TMCnet Feature
July 28, 2020

How AI Is Transforming Inventory Optimization

Artificial intelligence (AI) has made an immense impact on how data and inventory are handled. Using AI systems, companies can maximize the accuracy of their inventory data as well as view it in new and insightful ways. Verusen explains how AI systems can benefit inventory optimization, laying out the reasons why AI makes both practical and financial sense.

Optimizing Your Inventory

Effective inventory control focuses on the fine line between adequate inventory and inventory overstock. Every company carrying inventory, whether for resale or for internal use, needs to manage it consistently and effectively to avoid waste and to maximize cash flow.

The Capabilities of an AI System

Artificial intelligence focuses on the creation of computers that are programmed to work and react like humans. All computers are intended to learn, plan, and problem-solve. However, AI systems enhance this functionality by predicting customer demand, managing supplier backorders, and optimizing inventory stock levels. This is especially true for a production company. AI can track even the most minute of products, like a bolt or a screw.

AI-powered inventory systems can address such questions as the optimal minimum and maximum stocking levels. They can also help to reduce the amount of capital that is tied-up in excess stock and can help to minimize the problem of inventory obsolescence. Some AI systems can also recommend the best way to move products through the supply chain (i.e. factory à warehouse à retail outlets, etc.).

Additionally, AI technology can consolidate, standardize, and enrich data. This provides the foundation that AI systems use to present data-driven recommendations. When presented with the recommendations, company leaders have the ability to accept, reject, or revise the data. Utilizing AI for data preparation and recommendations, provides managers with added time to focus on other tasks, such as company strategy and decision-making.

Ways in Which Inventory Control Benefits from Artificial Intelligence

Artificial intelligence can predict the demand for selected items. This can be accomplished by building a time-series projection model. Additionally, any relevant external databases can be incorporated into the system as well.

AI can recommend the inventory stock levels for thousands of different items based on the demand projections. AI also optimizes inventory control by removing the complex and tedious data consolidation and interpretation, which was previously tasked to inventory managers.

Furthermore, AI can order raw materials, based on manufacturing order. Distributors can use this data to help predict future stock levels and demand.

Cleaning Up Vital Business Data

An AI system is capable of combing through data, finding errors, and removing duplicate or bad data. Every error in a database represents time and money lost and focusing on correcting data should be of upmost importance. Since there are often thousands of data points in an MRP system, devoting employees to manually repair the database is neither feasible nor cost-effective.

Using Data in New Ways

An added benefit of using an AI inventory system is the ability to create new and useful datasets. For example, an AI system may be able to make data connections that a human would not have normally considered. These added datasets prove highly valuable and insightful when making strategic choices.

Verusen’s AI-backed cloud platform integrates with a variety of ERP systems and is focused on effectively providing proactive inventory management by predicting future inventory movements.

Greater Profitability

AI inventory control can help companies enhance their profitability by ensuring a quick and accurate turnaround of customer orders. AI systems also reduce overhead costs, making it possible to reduce the inventory workforce.

Al systems help companies understand how supply and demand for their products work. Companies may not clearly understand how their inventory levels should change based on seasonality, business cycles, and the useful life of their products. However, AI system can help predict these circumstances.

Inventory optimization can be a transformative factor that helps your business run as smoothly as possible. Taking the time to understand what AI can do for you will lead to a more prosperous future.

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