Accurate inventory management in logistics is crucial because it enhances business efficiency, profitability, and consumer satisfaction. It plays a vital role in logistics despite the size of the business. Many companies struggle to manage their inventory in complex situations. This is all because of their inaccurate management of inventory levels. The current Inventory level refers to the stock of goods apart from those that must be transported. These stocks are used at the time of need. The stock levels mustn’t be more than or less than required. 

We will briefly discuss what inventory management in logistics really means and why it is so important for your business’s growth. We will also explore advanced technology for maintaining inventory and best practices for ensuring its stable levels. 

What is accurate inventory management? 

Accurate inventory management in logistics, also called inventory accuracy, is a criterion through which the physical inventory levels are matched to the digital records. These digital records are the optimum and precise stock levels needed to cope with unexpected conditions. If your digital level matches the physical level, it implies that you have the exact stock required. Inventory management is not limited to quantity; it means the correct stock availability at the correct time and place. 

Inventory management in the supply chain refers to controlling or authorizing the flow of goods from the initial point of production to the end point of consumption. It covers diverse processes such as storage, procurement, monitoring stock levels, recharging inventories when required, and minimizing the loss from excess or lack of stocks. 

There are 12 different types of inventories: raw materials, decoupling inventory, safety inventory, packaging materials, cycle inventory, service stock, transit, theoretical, excess and maintenance, repair and operations (MRO), work-in-progress (WIP), and finished goods.

How do you calculate inventory accuracy? 

To calculate the inventory accuracy, you need to have the following numbers in place: 

1. First is the quantity of items physically available in your stock. 
2. Then, you must have an exact digital and recorded number for your inventory levels.
3. Then, you must apply this formula: Number of items physically counted/ number of items on record X 100. 

If your answer is 100%, you are in the correct inventory control. But you need to work on it if it is less or more than required. 

What are the techniques and terms used in accurate inventory management? 

There are some techniques and terms used in accurate inventory management in logistics. Some are the formulas, and some depend on the procedures. Let’s have a look at the techniques that you can use to ensure accurate inventory management in logistics: 

1. Bulk shipments: This technique involves unpacked materials loaded in trucks or ships using freight containers. It also includes buying, storing, and shipping bulk inventories. 
2. ABC analysis: This technique covers the analysis of the most and least like stocks. 
3. Tracking the batch: This method includes tracing the expired dates and the defective items. 
4. Consignment: Consignment comes under which you won’t pay the supplier until you trade a given product, and then the supplier retains ownership. 
5. Cross docking: Under this strategy, there is no use in warehouse operations. The goods are directly loaded into the vessels. 
6. Demand forecasting: Demand forecasting is a predictive analysis method that assumes future demand. 
7. Economic Order Quantity: This formula helps to give an exact idea of how much stock a business should order to match the decided inventory levels. 
8. Lean methodology: It removes any inventory that does not add value to the stock levels stored at the container depot. 

What are the benefits of accurate inventory management? 

Accurate inventory management in logistics is beneficial for logistics performance and supply chain operations. The balance of the inventory levels is crucial for managing customer demands, reducing costs, and increasing profits. We will discuss these points in detail below: 

1. Improves knowledge for your business: Accurate inventory management improves your knowledge about your business. It will help you have an exact idea of the suitable amount of products required or manage customer demands and supply alignment. This also ensures that you do not have to take care of product shortages or excessive availability. Accurate inventory allows you to accept the quantity of orders that you can manage with extra stock and overcome logistical challenges. 
2. Saves time and money: A precise inventory system saves time and money. Knowing the exact quantity of goods available and those ordered will help you know the present real-time quantity. It will save you time recounting the inventory physically, and the advanced management system will digitally record the numbers. With this analysis and optimized container trading customs, you can recognize the non-sellers and the slow sellers and decrease their stocks in your warehouses. 
3. Enhanced customer experience and loyalty: The comprehensive management systems will furnish you with inventory when required. They will also keep you well-informed about what consumers sell and purchase. Hence, you can add that to your inventories and facilitate growing demands. It will ensure faster and better customer service. 
4. Elevated operational effectiveness: Regular inventory analysis can help determine the prevalent or non-selling goods and the peak and non-peak seasons. You can then plan production, procurement, and distribution accordingly, which will help optimize the supply chain and prevent supply chain disruptions due to the low availability of goods. 
5. Creating an organized warehouse: Disorganized warehouses are a significant challenge in logistics operations. Accurate management systems help organize warehouses in an optimized manner. Proper management systems reduce the chances of misplacement or product not being tracked.
6. Decrease the risk of obsolescence: One of the main benefits of the management system is the decreased risk of obsolescence. With this system, you would be well aware of products that are not in demand, so you can decrease the stock in your warehouse. 
7. Data-driven decisions: This accurate management system will give you the exact numbers. This will help you make informed decisions about logistics optimization and supply chain operations, whether production, procurement, or stock quantity. 

What is the role of advanced technology in accurate inventory management? 

Every industry is affected by technological advancements, and so is the logistics industry. Technological advances have revolutionized the accurate management of logistics. Therefore, Now we will delve into the inventory management challenges: 

1. Artificial Intelligence and Automation: Automation helps analyze the data that can be used to optimize inventory levels. AI also helps with order processing and inventory adjustments when needed. Artificial intelligence and automation in the supply chain have simplified the task of inventory placement and data prediction. 
2. Cloud-based systems: Cloud-based logistics management systems help stakeholders access data from different places. It aligns the supply chain management objectives with the inventory levels. 
3. Real-time data: The core of inventory management systems is using real-time analytics to extract real-time data. IoT devices and RFID technology can help you monitor stock levels at present. With developed analytics, you can use this data to forecast the demand for the future. 

Best implementation strategies for inventory management in logistics

To keep up with the current sustainable logistics trends, you need to adopt the best inventory management in logistics strategies. Let’s have a look at the best practices to adopt for the management of inventory: 

1. Focus on continuous improvement and adaptability: In this revolutionizing landscape of the supply chain, your strategies must continuously evolve with time. You must include certain technological advancements and trends in your strategy to get the best results. 
2. Embrace a demand-driven approach: Understanding consumer behavior is the key to business. Adopting a demand-driven approach in inventory management with forecasting tools will help you avoid overstocking or stockouts. 
3. Give priority to the accuracy of the inventory: You must be aware that accurate stock levels are paramount. This creates and destroys your market reputation along with customer satisfaction. 
4. Improve relations with suppliers: Enhancing relations with suppliers will benefit the shippers in the long run. Collaborate with suppliers to enhance your recharging strategies and demand forecasting. You can also adopt a Vendor Management Inventory (VMI), where suppliers are fully responsible for stock management.
5. Staff training: Training the staff regarding this management system is essential. A well-aware staff is more beneficial and efficient than one unfamiliar with the systems. 

What are inventory management challenges? 

Inventory management in logistics faces some challenges. You can overcome these challenges by using accurate inventory management in logistics. Now, we will delve into the inventory management challenges: 

1. Demand variation: Demand forecasting always analyzes the market situation, especially consumer behavior. An increase or decrease in demand can significantly affect the size of your stocks. 
2. Product expiration: The major problem for this system is the product expiration. After a certain period, your goods will become obsolete or perish. Moreover, to overcome this problem, we have these optimized inventory management systems. 
3. Inconsistent strategies: If your strategies are correct but you are inconsistent with their implementation, it will adversely affect your inventories and business operations. 

LOTUS Containers offers optimized port logistic services to optimize your supply chain. You can get tailored solutions, such as refrigerated warehouses, according to your cargo needs.