High-Performing Supply Chains and Inventory Transparency
Companies with high-performing supply chains, characterised by greater visibility and transparency, are 79% more likely to achieve above-average revenue growth compared to their peers (McKinsey, 2023).
Importance of Inventory Transparency
Inventory transparency, the ability to see real-time data of your stock levels, locations, and movement throughout the supply chain, is crucial for the success of your business. This visibility is essential for making informed decisions about procurement, productivity, distribution, and customer service.
Finding the right balance in inventory levels can often feel like walking a tightrope – too much inventory results in extra storage costs, while too little leads to dissatisfied customers and lost revenue.
Effective inventory management impacts every aspect of your business. A significant portion of a company’s value is derived from its ability to deliver products to customers promptly.
If there is inaccurate inventory data, this will affect the ability to run a successful business. Without a clear view of the supply chain, products can easily fall through the net, leading to inventory discrepancies. Losing track of products is equivalent to losing money.
Achieving Inventory Transparency
Achieving inventory transparency can be accomplished through the adoption of an inventory management system and the use of barcode technology. Inventory data can be centralised and accessed from one platform, ensuring a clear and consistent view of your inventory status.
With barcode scanning and cloud technology, your inventory management system can accurately track what stock you have, where it is, and its current status – all in real-time. This vital information can be accessed from anywhere, thanks to cloud-based inventory management software.
Every item has its own audit trail, providing full traceability, enabling you to track its journey throughout the whole supply chain and maintain full control of your stock at any time.
Knowing precisely where your products are and how much stock you have directly impacts your business and your ability to meet customer demand.
Impact on Key Business Areas
Impact on Procurement
Inventory transparency allows for a better and more efficient procurement process. When you have a clear view of your inventory levels and movements, you can set stock thresholds to automatically reorder or transfer stock to the right location, ensuring you’re always ready when items are required for dispatch. This leads to more efficient purchasing and replenishment, reducing the risk of overstocking or understocking.
According to the CSCMP (Council of Supply Chain Management Professionals), inventory transparency improves procurement efficiency by allowing automatic stock reordering and optimal placement (CSCMP, 2024).
Benefits for Order Fulfilment
Knowing the exact location and quantity of your stock enhances the pick and pack process and enables better delivery scheduling and faster shipments.
Transparency enhances order fulfillment by providing precise stock location information, improving delivery scheduling and speed (CSCMP, 2024).
Effects on Planning and Forecasting
Inventory transparency improves planning by taking into account market trends, seasonal demands, and special offers. This ensures you can maintain optimal stock levels by minimising the costs associated with holding excess inventory and avoids the missed sales opportunities caused by stockouts.
Transparent systems improve planning by considering market trends and seasonal demands, reducing excess inventory costs and preventing stockouts (CSCMP, 2024).
Advantages for Customer Service
In customer service, inventory transparency translates to faster response times and improved customer satisfaction. When customer service employees have access to accurate stock information, they can provide better support and more accurate delivery estimates, leading to happier customers.
Better inventory visibility leads to higher customer satisfaction through accurate delivery estimates (CSCMP, 2024).
Cost Reduction
By avoiding overstocking and understocking with real-time tracking, you can run a lean inventory, thereby reducing costs associated with increased storage, loss of revenue from out-of-stock items, and cash tied up in unsold goods.
Accenture’s research indicates that companies with greater supply chain visibility are more likely to maintain revenue, profit, and share price performance during disruptions. This visibility helps in uncovering hidden issues and understanding supply chain risks and weaknesses (Accenture, 2024).
Business Growth
By taking into account the points mentioned above, you can improve your visibility into stock levels and movements, which can lead to better decision-making and improve your business performance.
Scalability is a significant advantage of inventory transparency. The lack of transparency in a company’s supply chain can lead to a lot of problems which can significantly hinder productivity and negatively affect your company’s growth.
The ability to see and manage your inventory in real-time empowers you to make smarter decisions, reduce costs, increase efficiency, and ultimately, drive your business’s success.
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Author: Iain Coplans CEO Stok.ly