Until recently, small and medium businesses (SMBs) had to rely on their own methods for predicting inventory needs, often combining intuition (basically guesswork) with complex spreadsheets, before AI-powered inventory planning software became available.
While cheap at first glance, this approach has proven to not only be extremely costly to these businesses in obvious issues such as error and stock-outs but also in having essential capital tied up in stock. This creates severe cashflow difficulties, even for companies with strong growth.
In my own time/previous life as an importer & retailer of kid's toys, as well as working with hundreds of product businesses around the world, I see numerous instances where there's an actual liquidity event due to poor cash flow awareness around inventory planning.
Now, smart AI-powered systems have entered the market, available via the cloud as add-ons for businesses. But what exactly do they help with?
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Improved Accuracy: AI-powered inventory planning software uses advanced algorithms to analyze data and make accurate demand forecasts, which helps businesses to plan their inventory and minimize the risk of stockouts or overstocking.
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Real-Time Data Insights: The software integrates with various data sources to provide real-time data insights, allowing businesses to make informed decisions quickly and respond to changes in demand patterns or other market conditions.
- Dynamic Inventory Optimization: AI-powered inventory planning software uses machine learning algorithms to dynamically optimize inventory levels based on factors such as demand forecasting, lead times, safety stock levels, and reorder points.
- Helps predict demand for new products with no sales history: The software takes sales data from similar products and predicts weighted volume to allow users to accurately plan production schedules or sales forecasts.
- Deals with Supplier Unpredictability: Clever software can detect changes in supply patterns, create alerts and give option before the producer or seller gets into a stock-out situation.
- Increased Efficiency: AI-powered inventory planning software automates manual processes and eliminates the need for manual data entry, freeing up supply chain managers to focus on more strategic tasks and improving overall efficiency.
While many small businesses will struggle to make do, there's a growing sector of entrepreneurs who want to use smart software to make business processes faster, easier, and more accurate. Utilizing AI-powered software for inventory planning & demand forecasting can change the landscape for scaling SMBs. We’ve even had one customer here at StockTrim who recently said ‘It's all there, it's magic!
Kind of - it’s actually machine learning, but we’ll take it....
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