Are you looking for ways to future-proof your business against demand fluctuations?
You’re not alone.
Sales through the roof one month, crickets the next. This boom and bust cycle makes it nearly impossible for businesses to plan for what’s next.
But… there’s good news and bad news.
Bad news first.
Poor inventory management costs businesses up to 11% of annual revenue. Imagine throwing that much money away because you don’t have the right inventory when you need it.
Here’s the good news:
Businesses are fighting back against demand fluctuations with solutions that optimize inventory levels and keep costs low. Proven solutions already exist that you can take advantage of right now.
Here’s what this article covers:
- Demand fluctuations are becoming more extreme.
- Poor inventory accuracy costs your business BIG money.
- Businesses are future-proofing themselves with intelligent inventory optimization software.
- Artificial Intelligence (AI) and other technologies make inventory optimization possible.
- How to future-proof your business against demand fluctuations today.
Demand Fluctuations Are Becoming More Extreme
…No matter how prepared a business thinks it is…
Demand is only going to become harder (not easier) to predict.
Consumer demands change overnight. Global pandemics create unprecedented stress on supply chains. Economies constantly fluctuate between growth and stagnation.
According to BCI’s Supply Chain Resilience Report, 79% of organizations experienced supply chain disruption over the past 12 months.
That’s up from previous years.
But wait, there’s more:
Annual supply chain disruptions increased by 38% in 2024 alone.
Nobody knows exactly what’s going to happen next. But these are the biggest causes of recent disruptions:
- Extreme weather events (up 119% YoY)
- Labor disputes and shortages
- Geopolitical instability and trade tensions
- Uncertain and changing consumer buying patterns
The bottom line? Demand is only going to get harder (not easier) to predict.
Poor Inventory Accuracy Costs Your Business BIG Money
Stockouts and overstocking are no joke.
Miss forecasting demand for your products and services can lead to missed revenue opportunities or dangerously low levels of inventory.
Let’s talk numbers.
Poor inventory accuracy costs the global business ecosystem roughly $1.1 trillion each year.
U.S. retailers specifically lose $471 billion every year due to overstocking.
Think that’ll change anytime soon?
Here’s another scary fact…
Approximately 43% of SMBs don’t even know how much inventory they have on hand.
While others are optimizing, these companies are left guessing.
Businesses that have their inventory nailed down know one thing for sure.
You can’t operate your business without smart inventory management software. Point blank.
Optimizing your inventory allows you to:
- Keep cash flowing through your business.
- Serve customers when and where they want to be served.
- Operate at minimal cost by eliminating unnecessary purchases.
Businesses Are Future-Proofing Themselves
Unlike many businesses that are stuck in the annual or quarterly mindset.
Prosperous companies know that demand will continue to fluctuate. They aren’t afraid of this uncertainty, though.
Businesses preparing for fluctuations aren’t trying to control the uncontrollable. Instead, they’re leveraging cutting-edge technology and inventory optimization strategies to “hedge their bets.”
What does that mean?
Forward-thinking companies are taking a layered approach to resilience.
They know that any single strategy won’t be enough to future-proof their businesses against sudden changes in demand. Successful supply chains use a mixture of strategies like these…
Multiple Supplier Relationships
Relying on a single supplier is dangerous.
If you get diversified sourcing strategies by putting supplier relationships all over the globe. If one supplier dries up, you have already have backup plans ready to activate.
Demand Planning
Demand guessing is so last century.
Advanced software can analyze historical sales data alongside current market conditions and predict future demand more accurately. Businesses leveraging AI for demand planning saw inventory levels decrease by 10-15%.
Safety Stock
Safety stock is a great way to insulate a business from unforeseen surges in demand.
The key is to understand how much safety stock is enough safety stock. Err on either side for too long and you’ll either lose sales or drown in excess inventory.
Real-Time Data
When you have access to complete visibility across your supply chain, you can make quicker decisions with confidence.
Identify potential issues before they become major problems and capitalize on opportunities while they’re still available.
Technologies That Will Help You Future-Proof Your Business
Demand will always be unpredictable.
However, there are technologies available that can give you a fighting chance against uncertainty.
AI and machine learning are two of the most impactful technologies that are helping businesses with inventory optimization.
Roughly 46% of businesses have implemented some form of AI into their inventory management practices.
And they’re using it to:
- Improve demand forecasting
- Optimize inventory position
- Reduce human error
But AI isn’t the only technology playing a role in inventory optimization.
Other technologies shaping the future of inventory optimization include:
- IoT sensors allow for real-time inventory tracking across multiple locations
- Cloud-based platforms give you access to your data anywhere
- Predictive analytics can alert you to potential issues before they become problems
- Automation allows you to eliminate manual errors and speed up processes
Don’t just stop at one piece of the technology pie. Use a blend of technologies to future-proof your business.
How to Prepare Your Business for Demand Fluctuations Today
Future-proofing your business starts with these 5 steps.
Assess current inventory operations. You can’t improve what you don’t understand. Take stock of where your current inventory processes excel and where there’s room for improvement.
Get your data in order. Garbage in, garbage out. If your current technology isn’t collecting the right data, your inventory will never be optimized.
Select a technology partner that fits your needs. Not all inventory solutions are created equal. Look for businesses that offer end-to-end functionality like forecasting, optimization, and visibility.
Educate your team. Technology is useless if your employees don’t know how to use it.
Implement slowly and prove value. Pick one area of your inventory and show your business what these technologies can do. Grow from there.
Want a Recap?
Here’s your beer scratch wrapper moment.
- Demand fluctuations are increasing.
- Businesses lose billions each year due to poor inventory management.
- AI and other advanced technologies allow businesses to prepare for uncertain demand.
- Businesses can future-proof their inventory by taking a layered approach and sticking to the strategies listed above.
- There are steps you can take today to prepare your business.
Demand will continue to fluctuate. However, that doesn’t mean your business has to suffer because of it.
Businesses that take advantage of inventory optimization software today will be the ones still standing when the next wave of disruptions come.
Others? Not so much.
Don’t get caught wondering what could have been.