{"id":27060,"date":"2024-02-20T18:21:53","date_gmt":"2024-02-20T18:21:53","guid":{"rendered":"https:\/\/statanalytica.com\/blog\/?p=27060"},"modified":"2024-12-10T23:49:21","modified_gmt":"2024-12-11T04:49:21","slug":"optimizing-inventory","status":"publish","type":"post","link":"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/","title":{"rendered":"Optimizing Inventory with Data Analytics"},"content":{"rendered":"\n<p>Inventory management, logistics, and fulfillment operations can be challenging to perform for even the largest of organizations. Whether we\u2019re talking about retailers that need to ensure stock levels are kept within certain parameters, or healthcare teams tasked with making sure medication is stored correctly, real-time insights regarding inventory have become essential.<\/p>\n\n\n\n<p>However, while most modern organizations understand the importance of effectively optimizing inventory management, a surprising number don\u2019t commit sufficient resources to this pursuit. Data suggests as many as 43% of small businesses don\u2019t track their inventory at all, leading to 34% of businesses accidentally selling unavailable items to paying customers and clients.<\/p>\n\n\n\n<p>Couple these problems with external factors like global supply chain issues, and it becomes clear that poorly optimized inventory solutions can cause significant troubles for businesses. So, how can modern organizations better protect themselves from inventory-related issues?<\/p>\n\n\n\n<p>In many cases, by optimizing inventory management with support from smart data analytics.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"what-are-inventory-analytics\"><\/span><strong>What are inventory analytics?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2><div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\" style=\"cursor:inherit\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a02fa48ed5db\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #ff5104;color:#ff5104\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #ff5104;color:#ff5104\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a02fa48ed5db\" checked aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#what-are-inventory-analytics\" >What are inventory analytics?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#why-choose-to-optimize-inventory-management\" >Why choose to optimize inventory management?<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#operating-cost-reductions\" >Operating cost reductions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#less-chance-of-stockouts\" >Less chance of stockouts<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#faster-fulfillment-processes\" >Faster fulfillment processes<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#fewer-supply-chain-issues\" >Fewer supply chain issues &nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#data-analytics-use-cases-for-inventory-optimization\" >Data analytics use cases for inventory optimization<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#demand-forecasting\" >Demand forecasting<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#inventory-shrinkage\" >Inventory shrinkage&nbsp;<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#profitability-analysis\" >Profitability analysis&nbsp;<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/statanalytica.com\/blog\/optimizing-inventory\/#summary\" >Summary<\/a><\/li><\/ul><\/nav><\/div>\n\n\n\n\n<p>When businesses talk about inventory analytics, leaders are typically referring to the tools and technologies they use to monitor the movement of physical assets as they travel through the <a href=\"https:\/\/statanalytica.com\/blog\/strategies-for-sustainable-logistics\/\">supply chain<\/a>. When stored and processed intelligently, the data collected by these tools can be used to adjust inventory operations with both cost efficiency and productivity in mind.<\/p>\n\n\n\n<p>In a general sense, the primary purpose of inventory analytics is to mitigate the risks faced by businesses reliant on global supply chains. By improving the accuracy of forecasting with support from reliable data, leaders can measurably reduce the impact of common challenges like stockouts, overstocking, and fulfillment delays, improving general operational efficiencies.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"why-choose-to-optimize-inventory-management\"><\/span><strong>Why choose to optimize inventory management?<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Given the competitive nature of modern commerce, businesses of all sizes are always looking for ways to gain an advantage over their rivals. Typically, the most reliable way to achieve this is to invest in systems able to improve the efficiency of essential operations.<\/p>\n\n\n\n<p>Developing well-calibrated inventory analytics systems, informed by high-quality data from multiple relevant sources, removes almost all of the guesswork previously associated with large-scale inventory management operations. Helping teams to better meet client demands.<\/p>\n\n\n\n<p>By optimizing inventory with data analytics, businesses can pursue the following benefits:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"operating-cost-reductions\"><\/span><strong>Operating cost reductions<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>By accurately forecasting demand with support from reliable data sources, teams can reduce the risk of overspending on multiple aspects of their operations. The key insights provided by data analytics systems help businesses schedule appropriate numbers of workers, order required amounts of stock, and plan machine downtime effectively to reduce most core costs.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"less-chance-of-stockouts\"><\/span><strong>Less chance of stockouts<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The demand for many different types of products can change in response to multiple factors, from fairly predictable seasonal demand to unforeseen trends and global events. Optimizing inventory management with <a href=\"https:\/\/statanalytica.com\/blog\/data-analytics-techniques\/\">data analytics<\/a> helps teams to better predict such occurrences by continuously analyzing data from multiple sources. This raises the likelihood that businesses will have sufficient inventory levels to meet projected demands, protecting against stockouts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"faster-fulfillment-processes\"><\/span><strong>Faster fulfillment processes<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>When companies choose to optimize their inventory management systems with support from real-time data analytics, teams can dramatically improve fulfillment times. Customer location data can be used to find warehouses nearest to their addresses, enabling teams to expedite the fulfillment process and find the most efficient delivery route to best meet client demands.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"fewer-supply-chain-issues\"><\/span><strong>Fewer supply chain issues <\/strong>&nbsp;<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Data analytics systems can help organizations predict and prevent supply chain issues, enabling teams to adapt operations as soon as possible to mitigate potential losses. This aspect of inventory optimization is one of the driving factors behind the adoption of smart data analytics tools in commerce, with 72% of retailers said to be pursuing such initiatives.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"data-analytics-use-cases-for-inventory-optimization\"><\/span><strong>Data analytics use cases for inventory optimization<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><a href=\"https:\/\/statanalytica.com\/blog\/data-analytics-tools\/\">Data analytics tools<\/a> and data-informed processes are commonly applied to multiple aspects of commercial inventory management systems. Any essential process that may be affected by changeable factors can be optimized via the deployment of such tools, examples include:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"demand-forecasting\"><\/span><strong>Demand forecasting<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Data analytics tools can be used to review and cross-reference multiple data sources to help organizations better understand projected demand. Tools can automatically compare historic sales data with emerging trends, logistical data, and current supply chain information, helping teams secure needed raw materials and saleable items far in advance of surges in demand.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"inventory-shrinkage\"><\/span><strong>Inventory shrinkage&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>In 2019, inventory shrinkage alone cost the US retail industry almost $47 billion. By using data analytics tools to monitor inventory management systems, teams can ensure that actual inventory levels always match internal databases. Alerts can be set up to warn stakeholders of discrepancies, helping leaders to investigate issues promptly and reduce potential losses.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"profitability-analysis\"><\/span><strong>Profitability analysis&nbsp;<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Data analytics tools can also be used to accurately predict the profitability of specific items. Methodologies like ABC analysis can be used to review sales data alongside wider sources to compare the projected popularity of certain products. Integrating these calculations into existing commerce operations enables businesses to prioritize their most profitable products.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"summary\"><\/span><strong>Summary<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Ensuring inventory management systems run as efficiently as possible is central to business success, especially in competitive markets that may be susceptible to modern supply chain issues. Proactive organizations can protect themselves from instability and improve general operations by optimizing inventory with data analytics, helping teams maximize efficiency.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Inventory management, logistics, and fulfillment operations can be challenging to perform for even the largest of organizations. Whether we\u2019re talking about retailers that need to ensure stock levels are kept within certain parameters, or healthcare teams tasked with making sure medication is stored correctly, real-time insights regarding inventory have become essential. However, while most modern [&hellip;]<\/p>\n","protected":false},"author":16,"featured_media":27062,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"","ast-site-content-layout":"default","site-content-style":"default","site-sidebar-style":"default","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":""},"categories":[136],"tags":[2956],"class_list":["post-27060","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-general","tag-optimizing-inventory-with-data-analytics"],"amp_enabled":true,"_links":{"self":[{"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/posts\/27060","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/users\/16"}],"replies":[{"embeddable":true,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/comments?post=27060"}],"version-history":[{"count":1,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/posts\/27060\/revisions"}],"predecessor-version":[{"id":37297,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/posts\/27060\/revisions\/37297"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/media\/27062"}],"wp:attachment":[{"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/media?parent=27060"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/categories?post=27060"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/statanalytica.com\/blog\/wp-json\/wp\/v2\/tags?post=27060"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}