Big data and inventory management explained

What is big data?

All successful businesses use data to develop strategies and review their outcomes.

But as the number of systems being used increases, the amount of data available for consumption and analysis grows exponentially. This is especially true in inventory management, where new technologies are being introduced all the time, and along with them, more and more data is being generated. The key for inventory management teams is to know what to do with it!

Inventory management information usually comes from a variety of data sources and is either structured or unstructured. Structured data typically comes from spreadsheets or business systems and is usually organised in columns or rows so you can enter, export, search and compare.

Unstructured data isn’t as accessible to search or export and is often text-heavy. It could be open-ended feedback, images, video, audio, or general business documents.

Large amounts of unstructured and structured information that can’t be processed using traditional techniques and software because of its size is called big data. Big data is used to understand trends and patterns in behaviour.

Gartner defines big data as:

“…high-volume, -velocity and -variety information assets that demand cost-effective, innovative forms of information processing for enhanced insight and decision making”.

This article explores some of the benefits of big data to inventory management teams.

Digital cogs on a black background. Business systems for processing big data analytics in inventory management

Processing big data

First – a caveat! When it comes to supply chain and inventory management, the amount of data available can be overwhelming. You, therefore, need to have suitable business systems in place to process it. Advanced software systems can make this easier and bring significant benefits to your business.

Technology, such as responsive warehouse management systems, can integrate with Artificial Intelligence (AI) and the Internet of Things (IoT) to enable a more intuitive and reactive operation.

Big data and the benefits to inventory managers

Big data can help businesses reduce costs, enhance efficiency, and make smarter, informed decisions by quickly analysing patterns and trends in a number of ways.

Big data brings more efficient processes

Big data analysis allows you to get real-time information about the flow of supply chain operations and stock management. This can help identify bottlenecks and improve the efficiency of inventory planning activity, to avoid wasting unnecessary time, money, warehouse space and resources.

Big data helps accurate customer demand forecasting

Big data can help improve demand forecasting accuracy, allowing you to determine when, what and how much inventory to stock to meet customer demand. It will highlight bestselling products and those that might be heading to obsolescence.

The additional responsiveness that big data brings means that you can make informed decisions to adjust to changing market demands quickly.

Big data allows you to optimise replenishment

Integrating big data and the IoT provides an overview of warehouse inventory in real-time. This can make it easier to organise and manage stock replenishment. Again, this increases efficiency by ensuring you have the right stock at the right time, reducing the risk of overstocking or stock outs.

Forklift moving boxes around a warehouse warehouse delivery big data and inventory management

Big data gives you real-time visibility of the entire supply chain

As big data can track the entire supply chain, you’ll be able to see where all your stock items are at any time. This means you’ll know of any delays or issues when they occur (sometimes before!), so you have time to implement contingency plans.

By tracking your fleet, you can have complete visibility and control over all your shipments and deliveries.

Big data helps improve supplier management

Good and reliable suppliers are crucial to robust inventory management, so it’s essential that you can track their performance. As big data can provide immediate information about orders, shipments or missed deliveries, you will have all the data you need to discuss any recurring issues. This allows you to put fixes in place or find alternative and more reliable suppliers.

Introducing big data analysis into your business

Introducing big data processes to your business can be daunting. However, there are some steps that you can take to organise your systems and start planning the move:

  • If you don’t already use cloud IT services, there are many advantages to using Software-as-a-Service tech. Cloud services make integration easier in the long run, as they can integrate via APIs and connectors across systems.
  • If you’re collecting and storing data manually, automating this will make the transition easier. While spreadsheets can be useful, automated systems make processing and reviewing data more accessible. They also reduce the risk of human error.
  • Look at where warehouse technologies can support your business. Bluetooth, WiFi, and connected RFID devices can bring efficiency and cost savings to companies.
  • Make data available across the business, so everyone is working from the same information to ensure all decisions are informed.

Big data and inventory optimisation

Inventory optimisation software like EazyStock can connect to business systems, helping you forecast with confidence, stock the right items and optimise your purchasing.

EazyStock automates everyday inventory calculations, such as calculating and adjusting reorder points, order quantities and safety stock levels. This allows you to optimise order proposals that feed back to your stock ordering system, ready for purchasing.

Using EazyStock, you can classify inventory items, set dynamic stocking policies and adjust stock levels based on many moving factors, including forecasts, demand profiles and supplier lead times.

You can generate accurate demand forecasts through EazyStock’s advanced statistical algorithms accounting for all trends, seasonality and product lifecycle profiles.

Book a demo to find out more about how EazyStock can help you make informed purchasing decisions, leaving more time to focus on your strategic business goals.

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