Data driven inventory management in 2019
What are we going to overcome? declining working capital performance. How are we going to overcome it? by implementing data driven Inventory Management in the Middle East. Supply chain blogger, Wesley van Kemenade, analyses the past year in the region and discusses the importance of data technology implementation to help businesses to adapt to the challenging environment.
Looking back at 2018, Slimstock found a region with a lot of challenges in inventory management. This is supported by figures in the report from PWC about the declining working capital performance in the Middle East. The latest figures state that there are a shocking 112 AED billion of trapped up liquidity in the three areas of business; inventory, receivables and payables.
Both globally and in the Middle East, technological developments, struggling economies and political pressure have fueled the increase in cost savings and raised focus on productivity, efficiency and flexibility. This has resulted in massive movements exploring opportunities in Omni-channel strategies, Blockchain, Internet of Things, Big Data and Automation of tasks with the biggest trend of all…Artificial Intelligence.
What to expect in 2019
In 2019, we can expect an increased momentum in developing, acquiring and adopting these data driven technologies, to overcome expanding complexity, increased costs and declining revenues.
However, implementing and applying data technology to improve business and inventory management results will not be successful without a fight. The road to becoming the most innovative is indissolubly linked to success but more often to failure. As Gartner stated that 60% of analytics and BI projects failed and later this number was even adjusted to 85%. But don’t fear, there are ways to become part of the 15%.
The pitfalls of unsuccessful adaption can be overcome by making the implementation a complete effort, which not only focuses on the technological aspect. An effort of all stakeholders is vital in the adaption of data technology for excellent inventory management. It also requires emphasis on basic topics such as;
1. Business strategy: the direction, interaction and integration of critical performance factors within the company and the market
2. Assortment Control: the size and contents of the assortment and the way it is presented to the market
3. Supply and sourcing design: the relationship with the supply chain network and balancing inventory within the network to reduce risks for both supply and demand
4. Data availability: the ability to maintain and update accurate data in a structured and timely manner
5. Ability to automate: the capabilities and skills within the organization to adapt to new processes and follow structured procedures and tasks
During the implementation of data technology, a compulsion similar to creating a new product is necessary. When any of the basic topics lack attention, the adaption will become increasingly more difficult.
Excellent inventory management is one of the themes that will help the Middle East to overcome and turn around the trend in declining working capital performance. Data driven products can massively increase the benefits, but for this to happen, the implementation of data technology requires the full emphasis of the business.