite simple. Here the team builds a separate dashboard for putting a sight on the inventory management aspect of the company. 

Data Hanker:

The AI-based inventory management works on large data sets. You have to have a few years of inventory data on which the required module will be prepared. This sometimes is the major concern when it comes to building a model of stock management. 

Homogeneity of Product

Each article on the shelves should be treated with a different identity. Some articles remain in high supply or movement, on the other hand, some need pivotal attention on the movement and storage of the product on the shelves. Hence there comes a need for a solution that can predict the upcoming inventory and provide the best outcomes. 

How to Develop AI-Based Inventory Management Software?

There are a few steps that should be contemplated before initiating any AI-based system on stock management. Below our team has shared some of the important tips that will aid you in developing a flawless system for your inventory management needs. 

Pilot Plan (POC):

As we all know that, before any execution, there should be a layout defining the purpose and utility of the software. A layout or we can say a pilot plan is typically a description of work to be done, what teams and technology will be required and how the system will be implemented. 

Implementing AI is not a piece of cake for everybody. The models or modules that have to be generated are complex and not always executed. Thus, it is always necessary that you have a trail-run before rolling out the update in the entire work-flow. 

In other words, apart from fully releasing the system into the work-flows, a first trial should be taken to check the ROI, Educate the team for its functioning, and look forward to the drawbacks and advancements in it. 

Implementing the AI-based stock management tool is giving the company a new direction towards its growth. This isn’t easy at all but if deployed correctly, honestly no one can beat these humanoids in driving the highest performance and successful outcomes.

Read Also: Best Artificial Intelligence and Machine Learning Apps Ideas to Startups in 2021

People need to be aware of the applications of it, similarly, the team then provides feedback on the utility, performance, and other aspects of the software. After proper quality checks and assurance, the system should be implemented as a whole in the work-flows.  

Designing of the Project:

Now after collecting the feedback and other necessary details, here comes the complete execution plan. This step includes the final development and design of the project. The software must fulfill the requirements of the company and it should be re-designed as per the work-flows of the company (if needed).

The final deployment of the project will display 80% of AI decisions and 20% of human decisions. The operational activity will help the team to concentrate on other aspects of the projects and get an accurate analysis of stocks through these humanoids. But at some point in time, human interventions will be required to generate the best outcomes from the mechanism. 

How Much Does AI in Warehouse Management Costs?

It is a general fact that implementing AI in any stream will serve a slightly higher cost to the company. More robust technology you utilize, the more bucks you need to spend. As Artificial Intelligence is not yet fully recognized in the market and hence adopting this technique in the work-flows can be extravagant to some companies. As we all know, the analysis conducted by AI in Inventory Management works on the data collected from the past few years. So let us take a glance over the cost incurred to the company in the development of such software.

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Generally, the development of such software requires a skilled and talented dedicated developer that can handle Artificial Intelligence and Machine Learning both at the same time. Developing a program and enabling learning into it is something that ranges between $20,000 to $40,000 bucks to any company. This is the normal range which can go beyond your expectation when it comes to companies like Amazon and others. 

What Benefits One Can Get Implementing AI-Based Stock Management System?

Spending bucks on the technology and implementing it through the right hands always gives astonishing results. So here are some of the cool benefits of working with these humanoids at the work-culture.

Benefits-of-AI-based-inventory-management-system

Robot Automation

Science has provided some of the engaging benefits in the forms of humanoids. These are robots in the form of humans that work for the company being learned machines. You provide the algorithms to the machines and the functioning starts at the same time. Working like check on inventory, fulfilling and restocking inventory, etc. are being conducted by the machines. 

Data Mining

Data mining is sorting on consumer’s behavior at any product. The machines give an eye to the preferences of the customer on any specified product or service. It gives an idea to the company on production and boosts the market sales or company productivity. Data mining is based on the previous records, hence it gives clear forecasting on the business expansion or cutting down on some business units. 

Inventory Management

Firstly, it automates inventory management and provides effectiveness in the delivery module. Similarly, the process offers great freedom to focus on other tasks that will boost the inventory management process. AI automating the management of inventory has reduced the flaws in analyzing the stocks, covering up & explaining the costing, selling, & other positions of the company, etc. 

Read Also: How Can AI Help in Enhancing Logistics and Supply Chain Management?

Intelligent Warehousing

AI & ML gives an automated yet smooth & smart finish to the inventory management where the owner has a clear overview of the products, supply, and demands in the market. It has replaced the traditional stocking patterns and has paved the way for intelligent warehousing of goods. 

Human & Humanoids

Another benefit of accessing inventory with AI-boosted software is Reinforcement Learning (RL). It allows both humans and humanoids to work hand in hand to achieve the targets settled for the company. Here the machines, as well as human beings both, work in the same direction where human interventions are around 20% and humanoid working is 80% helping in achieving complete automation in the work-space. 

Business Forecasting

This is among the two core features or benefits offered by Artificial Intelligence in inventory management. Business forecasting is also termed as the Predictive Analysis where machines forecast the business in the upcoming months or years. Simultaneously, the forecasts are done on good accumulated data which gives almost 100% satisfactory outcomes.

The forecasting then helps in making crucial financial decisions which can be venturing with big retailers or producers, outsourcing the goods and services, and planning for the new or lost business opportunities for future gains. 

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AI in Optimizing Inventory for Businesses 

Not only in the management, but optimization is also another part where AI has grabbed 10/10 numbers. Many of us want to manage the inventory at its best but does someone have plans about how it will be consumed or how much stocks should be maintained? 

Well, this is where AI stood at the top peaks offering higher optimizations of inventory. Is it a tool that evaluates where the money is going to block or when to fully flourish the inventory in the market? 

Simultaneously, the machines are educated in a way where anything mishappend in the records gets compensated with other options. This reduces risks, cash flow blocking as well as maximizing revenues and especially the warehousing of goods for a business.

AI-driven-inventory-management

It includes few procedures which help in the best optimizations of inventory like:

Stock Classification

AI helps in creating the itinerary of the products that are of the same behavior or category. Similarly, AI & ML both here aid in showcasing the products first which delivers high productivity & turnovers for easy picking and dispatching.  Moreover, AI-based stock management helps in tracing consumer preferences and demand patterns for better sustainability in the market. 

Improvising the Process

We must have heard the statement at some point in our life i.e. “Even the best can improve” and so should happen with the AI implementations in inventory management. Many people ignore the trending strategies and tricks in using the AI & ML technique. 

There should be improvisations in the technology and working standards to get the best out of the system so deployed. The optimization not only informs you about the growth standards but sets a benchmark from which you need to keep moving. 

Continuous checks, the evaluation must be done to confirm high optimization of inventory is being managed. Operational costs must be reduced and customer satisfaction by quality products and services must be induced. 

Final Words:

So this was all on the AI in Inventory Management. Hopefully, this article has sorted so many things for those who are planning to deploy humanoids in the work-culture. AI & ML has drastically changed the working patterns and simultaneously, changing the labor forces too.

Deploying artificial intelligence in maintaining the inventory, accessing the demands and supply, forecasting the business opportunities has provided companies to focus on the other aspects of the business. 

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Arun Goyal

Managing Director @ Octal IT Solution, a prominent Mobile App Development Company offering cutting-edge iPhone App Development and Android App Development services to Startups, SMEs and Fortune-500 Companies.

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