What Is Inventory Visibility?
Inventory visibility refers to a business’s ability to understand the inventory it has on-hand, its status and where it’s kept. Customers also rely on inventory visibility to find and buy products they want at any of your locations.
Inventory includes goods, parts and raw materials for sale or used to build new products. There are four main types of inventory: finished goods, raw materials, work-in-progress and maintenance, repair and operating (MRO). When used as a verb, inventory refers to counting goods. In retail, inventory is also called stock.
Maintaining visibility throughout the supply chain allows businesses to better meet customer demand and reduce costs. Supply chain visibility allows you and your customers to track products at the production center, warehouse, retail store or in transit.
What Is Order Visibility?
Order visibility shows businesses when orders were placed, when they will be fulfilled and how they will be shipped. With order visibility, you can trace order fulfillment throughout the shipping process to final delivery. Order visibility is key to great customer service because it can reduce customers’ questions and complaints. That, in turn, reduces your costs.
How Do You Monitor Inventory?
Companies use inventory management strategies and systems to monitor inventory. The practice helps limit stockouts and overstocks, control costs and satisfy customers.
Basic inventory management steps that improve visibility include:
- Capture accurate details upon receipts to improve data accuracy.
- Invest in inventory management software with enterprise-wide visibility to ensure you have visibility of items across all locations and selling channels.
- Use mobile scanners within the warehouse and fulfillment areas to track the movement of items.
- Choose inventory management techniques suited to your business. There are more than a dozen methods available.
- Audit inventory regularly and conduct routine cycle counts.
Why Is Inventory Visibility Important?
Inventory visibility is key to customer satisfaction, which ultimately improves your company’s chances to succeed. It lets businesses and their customers know what’s in stock, where and how much. This insight is critical for omnichannel retailers.
Despite the importance of inventory visibility, many small retailers still use manual methods or don’t track inventory at all. Similarly, several retailers worldwide say items ship late because they sell items not currently in stock. Inventory visibility is also important for wholesale distributors in helping them manage costs and meet demand and for manufacturers, ensuring they always have access to the raw materials required in the manufacturing process. In many cases, inventory tracking software can help lower costs.
Aside from on-time shipping, here’s how better inventory visibility can help a business grow:
- Ensures an accurate inventory count across all locations and selling channels, including brick-and-mortar and online, which provides a better customer experience.
- Helps point out issues that are causing delays, so you can make adjustments to meet fulfillment demands
- Provides insight into which products are the biggest sellers or trending up
- Identify opportunities for cost savings
- Provides real-time visibility into orders and shipments to provide reliable advance knowledge of when goods will arrive
- Improves customer satisfaction by sharing the full range of products available, fulfillment options and when a delivery will arrive
Benefits of Inventory Visibility
Inventory visibility directly affects order fulfillment, which ultimately affects the bottom line. There are many benefits for a company that knows how many stock keeping units. it has and if they’re in a warehouse, store or with a drop-shipping partner.
What Are the Benefits of Inventory Visibility?
- Operational Efficiency: Saves time otherwise spent searching for items or responding to customer inquiries about delayed orders.
- Optimal Inventory/Stock Levels: When you know what you have and where it is, you don’t order excess inventory, which can turn into obsolete inventory. Instead, you promptly replenish low stock.
- Increased Security and Inventory Control: Inventory visibility and inventory control are crucial for highly regulated industries, such as chemicals, food and pharmaceuticals, which require strict tracking of items and lots.
- Improved Ability to Meet Demand: Good visibility means there are always enough popular items on hand to meet demand. Accurate information about fulfillment schedules improves the customer experience.
- Improved/Smart Resource Allocation: Better visibility encourages inventory optimization by sending the right amount of stock to retail and ecommerce outlets.
- More Accurate Forecasting: Inventory control tracks inbound and outbound stock, stock held, and conducts regular stock audits. Tracking data contributes to more focused stock purchasing and improved distribution. Learn more about the practice of demand planning.
- Supply Chain Transparency: Customers want to know the status of their orders as they progress through the supply chain.
- Improved Customer Satisfaction: Better visibility on the back end makes product and delivery problems apparent before they reach the customer. Visibility also helps companies deliver more products to customers and meet fulfillment needs.
- Increased Market Responsiveness: Global, real-time data equips businesses with the knowledge they need to anticipate shifts in consumer demand.
- The Ability to Adapt to Unexpected Events: Businesses can more quickly adapt to trends and supply chain disruptions.
- Flexible Views: Some events require insights from historical and external data to prevent oversells and lost sales.
- Improved return on investment (ROI): Because inventory sitting in a warehouse represents tied up cash, you want to hold the least amount of stock possible while still serving customer needs.
Top Inventory Visibility Challenges
Ecommerce brings many fulfillment options for customers, and that comes with challenges. Products can come to customers through in-store purchases, buy online, pickup in-store (BOPIS), shipping from a warehouse, shipping from a store or drop shipping.
Challenges to achieving accurate inventory visibility include:
- Unrecorded Changes: Undocumented inventory changes from theft or unreported breakage or spoilage hinder efficient planning and fulfillment.
- Manual Processs: Manual cycle counts and tracking in an age of barcodes and automated cycle counts is needlessly inefficient.
- Lack of Visibility: Inability to track and trace product across multiple ERP, SCM and CRM applications internally and within the partner ecosystem can cause unnecessary delays and provide a poor customer experience.
- Reactive Management: When managers receive late notification of unplanned events, they can’t always use systems in place to respond.
- Uncertainty in Demand: When there’s no visibility into inventory it can lead to excess inventory and speculative ordering.
- Lack of Data: Managers who don’t have access to critical information when needed can result in lost sales, out-of-stocks, markdowns and reductions.
- Deployment Issues: When managers don’t know where and what quantity of inventory is available to deploy in the network across dimensions of time, geography and demographics, they can make uninformed decisions.
- Out-of-Stock Items: Customers who can’t get what they need from you will likely substitute brands or make purchases from your competitors.
- Loss in Productivity: When staff spend time tending to low-value data collection and manipulation efforts, they’re not focusing on their priorities and doing their work.
- Poor Planning: Lack of planning into stock levels, upstream and downstream, can lead to shortages, followed by overcompensation and excesses. These issues can result in an increased level of discounting and write-offs for slow moving and obsolete inventory.
- Inadequate Legacy Tracking Platforms: Older ecommerce platforms and ERP systems often don’t provide the real-time updates multichannel businesses need.