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Inventory Visibility In The Supply Chain: Benefits, Challenges & How To Improve
For your direct-to-consumer (DTC) brand to be successful, you need to have a clear and accurate understanding of your current inventory levels.
This clear view — more commonly known as inventory visibility — is the key to making smarter decisions about demand forecasting, replenishment, fulfillment, and more.
At its core, inventory visibility answers the questions: What products do I have available? And, where are those products located along my supply chain?
With the correct answers to these questions, your company can enjoy all the benefits ranging from fewer stockouts and less dead stock to better allocation of resources and an elevated customer experience.
Because of this, inventory visibility is at the heart of well-executed inventory management and serves as the cornerstone of a well-run supply chain. Here’s everything you need to know about it.
Inventory visibility is the ability to monitor stock levels in real-time to evaluate inventory availability and accurately locate specific units within a warehouse, fulfillment center, or transit route.
If you run a product-based brand, inventory visibility is the key to unlocking growth and long-term success. For one, inventory visibility reduces stockouts and overstocking. But it also supports improved forecasting, resource allocation, and omnichannel management.
When you track your products across multiple storage locations and stages of the fulfillment process, you can make smarter, more accurate inventory decisions to avoid excess inventory and running out of stock.
Inventory visibility shows you what you have in stock versus what SKUs are running low, so you can order the optimal quantity to satisfy demand.
In that way, inventory visibility reduces the potential for inventory shortages (AKA, stockouts) and prevents overstocking.
And by avoiding an overstock situation, you’ll also put a stop to accumulating dead stock (or slow-moving, unsold inventory) that hurts your profitability by racking up carrying costs.
Demand forecasts are a key player in inventory planning since forecasting is the backbone of your reordering and replenishment process.
Thankfully, inventory visibility supports greater accuracy in all your forecasting efforts.
That’s because inventory visibility lets you see historical data from across your selling channels. This includes the time and date of previous orders, the number of SKUs ordered, and so on.
This type of granular data — courtesy of inventory visibility — can help you forecast growth and trend projections with a lot more certainty.
Plus, you can even look back and see whether your earlier forecasts lined up with actual consumer demand.
The bottom line is that although forecasting is rarely 100% accurate, inventory visibility can get you much closer to that mark than relying on guesswork and gut feelings.
Inventory visibility helps you allocate all your resources across your entire fulfillment network.
Essentially, inventory visibility tells you the amount of stock you need to send to your designated outlets (warehouses, distribution centers, and so on).
By optimizing your inventory like this — such as by stocking the right SKUs at the right Shopify locations — you can actually reduce shipping costs and speed up your order lead times. As a result, this efficient resource allocation can save your company a lot of money.
But on top of that, smarter resource allocation also prepares you for the unexpected.
For example, say your inventory is well-distributed among your warehouses and fulfillment centers. Then, you’ll likely have what you need to fulfill orders and ride out any disruptions with supply chain management.
In other words, better resource allocation makes you more adaptable. And it helps you continue with “business as usual” during unforeseen events.
Omnichannel retail integrates multiple sales channels to give customers a seamless shopping experience.
This means ecommerce brands can leverage coordinated inventory data across all customer channels — from social media to online marketplaces to brick-and-mortar stores.
And in recent years, omnichannel selling has seen a huge surge in popularity.
According to a Forrester Consulting study (commissioned by Shopify), 33% of retail brands are “prioritizing omnichannel order fulfillment over the next year.”
Meanwhile, 58% of consumers say “flexible blended shipping options” like Buy Online, Pick-Up In-Store (BOPIS) are important to their overall experience.
So, just how does inventory visibility factor into the omnichannel equation?
Well, inventory visibility ensures that all products are accounted for and documented in your electronic records — whether these items are at your warehouse, in transit, or sitting in a stockroom somewhere.
Inventory visibility pinpoints where your inventory is throughout the supply chain and makes sure your internal records match your inventory reality.
In turn, this leads to improved omnichannel management and more accuracy for your stock levels. And you won’t make the embarrassing mistake of selling products you don’t actually have (unless you’re intentionally selling on backorder, that is).
In the crowded world of retail, DTC brands can still set themselves apart by delivering an above-and-beyond customer experience.
But while there are many ways you can go about delivering exceptional customer service, inventory visibility continues to be one of the best.
That’s because the more visibility you have, the easier it is to monitor your stock levels across all selling channels. And you can maintain greater inventory control and always have enough SKUs in stock to meet customer expectations or demand.
When you have the products customers want in stock and ready to ship, they’ll get a favorable impression of your brand and will likely purchase from you again.
In fact, a Salesforce poll from late 2020 revealed that 91% of customers were “more likely to make a repeat purchase after a positive experience.”
What’s more, 71% of poll participants said they’ve “made a purchase decision based on experience quality.”
With this in mind, there’s no doubt it pays to optimize your stock levels via inventory visibility. In doing so, you can really boost customer satisfaction and keep them coming back for more.
Many things can affect your supply chain costs — from ineffective storage to unoptimized operations. But having a complete view of your inventory across your entire supply chain can cut down on these costs in a big way.
With the help of inventory visibility, your company can see where it’s overspending on warehousing fees or unsold SKUs.
For instance, you might notice you’re storing too much stock at locations where there isn’t a high demand for those products (meaning, you’re tying up working capital in unsold goods).
But once you recognize this situation, you can free up some of that capital by shifting toward product bundles, offering deeper discounts, or discontinuing slow-moving SKUs altogether.
This way, inventory visibility keeps your cash flow, well, flowing. But it also saves you from overspending on inventory and supply chain costs.
Now that you know all the barriers to inventory visibility, let’s talk through how you can get a blue-sky view of your stock levels.
Among the most popular methods for improving inventory visibility are using barcode scanners, streamlining inventory tracking, and implementing operations software.
A disorganized warehouse isn’t just trouble for your inventory accuracy — it can also really block your visibility.
If your team is working in an inefficient warehouse, it will be tough for them to find the products they need when they need them.
Warehouse inefficiency can come in many different forms:
So, like it or not, a messy warehouse will create fulfillment delays and weaken your inventory visibility (since the products you need are not easily found).
This reduced visibility can then throw off your inventory counting, tracking, or forecasting processes.
Relying on manual processes is seldom in the best interest of DTC brands. And in this case, manual efforts tend to interfere with your inventory visibility.
Simply put, manual inventory tracking is both tedious and time-consuming.
This is especially true if your company works with a complex supply chain — where inventory is constantly shipped between different warehouses or distribution centers.
When you manually monitor product movement, it eats up countless hours in the workday that could be better used on customer engagement.
In addition, manual processes are super susceptible to human errors like miscalculations or inaccurate inventory count.
These errors can then affect the accuracy of your reporting and make it difficult to maintain optimal inventory levels.
Relying on manual processes often goes hand in hand with a lack of knowledge about automation.
That is, your company might be doing things manually because you didn’t realize there was a way to automate those tasks.
But the truth is: Modern inventory and operations software can easily be automated to support inventory visibility.
For example, most operations systems are now equipped with real-time inventory updates, automatic replenish alerts, and forecasting slash planning features.
Whether you’re a new DTC brand or you’ve been on the retail scene for a few years, automating your inventory management system can revolutionize your business.
When you leverage all the functionality of operations software, your company can boost productivity, reduce errors, and meet customer demand with ease.
Maybe you’re familiar with all the benefits of automation software. But you’re turned off by the cost of getting a platform up and running.
While the initial investment can feel overwhelming, not teaming up with an enterprise resource planning (ERP) system or equivalent operations software hurts worse long term.
That’s because manual processes — in lieu of adopting automation — deny your brand the inventory visibility it deserves.
So, if you experience sticker shock while searching for the right software, just remember all the assets you’ll gain and how much money you’ll save as a result.
For example, Cogsy has helped top DTC brands like Caraway and Lalo reduce their down payments to vendors by 50%.
How? By providing the inventory visibility needed to negotiate better terms.
Plus, Cogsy saved these ops teams up to 20 hours of work per week. So, with plans starting at only $200/month, the operations software more than pays for itself.
| 🔥 Tip |
| If you’re shopping around for ways to automate your inventory planning, look for a Shopify integration that integrates with your existing tech stack. These types of integrations make it easier to provide a seamless customer experience or reach full inventory visibility. |
Now that you know all the barriers, let’s talk through how you can actually achieve inventory visibility.
Among the most popular methods for improving inventory visibility are using barcode scanners, streamlining inventory tracking, and implementing operations software.
Barcode scanners are a wonderful way to add efficiency and visibility to your warehouse management.
When all of your inventory is barcoded, it can quickly be scanned to reveal important product details. For instance, you can use barcodes or QR codes generated to check in and track where the item is stored and how many units are in stock.
The beauty of barcodes and barcode scanners is that this technology is universally accepted. Meaning, it’s used by retailers, suppliers, and manufacturers from all over the world.
This makes switching to third-party logistics providers or scaling up your operations much easier.
In addition, barcode readers significantly reduce the number of mistakes you’ll encounter.
The accuracy of barcodes far exceeds that of manual entry. And it ensures the data you’re working with is as precise as possible.
And perhaps the best part is they can deliver the information you need in just a fraction of a second.
This can save your team tons of time during the workday, especially compared to the slog of cataloging each inventory item by hand.
Along with barcode scanners, radio frequency identification (RFID) tags can also improve your warehouse organization and help streamline inventory tracking.
In fact, RFID scanners can read multiple product codes at once. This allows for even more efficient use of your company’s time (and capital).
When RFID tags are scanned into an Automatic Identification and Data Capture (AIDC) dashboard, it automatically generates a full report on that particular item.
This means your team can track data fast and accurately. And with this information at their fingertips, they will inevitably make better operational decisions.
As a result, productivity will increase, forecasts will improve, and customers can get what they want, when they want it.
While barcode scanners and RFID tags are great hardware solutions, you can also improve your inventory visibility via software.
Retail operations software has a variety of features that can broaden your inventory visibility to a significant degree. As I mentioned earlier, the best software comes with:
And if that wasn’t enough, some operations platforms even store your real-time and historical data right in the same place.
With this incredible level of visibility, you can see all your inventory metrics at a glance and keep your entire supply chain running smoothly.
Cogsy makes it easy for DTC brands to gain the inventory visibility needed to fuel their growth.
By teaming up with Cogsy, your company can view its inventory in real-time, improve its purchasing workflows, and integrate with the leading retail apps and platforms.
Scalable, sustainable DTC growth is closely tied to how well you manage your inventory. So, without consistent visibility into your inventory levels, your brand will have a hard time unlocking its growth potential.
Fortunately, Cogsy’s actionable dashboard supports real-time inventory visibility. With it, you can clarify what your products are doing around the clock.
Cogsy also helps you make sense of your inventory data. This way, you can pull practical insights from all your numbers.
You can then use these insights to make smarter decisions for purchasing, forecasting, and beyond.
Speaking of improved purchasing decisions, Cogsy has a few other features to help optimize your purchasing workflows.
Because Cogsy has eyes on your inventory 24/7, it knows when your stock levels are running low and when you need to replenish.
As you’re nearing your ideal reorder point, Cogsy will automatically email replenish alerts, letting you know it’s time to stock up.
With these reliable notifications, you can be sure you order all the products you need, exactly when you need them.
But the best part? Cogsy even streamlines your purchase orders.
With a single click, Cogsy creates customized POs tailored to your unique inventory needs (zero guesswork involved). All you have to do is check the PO and hit “submit.”
Cogsy knows that running a successful DTC brand requires multiple platforms to take care of all your different business needs. And that’s exactly why Cogsy seamlessly integrates with your current tech stack to deliver actionable, measurable insights.
By combining Cogsy with your favorite DTC tools — like Shopify, Amazon, Cin7, and ShipBob — you can empower your brand’s operations to an even greater degree.
With these integrations in effect, you’ll have a well-rounded retail support system you can lean on at every turn.
But don’t just take our word for it – try Cogsy free for 14 days.
Inventory visibility is the ability to view and track products in real-time. Not only does inventory visibility reduce stockouts and overstocking, but it also supports improved forecasting, product allocation, and omnichannel management.
Global Inventory Visibility is a software solution from IBM that offers a consolidated view of your inventory levels. With this comprehensive visibility, you can coordinate your global goods across multiple sites and track inventory anywhere in the world. Still, IBM’s inventory visibility solution doesn’t come with any demand planning features — a type of functionality Cogsy excels at. Without demand planning features, inventory visibility won’t easily lead to maintaining optimal stock levels.
Inventory visibility is when products are viewed and tracked in real-time. With inventory visibility, retailers can see how much stock is available on hand and where it’s located in their warehouse. Supply chain visibility (SCV), on the other hand, is the ability to track individual components — like raw materials or finished products — as they move from supplier to manufacturer to consumer.
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