Abstract

One of the top priorities that every brand in the contemporary world ought to have is achieving
better inventory management as the business grows. It overlooks the efficiency of the supply
chain of goods from the point they are released by the manufacturer to the warehouse, and finally
to the point of sale. Inventory management is quite a challenge for many organizations,
especially if the whole process is poorly planned, executed, and the adopted technologies are not
managed properly.

An effective inventory management system should detect, capture, and analyze information
about the demand and supply of various products. In inventory management, information
technology is a tool that organizations use to enhance efficiency levels and manage costs.
Information technology has also affected inventory management about the necessary skill sets
for employees. If it is not used expertly, integrating information technology in inventory
management can be a hindrance to organizational success.

Introduction

One of the most important elements within any organization is supply chain management. A key
component of this element is inventory management, which refers to the organization and
supervision of stock items, as well as the value of a firm’s current assets (Turban, Pollard &
Wood, 2018). It overlooks the efficiency of the supply chain of goods from the point they are
released by the manufacturer to the warehouse, and finally to the point of sale. In inventory
management, the most important thing is having a detailed and updated record of both new and
existing products as when they leave or return from one point to another.

The complexity and challenges associated with this process are quite similar across all
organizations regardless of their portfolio’s size (Waller & Esper, 2014). However, there are
slight differences for organizations with adequate physical space compared to those with a
limited one because the former will have a receiving area for goods while the former may be
forced to send them straight to the stock area. Another notable difference in the way the
inventory management process might be applied by different organizations is that wholesale
distributors tend to deal with finished products, while manufacturers start by handling raw
materials (Arslan, 2017).
Depending on where an organization fits in the supply chain, the efficiency of the process is of
paramount importance, thus the need to have effective tools, techniques, and quality measures
cannot be easily overlooked.

Discussion

Inventory management is quite a challenge for many organizations, especially if the whole
process is poorly planned, executed, and the adopted technologies are not managed properly. The
whole process uses an assortment of information about various goods that includes serial
numbers, quantity, costs, and dates of moving from one point to another (Turban, Pollard &
Wood, 2018). The importance of taking and using this information in supply chain management
is the fact that it ensures high customer satisfaction by delivering the right goods, in the ordered
quantity, and on time.

In addition, inventory management plays a pivotal role in ensuring that a business reduces the
cost of operation and optimizes profitability (Waller & Esper, 2014). This kind of control
achieved through inventory management is usually the difference between businesses that
maintain high levels of competitiveness for prolonged periods and those that do not.

Methodologies of Inventory Management

To have an effective inventory management process, an organization has to apply several

methodologies. One of the commonly used ones in stock review. This involves conducting an
analysis of goods at hand versus the need level regularly. Capable of being done manually or
using an automated system, this methodology provides an organization with the lowest stock
level they should not pass to maintain a good flow of goods (Turban, Pollard & Wood, 2018).

Another effective methodology for inventory management is the Just in Time (JIT) approach that
entails releasing goods only ordered by customers. The effectiveness of this strategy is highly
dependent on the ability of an organization to conduct a thorough market analysis to establish the
buying patterns of potential customers, as well as the supply and demand of goods (Arslan,
2017).

Organizations that have an effective inventory management process also use the ABC analysis
strategy. It involves classifying products into three categories, namely A, B, & C. A contains
products of high value and low quantities. Category B has products of moderate value and
moderate quantity, while C contains goods with low value and high quantity. This model relies a
lot on the ability to identify products that have the best sales to have enough stock on standby.
One of the notable merits of this model is the fact that it helps an organization to have good
control over high-value goods (Waller & Esper, 2014).

For example, items in category A are most likely to be more expensive than the other two, thus
no need to have them in large quantities because the probability of them taking a long time to sell
is higher. However, the model can prove to be costly in the end for organizations that struggle to
make sales because regular analysis of inventory levels for the three categories requires a
considerable amount of resources.

Technological Features that have Improved Inventory Management

One of the top priorities that every brand in the contemporary world ought to have is achieving
better inventory management as the business grows. Technology has played a major role in many
organizations achieving this feat, amid an array of challenges relating to the high rate at which
new trends keep emerging. The most effective inventory management technologies have four
key features, namely ease of accessibility, scalability, real-time updates, and in-depth reporting
(Turban, Pollard & Wood, 2018).

An effective inventory management system should be easily accessible from devices such as
laptops, tablets, and mobile phones. This makes it easy for all departments to have good
coordination. In addition, it helps employees to be highly productive because one does not have
to be stuck in front of a computer running numbers all the time.

An inventory control technology should have scalability, in the sense that a small business can
integrate a system that is capable of handling its potential in terms of projected growth. A
business does not need to keep changing systems as it grows and diversifies. In-depth reporting
is also a key feature of an effective inventory management system. This entails the ability of a
system to detect, capture, and analyze information about the demand and supply of various
products (Waller & Esper, 2014).

The system should also be in a position to identify products that have gone for long without
leaving the warehouse or the point of retail. This helps in making decisions relating to the
marketing of such products. Finally, an effective inventory management system should have
real-time product updates. This entails providing the latest stock information depending on the
rate at which customers order and receives the goods they need (Waller & Esper, 2014). These
kinds of updates play a crucial role in ensuring that products are not over or under-stocked.

Use of Technology in Inventory Management

Technology is one of the most vital elements of every business plan in the contemporary world.
Regarding supply management, technology has had a noticeable impact on inventory
management in terms of its efficiency, accuracy of the information, as well as ease of access to
data (Arslan, 2017). This has in turn had a very positive impact on organizational performance
because employees are more motivated to give maximum output, the cost of operation lowers,
and profit optimization is achieved.

Organizations need to invest in modern inventory systems because they offer a good platform for
evaluating risks associated maintain enough stock without investing in more than is required at a
particular time (Turban, Pollard & Wood, 2018). Information technology has improved the
efficiency of inventory management by tracking the quantity of every product a company has,
whereby an order for the additional stock is triggered as soon as the quantities go below the
predetermined amount.

This function is necessitated when an organization uses a Point of Sale System (POS), which
ensures that once an item has been sold it is removed from the inventory (Pagano & Liotine,
2019). This then creates a closed information loop between all the relevant departments to take
the appropriate action.

In inventory management, information technology is a tool that organizations use to enhance

efficiency levels and manage costs. Checking and rechecking stock is a never-ending process
that requires a high level of commitment in terms of the personnel used and investing in the right
technologies. With the high rate of technological advancements and uptake, organizations should
ensure that they use the latest technology (Pagano & Liotine, 2019).

Technology has eliminated the manual system of inventory management that was slow and prone
to various errors. Good and competent inventory managers agree to the fact that the landscape of
their jobs has changed a lot since the integration of information technology in the whole supply
management process. Technology has changed the way businesses run their operations and
manage various processes. One of the main changes that technology has brought into inventory
management the high degree of accuracy of data recorded and shared (Waller & Esper, 2014).
This is a big improvement from the manual system where everything had to be done physically,
thus leaving room for numerous numerical errors.

An automated system is faster, accurate, more efficient, as well as allows information to be

stored and shared with ease (Arslan, 2017). The fact that information technology allows a
business to control its inventory continually means that productivity and profitability are highly
optimized. This also plays a pivotal role in improving the involvement of employees and other
stakeholders in the decision-making process, as information regarding the performance of every
department is available. Reliable business decisions are made when managers can conduct
insightful analysis of information about an organization’s inventory (Turban, Pollard & Wood,
2018). For example, decisions involving the sale of products depend on the available information
detailing the demand and supply of goods in a particular market over a specified period.

Integration of information technology has also affected inventory management about the
necessary skill sets for employees. Studies have shown that the complex nature of an automated
inventory management system means that employees ought to have the rights skills for it to be of
meaningful benefit to an organization (Pagano & Liotine, 2019). Information technology can be
a hindrance to success in an organization if it is not used expertly.

This may involve the ability of an organization to diversify and incorporate the concept of e-
commerce into its operations. For businesses that have invested in e-commerce, the value of
information technology in inventory control is much higher because online retailing compliments
the sales made across physical stores. This is made possible by using an integrated inventory
control system that tracks the activity of products across all channels of retails in a continuous
manner.

Technological advancements and uptake have gained a lot of momentum over the last couple of
decades. This has increased the ability of businesses to diversify their portfolios because
inventory control is much easier, coupled with the fact that there is a wide range of technologies
to choose from depending on the unique needs of a business (Waller & Esper, 2014).

Information technology has also changed inventory management by eliminating the one-size-fits-
all attitude that was common with the traditional inventory management techniques. In the
contemporary world, manufacturers have the option of using a different inventory management
system from the one used by retail and wholesale traders (Pagano & Liotine, 2019).
Interestingly, inventory management technologies are designed in a manner that collecting and
managing the flow of goods can be done passively or actively.

Passive control of inventory entails an approach where information systems are manually
activated depending on the period a manager wants to cover. On the other hand, active control of
inventory entails a strategy were detecting, tracking, storing, and analyzing data happens
automatically (Waller & Esper, 2014).

Studies have shown that smart technologies such as apps have also made a considerable impact
on inventory management strategies adopted by organizations (Pagano & Liotine, 2019).
Although they require manual entry of information like the traditional methods, their chances of
having errors are much lower and provide a worthwhile option for smaller businesses that may
lack the resource pool needed to integrate some of the top inventory management technologies
available. However, the most important thing is the fact that a business can use technology to
improve the efficiency of its service delivery systems and lower the costs of operation (Turban,
Pollard & Wood, 2018). Apps are also beneficial in the sense that they do not require a high
investment in personnel like the other types of inventory management technologies.

Conclusion

For any business to achieve prolonged success and competitive advantage, having a good
inventory management system is of paramount importance. Information technology has helped
businesses to become more efficient and profitable due to a reduction in the number of errors
made in managing stock, as well as empowering employees to give maximum output. Inventory
management technologies such as barcode scanners have eliminated manual processes in many
retail and wholesale businesses that have created time for employees to focus on other tasks
within the workplace.

There is an urgent need for businesses in the contemporary world to integrate information
technology in managing their inventory because it has proved to have a positive impact on
increasing profitability and enhancing the efficiency of service delivery.

References
Arslan, M. (2017). The role of information technology in inventory management: A study of the
logistics sector of Pakistan. New York, NY: GRIN Verlag.

Pagano, A, M., & Liotine, M. (2019). Technology in supply chain management and logistics:
Current practice and future applications. New York, NY: Elsevier.

Turban, E., Pollard, C., & Wood, G. (2018). Information technology for management: On-
demand strategies for performance, growth, and sustainability. New York, NY: John Wiley &
Sons.

Waller, M.A., & Esper, T.L. (2014). The definitive guide to inventory management: Principles
and strategies for the efficient flow of inventory across the supply chain. New York, NY:
Pearson Education Incorporated.