What Is Inventory Visibility and How Does It Work?
by Jaidyn Farar
Inventory visibility is an essential component of overall supply chain visibility. It’s also key to the success of omnichannel fulfillment, a flexible approach that allows brands and retailers to seamlessly sell products through various channels.
Omnichannel can provide a cohesive, unified experience for consumers … or it can lead to inventory issues that ruin the purchase experience. If you don’t know what’s in stock at any given time, you’ll face a host of challenges, potentially even losing customers.
So, what exactly is inventory visibility? And how can your business achieve full visibility into your stock levels and locations? Read on for answers.
What is inventory visibility?
Inventory visibility is knowing what products are available and where they’re located along your supply chain. Businesses achieve full inventory visibility by monitoring stock levels and sales data in real time. This allows them to see how many SKUs they have, which warehouse or distribution center they’re located at, and even where they’re stored within the facility. The result? Better demand forecasting and more streamlined order fulfillment.
Benefits of better inventory visibility
Inventory visibility can lead to better decision-making and significant cost savings. Let’s take a look at some of the specific benefits for both organizations and their customers.
- Better demand forecasting. Good inventory visibility requires businesses to understand their historical sales data, including which products are ordered (and when), which logistics facility fulfills each order, and how much stock is left. This information helps them order the right products to meet customer demand. For example, a candle merchant might notice that demand for their autumn-themed candles picks up earlier in colder regions. They could then make sure to stock extra candles at distribution centers that serve these regions.
- Reduced stockouts and overstocking. Ordering inventory can be a tricky balancing act. Order too many products and they’ll sit in warehouses gathering dust; order too few and you’ll miss out on sales. Inventory visibility helps businesses order the right amount of every SKU, minimizing stockouts and overstocking.
- More efficient inventory distribution. Inventory visibility gives companies a more accurate idea of what products are being ordered in which locations. This helps them efficiently distribute inventory across different facilities, leading to faster fulfillment and lower shipping costs.
- Decreased supply chain costs. Better inventory visibility reveals opportunities to cut costs. For instance, a business might realize that they have too much stock on hand at a particular location, which is ramping up storage costs. Or they might discover that stocking more of a popular product at a certain warehouse could reduce shipping fees since customers near that warehouse frequently order the product.
- Smoother omnichannel coordination. With an omnichannel strategy, businesses risk confusion if inventory levels aren’t updated across sales channels. When you’re using multiple integrated sales channels, having full inventory visibility is the only way to keep things under control.
Ultimately, inventory visibility helps businesses ensure they have enough stock to meet demand and can ship it as efficiently as possible. With faster and more accurate order processing, you’re sure to keep customers happy.
Tools and technologies for inventory visibility
Relying on manual inventory management techniques is a pitfall that too many companies fall into. With the right technology, you’ll be able to see what products you have, where they are, and where they’re going—without confusion or errors.
Barcode scanning or RFID tags
Barcode scanning and RFID (radio-frequency identification) tags are two methods used to track individual inventory items. Barcodes require a scanner to capture and log information, while RFID tags use radio waves, allowing for faster and more hands-off data collection.
These technologies improve visibility by tracking inventory locations, quantities, and movements within the warehouse. They provide a hassle-free way to accurately update systems in real time, leading to fewer errors.
Internet of things (IoT) devices
IoT devices consist of networked sensors and equipment that communicate data in real time. Examples include temperature monitors, GPS trackers, and sensors on shelves or conveyor systems that report the movement or presence of items.
With IoT, businesses can track shipments across the supply chain, monitor storage conditions, and receive alerts about potential disruptions, giving them a clearer, up-to-the-moment view of their entire inventory.
Warehouse management system
No warehouse is complete without a warehouse management system (WMS). A WMS is software that provides a centralized system to manage stock locations, track item movement, and organize warehouse workflows.
A WMS enhances inventory visibility by precisely tracking items within the warehouse. Having a granular view of inventory at specific locations allows for real-time adjustments and reduces time spent locating items. The system can also help with …
- Tracking orders across sales channels
- Tracking order fulfillment status
- Forecasting customer demand
- Determining safety stock
- Setting reorder points
For even more detailed and accurate inventory updates, a WMS can integrate with barcode scanners and IoT devices.
Inventory management system
An inventory management system is software that monitors inventory levels and movements across one or more locations. It maintains records of stock quantities, incoming and outgoing shipments, and inventory valuation.
This technology contributes to inventory visibility by providing a clear picture of current stock levels, helping prevent stockouts and overstock situations. It also allows for demand forecasting by analyzing historical data, which is essential for managing seasonal fluctuations and reducing holding costs.
Enterprise resource planning (ERP) system
Enterprise resource planning (ERP) systems integrate various business functions, including inventory, accounting, sales, and human resources, into a single database. An ERP is broader than a WMS or IMS and links inventory data to other core business operations. This centralized visibility supports strategic decision-making and can help streamline operations across the organization.
AI and machine learning
Today, businesses have access to a wide variety of artificial intelligence (AI) and machine learning tools that enhance inventory visibility by predicting demand, automating stock management, and providing real-time tracking. The possibilities are endless!
Learn more in our podcast episode, The Power of AI in the Warehouse.
Challenges in inventory visibility
The three challenges below often stand in the way of achieving full inventory visibility.
- Multi-channel or omnichannel complexity. Managing inventory across multiple sales channels (online, in-store, and marketplaces) creates a complex landscape where stock levels are hard to track in real time.
- Unorganized warehouses. Poorly organized warehouses make it difficult to track stock accurately, leading to misplaced items, longer picking times, and a greater risk of inventory discrepancies.
- Lack of automation. Without automation, businesses rely on manual processes. While this can work for very small businesses, reliance on manual processes makes it hard for larger companies to maintain an accurate picture of stock levels.
Best practices for implementing inventory visibility
How do you increase inventory visibility? Making a few simple changes can help businesses improve inventory visibility and reap the associated benefits.
Integrate across channels
To achieve full visibility, it’s essential to integrate inventory data across all sales channels, including brand-owned platforms, physical stores, and third-party marketplaces. By syncing stock levels and tracking in real time, you can maintain a centralized, up-to-date view of inventory across every platform.
To get started: Use an inventory management system that syncs data in real time, and make sure each platform you sell on is connected to a single source of truth.
Leverage automation
Warehouse automation streamlines tasks like updating stock levels, reordering low inventory, and alerting staff about discrepancies, freeing up valuable time and reducing errors. With automated workflows in place, you can ensure accurate, real-time data across all systems.
To get started: First, identify repetitive tasks—such as stock level updates, reorder points, and sales tracking—that could be automated. Then choose automation software that integrates with your existing systems.
Automate cycle counts
Automating cycle counts—regularly scheduled inventory checks of small, rotating stock samples—improves accuracy without disrupting daily operations. Automated counts can be scheduled to focus on high-value or high-turnover items so that critical stock is always counted and recorded correctly.
To get started: Begin by scheduling automated cycle counts for high-demand or high-value items. Use barcode scanners or RFID tags that connect directly to your inventory system, and develop a rotating schedule so each section of the warehouse is counted regularly.
Improve the warehouse layout
A well-organized layout minimizes delays and confusion, making it easier for workers to find and process inventory quickly. This supports more accurate tracking of stock locations, contributing to better inventory visibility and faster fulfillment.
To get started: Conduct a walk-through to identify bottlenecks, and reorganize frequently picked items closer to packing stations. Consider grouping similar products or high-demand items together so they’re easier to locate and access quickly.
Continuously monitor and optimize
Your business is continually growing, adapting to both internal changes—like new processes or systems—and external changes, like shifting customer demand. Your inventory visibility strategy should evolve as necessary so it continues to meet your needs.
To get started: Begin the process of ongoing optimization by setting up regular inventory audits and tracking key metrics like stock levels, turnover rates, and order fulfillment times. Use data visualization tools to spot trends and evaluate changes over time.
Better order fulfillment with EasyPost
Inventory visibility is essential if you want to get orders shipped to customers on time, but it’s important to consider the other processes that come into play.
Even if warehouse workers can locate and pick an item in record time, slowdowns could happen at other stages of the fulfillment process. That’s why it’s critical to have a reliable shipping platform.
EasyPost Enterprise Shipping is a multi-carrier shipping engine that’s able to process up to one million orders per day. With both on-premise and cloud-based solutions available, EasyPost Enterprise helps high-performance shippers like Walmart, FabFitFun, and Carhartt keep their shipments flowing even during the busiest times.
Contact sales to learn where EasyPost Enterprise fits in your fulfillment strategy.