Inventory Automation: Use Cases, Steps, Features, Costs, ROI
ScienceSoft applies 10-year experience in building supply chain management software and 11-year experience in IoT services to design and develop effective automated inventory solutions.
Inventory Automation: The Essence
Inventory automation facilitates monitoring of inventory levels and location, inventory valuation and audit, inventory ordering and selling. Automated inventory systems rely on IoT and AI technologies to provide end-to-end inventory automation. The solutions support multi-location inventory management, demand-driven inventory planning, and inventory optimization based on advanced analytics, which helps companies avoid stockouts and overstocking.
Inventory automation is especially helpful for large enterprises that need to manage a wide range of inventory items across complex multi-echelon distribution networks.
- Necessary integrations: ERP, CRM, accounting software, a vendor portal, etc.
- Implementation time: 8–12+ months.
- Development costs: $90,000–$400,000, depending on the automation solution complexity.
- ROI: up to 300%.
Main Use Cases of Inventory Automation
Achieve up to 30% reduction in an overall inventory amount due to analytics-based inventory planning and multi-echelon inventory optimization.
Get intelligent guidance on when and how much inventory to purchase. Up to 99% of your inventory purchase orders can be managed automatically.
Employ RFID technology and the cutting-edge computer vision techs to drive up to x15 faster inventory counting and get 100% visibility of the real-time inventory levels across your storage locations.
With automated and optimized inventory operations, you’ll be able to increase the fill rate and spur the revenue growth. Also, you benefit from enhanced customer satisfaction due to timely order delivery.
- Automated calculation of required inventory amounts by period, inventory item, location, etc. based on the analysis of relevant historical data:
- Inventory demand to support internal processes, e.g., office equipment, raw materials for manufacturing needs.
- Customer demand (by selling channel, point of sale, during particular seasons, etc.).
- Automated calculation of expected inventory delivery dates based on the analysis of historical inventory lead time, supplier data, etc.
Inventory ordering automation
- Automated creation of purchase orders triggered by reorder points, certain dates, etc.
- Rule-based supplier assignment for various inventory items.
- Automated workflows for multi-department purchase order approval.
- Real-time purchase order status tracking.
- Alerts to the inventory team on inventory delivery.
- Automated purchase invoice processing and submission for payment.
SKU management automation
- Template-based SKU creation.
- Rule-based inventory item cataloging.
- Automated updating of SKU information as new relevant data appear.
- Rule-based inventory kitting (for retail and wholesale).
Inventory costing automation
- Automated inventory valuation based on FIFO, LIFO, weighted average costing, and other inventory costing methods.
- Calculating inventory carrying costs.
- Calculating cost of goods sold (COGS).
Inventory control automation
- Inventory level monitoring based on barcode (semi-automated) or RFID (fully automated) technology:
- Across multiple domestic and foreign locations (warehouses, distribution centers, manufacturing facilities, points of sale, etc.).
- Across various stages of production (raw materials, in-progress goods, finished goods).
- Across owned and consignment inventory (for retail, healthcare, and more).
- Alerts on low-level inventory.
- Batch control to track expiration dates (e.g., of perishable inventory items) using barcode or RFID technology.
- Reminders on inventory expiration dates.
- Inventory audit based on barcode or RFID technology.
Automated inventory reservation
- Automated inventory reservation for a customer order.
- Automated inventory reservation and request for transfer from warehouses to the locations where operations are conducted (e.g., manufacturing facilities or construction sites) triggered by certain dates (e.g., specified in manufacturing or construction schedules).
- Automated reservation of inventory items required for scheduled medical procedures (for healthcare).
- Rule-based inventory reservation for guaranteed trade promotion campaigns (for retail).
- Template-based Bill of Materials (BOM) creation and automated inventory reservation (for discrete manufacturing).
- AI-supported calculation of optimal inventory levels and reorder points for each inventory item based on the historical manufacturing and sales data, product promotions, demand seasonality, and other factors.
- AI-driven recommendations on inventory reallocation between different manufacturing facilities, warehouses, distribution centers, points of sale, etc. (for multi-echelon inventory optimization).
Customer order management
- Template-based creation of sales orders.
- Real-time tracking of sales order status.
- Automated generation and approval of sales invoices and shipping documents.
- Automated package slips generation.
- Notifications to the inventory team on the goods dispatch.
Reverse logistics automation
- Rule-based inventory return routing to a fitting warehouse.
- Real-time tracking of return order status.
- Alerts to the inventory team on the returned inventory delivery.
- Automated workflows for various inventory processing scenarios upon returned inventory delivery (e.g., inventory routing for quality check or inventory return to the initial supplier).
- Template-based creation of consignment inventory return orders.
- Automated reservation of consignment inventory for return to the supplier, invoice and package slips generation.
- Real-time calculation of essential inventory metrics, such as total inventory levels by location, on-hand/low-stock inventory, inventory turnover, days sales of inventory (DSI), aged inventory, and more.
- Automated ABC and FSN analysis.
- Template-based inventory reports.
Explore Our Inventory Automation System Demo
A sample application for the inventory team shows how robust automation across inventory planning, multi-location inventory control, inventory reporting and other important inventory management processes improves operations efficiency.
Inventory automation system + ERP
- For accurate multi-location inventory planning.
- To plan optimal time for inventory reallocation from warehouses to the locations where operations are conducted.
- To leverage inventory data at all levels of operational and strategic planning.
Inventory automation system + CRM
Alternatively to CRM, the solution can be integrated directly with selling channels (e.g., a company’s ecommerce website or a point-of-sale (POS) system).
- For the automated input of relevant data when creating sales orders and customer invoices.
- For accurate omnichannel inventory planning to meet customer demand.
- To keep sales agents up-to-date on available inventory.
Inventory automation system + vendor portal
- For the automated input of product data when generating POs.
- For the automated PO submission to suppliers via a vendor portal.
- For facilitated PO status tracking.
- For faster processing of supplier invoices uploaded from a vendor portal.
Inventory automation system + accounting software
For automated recording of inventory transactions in the general ledger, accurate inventory value recording and reporting.
Inventory automation system + hardware
(barcode or RFID readers)
For accurate inventory level and location monitoring.
Inventory automation system + BI solution
For the analytics and visualization of multi-location inventory demand analytics, inventory lead time analytics, ABC and FSN analytics, and more.
The use of barcode and RFID technology
To eliminate error-prone manual inventory counting, enable precise automated tracking of inventory level and location.
AI-powered prescriptive analytics
To provide inventory specialists with intelligent recommendations, for example, on optimal inventory reorder points or inventory reallocation time to support optimal inventory levels across various storage locations and manufacturing facilities.
A mobile app
with barcode scanning and QR code scanning capabilities. To enable employees who deal with physical inventory to track inventory levels and share inventory data with colleagues using their smartphones.
Proper user training
To help employees involved in inventory management quickly learn how to use software and integrated hardware (RFID or barcode scanners) to streamline their daily tasks.
Inventory Automation: Success Stories by ScienceSoft
Inventory Management Software for Herbal Medicine Manufacturer
- Monitoring the herbs stock at the stages of harvesting, internal packaging and storing.
- Solution integration with an electronic scale for the automated upload of weighing information.
- Easy inventory database navigation.
Customer’s benefit: more convenient and efficient control over inventory data and operations at scale.
SaaS Module for Food Inventory Management
- Managing and storing data on raw food items, final products, recipes, manufacturers, and more.
- Assigning user-defined SKU values.
- Real-time inventory level monitoring.
- Automated updates of stock data upon inventory utilization for production and selling.
Customer’s benefit: optimized inventory levels.
Restaurant Inventory Management Software
- Permission-based access for restaurant executives, managers, barmen, etc.
- Web and mobile access to the up-to-date menu for restaurant guests.
- Drill-down dashboards to track, manage and transfer stock items.
- Inventory order management.
Customer’s benefit: streamlined inventory management, enhanced team productivity, improved client experience.
Business needs analysis and eliciting requirements for inventory automation.
Designing the functionality, architecture, and tech stack for the automated inventory system.
Project planning: deliverables, scope of work, duration, budget, team composition, etc.
Custom inventory automation software development OR upgrading a legacy inventory solution.
Running the necessary quality assurance procedures.
Inventory data migration (from spreadsheets or a previously used inventory management tool).
Software integration with the required systems, including hardware systems.
Continuous support and evolution of the automated inventory solution (optional).
Inventory Automation Techs and Tools ScienceSoft Uses
Business analysis methodologies
Interviews and focus groups
Value chain analysis
Risk assessment matrix
Lean Six Sigma
Architecture designs and patterns
Traditional 3-layer architecture
Service-oriented architecture (SOA)
Various approaches to enterprise application integration (database integration, point-to-point and middleware-based SOA, robotic process automation)
Inventory Automation Costs and Financial Outcomes
The cost of implementing inventory automation varies greatly depending on:
- The number and complexity of an automation solution’s functional modules.
- The amount of automation required for inventory tracking (semi-automation provided by barcode scanners or full automation enabled by RFID technology).
- The volume and complexity of data to be migrated from spreadsheets and/or existing inventory management software.
- The number and complexity of integrations (with ERP, CRM, accounting software, a vendor portal, a BI tool, etc.).
A custom automated inventory control system of average complexity requires $90,000–$250,000 in investments, while the cost of a comprehensive inventory management automation solution for a large enterprise may reach $400,000+.
Inventory automation can bring up to 300% ROI.
Benefits of inventory automation
stockout and overstocking costs eliminated
decrease in inventory purchasing, holding and shortage costs
reduction in inventory-related labor costs
increase in productivity of inventory specialists
You need to automate complex or specific inventory-related processes, such as the control of perishable or highly regulated (e.g., medicines, military equipment) inventory items that even customizable software products can’t handle efficiently.
You need a flexible inventory automation solution that is easy to evolve, e.g., with advanced technologies like comprehensive AI-powered inventory analytics or RFID-enabled inventory monitoring.
You are building a blockchain-based SCM system and need to enable facilitated inventory order traceability, inventory shipment tracking and inventory authenticity verification at each level of the supply chain.
You want to avoid costly and complicated integration of inventory automation software with your legacy corporate systems (ERP, CRM, accounting software, BI software, etc.).
ScienceSoft’s Business Analyst and Digital Supply Chain Consultant Serge Legchekov shares his experience:
I recommend our clients with non-specific inventory processes and minimal requirements for the solution’s UX and UI consider platform-based development. From my experience, building an inventory automation system based on a low-code platform (e.g., Microsoft Power Apps) can bring up to 74% development cost savings.
Inventory automation consulting
- Analysis of your inventory automation needs.
- Suggesting optimal inventory automation features (including barcode- or RFID-enabled functionality), solution architecture, and tech stack.
- Preparing an integration plan with ERP, CRM, accounting software, RFID or barcode scanners, etc.
- Implementation cost & time estimates, expected ROI calculation.
Implementation of inventory automation
- Inventory automation needs analysis.
- Automated inventory solution conceptualization.
- Architecture design.
- Inventory automation system development.
- Integrating the solution with the required corporate systems and hardware.
- Quality assurance.
- User training.
- Continuous support and evolution (if required).
ScienceSoft is a global IT consulting and software development company headquartered in McKinney, Texas. Since 2012, we help organizations automate their inventory processes. Being ISO 9001 and ISO 27001 certified, we apply a mature quality management system and guarantee that cooperation with us does not pose any risks to our customers’ data security. If you are interested in getting a robust inventory automation system, feel free to turn to ScienceSoft’s team.