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The High Cost of Getting Inventory Management Wrong: Are You Losing Money Without Knowing It?

February 7, 2024 | Manju Devadas

Blog / The High Cost of Getting Inventory Management Wrong: Are You Losing Money Without Knowing It?

Balancing inventory is a daily tightrope walk. On one side, there’s the sales team, always pushing for more stock to ensure they never miss a sale. On the other, you’ve got the finance team, scrutinizing every order to cut costs.

You’ve seen it all – the overzealous ordering after a single good season, leading to a warehouse crammed with unsold items. Or that cautious approach, where you order minimally, only to scramble when demand spikes unexpectedly. And who hasn’t faced the classic ‘just double the last order’ approach, regardless of changing market trends?

Then there’s the legacy inventory, items ordered eons ago, gathering dust but still on your books. It’s a complex jigsaw puzzle where missing pieces cost real money.

So, what’s the solution? Is there a magic formula to get this right?

Three Things You Need to Fix In Your Supply Chain Right Now 

  • Playing the Guessing Game with Demand Forecasting

You might be relying on gut feelings or outdated data to predict demand. This approach is like shooting in the dark – sometimes you hit the target, but more often, you miss. The result? Overstock or stockouts, both expensive mistakes.

  • Treating All Inventory Equally

Not all inventory is created equal. Treating high-demand items the same way as slow-movers can tie up your capital unnecessarily. It’s crucial to differentiate and prioritize.

  • Ignoring the Power of Real-Time Data

If you’re still working with weekly or monthly reports, you’re always a step behind. The market moves fast, and your inventory decisions need to keep up. Real-time data is the game changer here.

5 Proven Ways AI Can Help You Reduce Inventory Carry-Over Costs 

In the world of inventory management, AI is the breakthrough tool that’s changing the game. It’s not just about automation; it’s about intelligent, data-driven decision-making.

At Pluto7, we harness this power with Planning in a Box, our decision intelligence platform. It’s designed to leverage the full capabilities of AI and advanced language models like Gemini Pro, specifically to address the complexities of inventory management. 

Now let’s look at ways you can reduce the baggage of excess inventory with AI and AI-powered platforms like Planning in a Box:

1. Predictive Analytics for Accurate Demand Forecasting

AI goes beyond traditional forecasting methods by analyzing complex patterns in historical sales data, market trends, and even external factors like weather or economic indicators. This results in highly accurate demand predictions, helping businesses stay ahead of the curve.

Impact of Planning in a Box

  • Seamlessly integrates with systems like SAP IBP or SAP APO, pulling in over 250 external signals, including Google Trends and Google Adtech.
  • AI-forecasting models complement human insights, offering multi-dimensional analysis capabilities.
  • Aims for up to a 30% improvement in forecasting accuracy within 4 weeks.

Case Study: Pluto7 Helped Levi’s Accurately Predict The Product Dimensions By 90%

2. Dynamic Inventory Optimization

With AI, inventory levels are continuously optimized based on real-time data. This approach reduces the risks of overstocking and understocking, ensuring the right balance between meeting demand and minimizing holding costs.

Impact of Planning in a Box

  • Rapidly establishes a data foundation for AI in just 2 weeks, centralizing ERP, Salesforce, and external data sources.
  • Begins with a focused inventory use case and scales according to your business needs.
  • Delivers real-time optimization alerts and recommendations.
  • Utilizes Gen AI for deep, insightful analyses.

Case Study: Redefining Subscription-Based Retail: A Global Beauty Brand’s Data-Driven Inventory Transformation

3. Automated Reordering

AI takes over the mundane task of reordering, but with an intelligence that manual processes lack. It assesses your needs and triggers orders at the perfect time, ensuring you’re never caught off guard by stock shortages or excesses.

Impact of Planning in a Box

  • Automatically initiates reordering based on AI-driven predictions, ensuring optimal stock levels.
  • Implements AI-enabled supplier ranking, optimizing supplier selection based on performance, reliability, and cost.
  • Features event-driven automation that places orders as soon as an item is lifted off the shelf, ensuring continual stock availability.

Case Study: How Ulta Beauty Predicts Supplier Delays Using Machine Learning

4. A Crystal Clear View of Your Inventory

AI doesn’t just provide data; it offers clarity. By integrating various data sources, it gives you a real-time, 360-degree view of your inventory. This means better decisions, made with a complete understanding of your stock’s status.

Impact of Planning in a Box

  • Provides instant, up-to-date inventory analysis, enabling swift and informed decision-making.
  • Correlates inventory data with sales trends, market changes, and customer feedback for a comprehensive view.
  • Enables proactive inventory management by identifying potential issues before they become problems.

Case Study: Tacori Elevates Their Supply Chain with Advanced Data & Analytics Platform

5. Personalized Reporting and Alerts

AI can tailor reports and alerts to specific needs and preferences, providing relevant information to different stakeholders. This customization ensures that everyone from the warehouse manager to the CFO receives the insights they need to make informed decisions.

Impact of Planning in a Box

  • Delivers analytics directly to your preferred cloud platform, such as SAP SAC, for enhanced accessibility and integration.
  • Customizes reports and alerts to meet the specific needs of different teams and stakeholders.
  • Offers easy-to-understand visualizations and insights for quick assessments.

Case Study: Supply Chain Baseline and Optimization Through Oracle Data Mining

Let’s Put an End to Inventory Glut with Planning In A Box 

This year could be another year of excess, or it could be the year you turn it all around. With Planning in a Box, you will set up a repeatable model for supply chain success that can weather fluctuations, disruptions, shifts, and turns.

Remember, Planning in a Box isn’t a magic wand. It won’t make your problems disappear overnight. What it does is more fundamental and lasting: it first organizes and structures your data, laying a solid foundation for AI success. Then, it employs predictive algorithms to help you make better sense of this data.

This approach is about empowering you with the right tools and insights to navigate the complexities of inventory management. It’s about transforming data into decisions and confusion into clarity.

Curious to learn more? Join us for an upcoming workshop where you’ll see firsthand how AI-driven insights can reshape your approach to inventory management, turning potential challenges into your greatest strengths.


Manju Devadas is the Founder and CEO of Pluto7, bringing 20+ years of experience in predictive analytics for Supply Chain, Retail and Manufacturing. With expertise in AI, Deep Learning, and Machine Learning, he has been instrumental in improving efficiency and strategic growth across industries.

Connect with Manju on LinkedIn