Inventory management can be tricky. You need to guess now what your customers want to buy from you in the coming weeks and months.
AI inventory management software eliminates this guesswork. It can accurately predict future customer demand, providing business owners with precise recommendations on what to stock, when to reorder and in what quantities.
In this article, you’ll discover what AI inventory management is and why it’s important. You’ll also find a guide to choosing an app for your own business and reviews of three of the top apps available now.
What is AI inventory management?
AI inventory management software uses artificial intelligence (AI) and machine learning (ML) to help you control your stock better. It processes real-time business data to forecast customer demand, so you have the items customers want when they’re ready to buy.
Imagine a small packaging supplies wholesaler using an AI-powered inventory system linked to its current and past sales data. The software can help the business owner:
Automatically track sales trends and adjust stock levels in real-time
Reorder when stock runs low
Hold extra stock for high-demand items
Forecast seasonal demand fluctuations accurately
Over time, the machine learning algorithms get to know the business better to improve forecast accuracy.
More reliable forecasting helps the wholesaler avoid stockouts and overstocking. It also reassures the sales team that the company can fulfill each order, boosting morale and customer satisfaction scores.
Why is AI inventory management important?
AI inventory management is important because it helps firms adapt to changing customer preferences. Using AI to maintain optimal inventory levels in your company enables you to unlock these opportunities:
Increased profitability and cash flow. Reduce inventory holding costs by maintaining only the stock you need to fulfill sales. Lower holding costs free up cash flow funds and help keep your business profitable.
Reduced lead times. Share demand forecasts and market trend data with suppliers so they can sync with your procurement cycles, speeding up the entire order-to-delivery process.
Happier clients. Accurate forecasting means you can fulfill orders straight away from your available stock. Shipping goods faster helps you boost customer satisfaction and retention.
Better warehouse management. Reducing your inventory of lower-demand items frees up warehouse space for popular products.
Supply chain optimization. AI can flag trends, including indicating underperforming suppliers. These insights enable you to switch to more reliable partners, reducing business bottlenecks.
Traditional inventory management relies on manual entry, which is more prone to human error. Older systems also lack the advanced algorithms to analyze vast amounts of data and recommend the next best action.
AI’s increasing speed and accuracy are growing its role in inventory management. For example, Amazon now uses AI tools to streamline its supply chains, use less packaging and avoid delivering damaged products.
Walmart uses AI to prevent stockouts, improve supply chain management and price its products.
Emerging AI inventory management use cases
Companies are discovering the benefits of AI beyond managing inventory levels. They use technology to solve industry-related challenges and achieve a competitive edge.
For example:
Retailers and e-commerce firms like Zara use AI systems in business decision-making for things like pricing, how much stock to carry and how to allocate inventory to different branches
Wholesalers and distribution firms like Logiwa look for cost-savings in warehouse operations like optimizing picking routes and freeing up shelf space to hold more popular stock
Manufacturers like BMW order raw materials to avoid shortages and keep their production schedules on track
Food and beverage companies like Niemann Foods use AI to track shelf life – especially on perishable goods – to reduce waste and ensure they follow safety standards
Healthcare and pharmaceutical providers like Walgreens rely on AI to monitor medicine volume and expiration to avoid stockouts and respond faster to patient needs
The power of AI inventory management is also available to small business owners and growing startups.
More accurate inventory forecasting ensures you can ship from stock immediately to deliver faster and delight your customers. You can also customize the inventory management processes on AI systems to align with your workflows so you’re more efficient and turn around orders faster.
How to choose an AI inventory system for your business
Inventory management affects everything from profitability and cash flow to your ability to deliver products on time. It also looks different for each organization.
The best system for your business depends on your specific needs, so you must consider your options carefully. Here are five steps for choosing the right AI inventory management software:
1. Assess your current inventory control
Start by learning about patterns in your ability to fulfill orders and balance inventory. Understanding these patterns will reveal any gaps in your processes so you’ll know what to look for in an inventory management system.
For example, identify which items you regularly overstock (those you struggle to generate sales revenue from) and which ones you often run out of, meaning you can’t fulfill customer orders.
Look for items in your stock that are out-of-date or obsolete. Do you need to be able to track shelf life to keep product moving before it’s no longer usable?
Review historical sales data to spot patterns in demand. These patterns will highlight issues like peak or quiet periods where the amount of stock you hold increases or decreases.
2. Set inventory management goals
Study your stock history to set realistic inventory management goals. Determining the strategies that will support these goals will also inform what you look for in a management system.
For instance, decide how much stock you need and when to reorder it to balance supply and demand without tying up your cash flow.
Determine how much extra “safety stock” of your best-selling items and how much you want to cut back on items that sell more slowly.
Find baselines for your goals using inventory sales metrics like:
Inventory turnover ratio, showing how quickly you turn stock around
Carrying costs, the amount you spend on storage and maintenance
Fill rates, orders you fulfill from available stock
These metrics measure how successfully your inventory strategy balances supply and demand so you only spend money on the stock you actually need.
Once you understand your needs and goals, you can look for solutions.
3. Review potential vendors
Visit different vendors’ websites to find a system with the functionality to meet your inventory management goals.
Features to look out for include:
Feature | Benefit |
Avoid overstocks and stockouts so you can fulfill customer orders faster and maximize your storage space. | |
Real-time inventory tracking | Respond quickly to sudden spikes in demand so you get in new stock fast to avoid missed sales. |
Customize AI algorithms to automatically reorder stock when supplies are low to meet future demand. | |
Tailor dashboards and alerts to include valuable insights into how you’re managing inventory on the metrics that matter most. | |
Monitor performance against KPIs in real-time and get AI-driven suggestions on how to improve efficiency further. | |
Connect to your customer relationship management (CRM) software, e-commerce and other business apps to centralize data for a complete overview of your operations. | |
Scalability | Choose a system that can start small and grow with you, handling bigger product ranges, more users and larger data sets. |
Choose a flexible, cost-effective system that aligns with your business processes and can be customized to measure your KPIs.
Download Your Guide to Sales Performance Measurement
4. Take advantage of free trials or demos
Test each system before you commit to see if it addresses your key inventory challenges and fits your company’s workflow. Take advantage of free trials and demos to test systems in a real-world setting.
Ask each vendor to demonstrate how their system handles your specific inventory challenges, like managing seasonal demand or reducing stockouts.
5. Prepare an implementation plan
Train your staff to use the software, and keep refining how you use it till it perfectly fits your workflows. To launch it smoothly, get as much help as possible from the vendor.
Making the software fit your company’s specific needs will yield the best return on your investment and set your team up for long-term success.
Top 3 AI inventory management apps
As technology develops, the number of AI-powered inventory optimization apps is growing. Here are three of the most popular options and who they might be most suitable for.
1. Best for complex supply chains: C3 AI
C3 AI Inventory Optimization supports companies with complex supply chains by improving stock management across multiple locations and product types. It helps reduce excess inventory and ensures you meet service-level targets efficiently.
The app offers accurate demand forecasting and lets companies customize inventory level management to match their operational goals.
It also offers insights into inventory metrics and highlights potential supply chain issues, like lead times, so firms can take action to prevent possible delays or disruptions.
Features
“What-if” scenarios to see how changes to inventory policies could affect operations
Database capability to handle millions of stock-keeping units (SKU), parts and raw materials at the same time
Supplier-specific data sheets that companies can use in pricing negotiations
Uncertainty analysis to handle variations in supplier performance and market demand
2. Best for manufacturers: Peak AI
Peak AI’s inventory management system helps businesses manage inventory levels and improve supply chain processes. It includes features for demand forecasting, safety stock optimization and replenishment planning.
The platform allows firms to adjust their inventory across locations to meet regional consumer demand. It enables production schedule planning so businesses deliver to customers on time.
Peak AI also connects with other business apps, making sharing data and coordinating tasks across departments easier.
Features
Customization options for balancing inventory and service levels where demand is hard to predict
Production planning tools to manage manufacturing workflows
Algorithms that manage products that experience the most significant demand fluctuations
3. Best for warehouses: Blue Yonder
Blue Yonder offers warehouse management tools to manage staff, equipment and space to reduce inefficiencies and prioritize tasks based on urgency.
The platform tracks inventory in real time and monitors where goods are at all parts of the cycle. Its AI technology plans high-impact tasks like order picking, cycle counting and inventory replenishment.
Blue Yonder’s Robotics Hub also allows users to control multiple automation solutions via the dashboard.
Features
Machine learning to reduce waste and improve yard throughput
Performance tracking and best practice implementation for staff
Replenishment planning tools balance demand patterns and stock levels.
Multi-site operational efficiency and measurement via cloud connection
How to use Pipedrive with your AI inventory management app
Pipedrive is a powerful sales CRM whose features can help you better manage stock purchasing and fulfillment alongside your AI inventory management software.
These three Pipedrive features can support inventory control across your business.
1. Sales forecasting with Insights
Pipedrive’s product revenue forecast report (available on Advanced and higher plans) can help you predict when you’ll need more stock.
You can see a graph or table view showing which products your company expects to sell and the months in which the software expects the orders to come in.
To create a product revenue report, go to Pipedrive’s Insights feature and click “+ Add item > Report > Revenue forecast > Product revenue forecast”.
Compare the forecasts from Pipedrive with the predictive analytics from your AI inventory management software. If there’s a difference, consider adjusting the automatic replenishment trigger in your inventory management software for tighter stock control.
2. Cataloging with Pipedrive Products
Organizing and keeping your product information up to date makes it easier to track sales data and spot trends in Pipedrive.
You can also feed this data into your AI inventory management system to help it forecast demand more accurately, adjust reorder points automatically and prevent both shortages and overstocking based on actual sales.
To start using Pipedrive Products, click the Products tab in your navigation bar.
Add products to your catalog by Clicking “+ Product”. Enter the product name and any additional details, then click “Save”.
Once you’ve added all your products, use Pipedrive’s Insights to run visual sales reports on the number of individual products sold.
To create a product report:
Go to Insights and click “+ > Deal > Products”
Select the time period you want results for
From “Filters”, select “Deals > Deals status > Won” in the field next to the “is any of” dropdown menu
Pipedrive will show you a graph with the sales of individual products and a table you can configure to show the information you want.
Centralizing your product details helps you easily spot your best sellers and slower-moving items.
You can also use this data from Pipedrive to fine-tune your AI inventory settings, respond quickly to changes in demand, schedule replenishments more accurately and focus resources on faster-selling products.
3. Optimizing warehouse and manufacturing operations
Your AI inventory forecasts and sales data show you which products are the best-selling. If you’re a manufacturer, a Pipedrive integration can help you reduce handling and transit time to streamline the shipping process.
Install the native MRPeasy integration into Pipedrive. When an order comes in, pass it straight through to production planning.
Then, enter the order in MRPeasy for production scheduling. When an order arrives, the AI system will check raw material levels and reorder anything you’re running low on.
By linking Pipedrive with MRPeasy, you connect your sales pipeline directly to production planning. The integration will give you a single, efficient view of each stage and reduce the risk of delays.
Final thoughts
These are the early days of AI, and the technology will only get better. Now is the time to explore how it can fit into your inventory workflows to refine demand forecasts, improve stock control and reduce waste.
Team your AI inventory management software with Pipedrive to help you respond faster to demand changes, fulfill sales quickly and free up storage space.
Start your 14-day free Pipedrive trial today.
