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Order Frequency: Inventory Management Pain Points and AI

Inventory Management order frequency issues

Having delivered inventory and supply chain projects across numerous industries and problem domains at Remi AI, we have found that the problems clients wish to solve typically fall into 4 broad buckets:

The Auto-Supply Chain and Demand Forecasting suite offered by Remi AI hits each of these pain points in the order desired by the client, and is tailored completely to the business needs at hand.

Order Frequency:

Although related to the previously discussed issue of working capital, order frequency issues impact the business in different ways. They primarily occur when a replenishment team is not incentivised to consider logistics costs in their purchasing decisions.

To elucidate with an extreme example, consider a fictitious business that stocks 100 different widgets. The replenishment team can see in the ERP system that the minimum level set for Widget A is 10. A replenishment team that is poorly incentivised will order 1 widget per day to keep the total number held above 10 as long as there is no reason not to. The hypothetical delivery and processing costs are $25.00 per delivery, for 1 or 10, but the replenishment team is incentivised on stock availability, not on logistics costs. By the end of the week, the team spends an extra $100, more than $5000 a year, for one item.

The above example may seem farcical but we do come across this issue. Staff typically don’t operate outside their area of competence if it is not part of their job.

Another potential problem arising from incorrect order frequency is the roll on impact of logistics - when staff are travelling to the back of the warehouse to put away an item five times per week instead of the one that would be we required from a more intelligent ordering system, this adds up as inefficient use of human capital. As you can see, both examples, while extreme, illustrate the incremental negative impact of order frequency can have on your business.

So where can AI help out? Our Auto-Supply Chain platform allows us to build in logistics constraints in the purchasing policy to work against this issue. Depending on historical data available, our demand forecasting can generate much greater confidence in ordering, allowing you to significantly reduce order frequency whilst delivering the same quality of business. An AI inventory platform that takes into account order frequency is rewarded on finding the optimal crossover between cost and order frequency.

What’s Next for AI and Inventory Management?

Our humble goal is to revolutionise supply chain management. While working towards solving the above 4 pain points (and coming damn close), we are simultaneously working to improve delivery scheduling, warehouse simulation, and global logistics simulation into our offering. The advantage of an entire supply chain being managed by the same AI platform is the benefits reaped from these different components speaking to each other. It truly is a hugely exciting time to be working in this space.

Stay tuned on the Remi AI blog as we build out the complete supply chain offering!

Or, if you're ready to start seeing the benefits of A.I-powered inventory management, start the journey here.


Who are we?

Remi AI is an Artificial Intelligence Research Firm with offices in Sydney and San Francisco. We have delivered inventory and supply chain projects across FMCG, automotive, industrial and corporate supply and more.


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