Companies with poor visibility into their inventory can suffer costly setbacks. Learn why inventory visibility is crucial to customer satisfaction, overall benefits and how to improve it.

In this article:

What Is Inventory Visibility?

Inventory visibility refers to a business’s ability to understand the inventory it has on-hand, its status and where it’s kept. Customers also rely on inventory visibility to find and buy products they want at any of your locations.

Inventory includes goods, parts and raw materials for sale or used to build new products. There are four main types of inventory: finished goods, raw materials, work-in-progress and maintenance, repair and operating (MRO). When used as a verb, inventory refers to counting goods. In retail, inventory is also called stock.

Maintaining visibility throughout the supply chain allows businesses to better meet customer demand and reduce costs. Supply chain visibility allows you and your customers to track products at the production centre, warehouse, retail store or in transit.

What Is Order Visibility?

Order visibility shows businesses when orders were placed, when they will be fulfilled and how they will be shipped. With order visibility, you can trace order fulfilment throughout the shipping process to final delivery. Order visibility is key to great customer service because it can reduce customers’ questions and complaints. That, in turn, reduces your costs.

How Do You Monitor Inventory?

Companies use inventory management strategies and systems to monitor inventory. The practice helps limit stockouts and overstocks, control costs and satisfy customers.

Basic inventory management steps that improve visibility include:

  • Capture accurate details upon receipts to improve data accuracy.
  • Invest in inventory management software with enterprise-wide visibility to ensure you have visibility of items across all locations and selling channels.
  • Use mobile scanners within the warehouse and fulfilment areas to track the movement of items.
  • Choose inventory management techniques suited to your business. There are more than a dozen methods available.
  • Audit inventory regularly and conduct routine cycle counts.

Why Is Inventory Visibility Important?

Inventory visibility is key to customer satisfaction, which ultimately improves your company’s chances to succeed. It lets businesses and their customers know what’s in stock, where and how much. This insight is critical for omnichannel retailers.

Despite the importance of inventory visibility, many small retailers still use manual methods or don’t track inventory at all. Similarly, several retailers worldwide say items ship late because they sell items not currently in stock. Inventory visibility is also important for wholesale distributors in helping them manage costs and meet demand and for manufacturers, ensuring they always have access to the raw materials required in the manufacturing process. In many cases, inventory tracking software can help lower costs.

Aside from on-time shipping, here’s how better inventory visibility can help a business grow:

  • Ensures an accurate inventory count across all locations and selling channels, including brick-and-mortar and online, which provides a better customer experience.
  • Helps point out issues that are causing delays, so you can make adjustments to meet fulfilment demands
  • Provides insight into which products are the biggest sellers or trending up
  • Identify opportunities for cost savings
  • Provides real-time visibility into orders and shipments to provide reliable advance knowledge of when goods will arrive
  • Improves customer satisfaction by sharing the full range of products available, fulfilment options and when a delivery will arrive

Benefits of Inventory Visibility

Inventory visibility directly affects order fulfilment, which ultimately affects the bottom line. There are many benefits for a company that knows how many stock keeping units (SKUs) it has and if they’re in a warehouse, store or with a drop-shipping partner.

What Are the Benefits of Inventory Visibility?

  • Operational Efficiency: Saves time otherwise spent searching for items or responding to customer inquiries about delayed orders.
  • Optimal Inventory/Stock Levels: When you know what you have and where it is, you don’t order excess inventory, which can turn into obsolete inventory. Instead, you promptly replenish low stock.
  • Increased Security and Inventory Control: Inventory visibility and inventory control are crucial for highly regulated industries, such as chemicals, food and pharmaceuticals, which require strict tracking of items and lots.
  • Improved Ability to Meet Demand: Good visibility means there are always enough popular items on hand to meet demand. Accurate information about fulfilment schedules improves the customer experience.
  • Improved/Smart Resource Allocation: Better visibility encourages inventory optimisation by sending the right amount of stock to retail and ecommerce outlets.
  • More Accurate Forecasting: Inventory control tracks inbound and outbound stock, stock held, and conducts regular stock audits. Tracking data contributes to more focused stock purchasing and improved distribution. Learn more about the practice of demand planning.
  • Supply Chain Transparency: Customers want to know the status of their orders as they progress through the supply chain.
  • Improved Customer Satisfaction: Better visibility on the back end makes product and delivery problems apparent before they reach the customer. Visibility also helps companies deliver more products to customers and meet fulfilment needs.
  • Increased Market Responsiveness: Global, real-time data equips businesses with the knowledge they need to anticipate shifts in consumer demand.
  • The Ability to Adapt to Unexpected Events: Businesses can more quickly adapt to trends and supply chain disruptions.
  • Flexible Views: Some events require insights from historical and external data to prevent oversells and lost sales.
  • Improved return on investment (ROI): Because inventory sitting in a warehouse represents tied up cash, you want to hold the least amount of stock possible while still serving customer needs.
The growing benefits inventory visibility infographic

Top Inventory Visibility Challenges

Ecommerce brings many fulfilment options for customers, and that comes with challenges. Products can come to customers through in-store purchases, buy online, pickup in-store (BOPIS), shipping from a warehouse, shipping from a store or drop shipping.

Challenges to achieving accurate inventory visibility include:

  • Unrecorded Changes: Undocumented inventory changes from theft or unreported breakage or spoilage hinder efficient planning and fulfilment.
  • Manual Processs: Manual cycle counts and tracking in an age of barcodes and automated cycle counts is needlessly inefficient.
  • Lack of Visibility: Inability to track and trace product across multiple ERP, SCM and CRM applications internally and within the partner ecosystem can cause unnecessary delays and provide a poor customer experience.
  • Reactive Management: When managers receive late notification of unplanned events, they can’t always use systems in place to respond.
  • Uncertainty in Demand: When there’s no visibility into inventory it can lead to excess inventory and speculative ordering.
  • Lack of Data: Managers who don’t have access to critical information when needed can result in lost sales, out-of-stocks, markdowns and reductions.
  • Deployment Issues: When managers don’t know where and what quantity of inventory is available to deploy in the network across dimensions of time, geography and demographics, they can make uninformed decisions.
  • Out-of-Stock Items: Customers who can’t get what they need from you will likely substitute brands or make purchases from your competitors.
  • Loss in Productivity: When staff spend time tending to low-value data collection and manipulation efforts, they’re not focusing on their priorities and doing their work.
  • Poor Planning: Lack of planning into stock levels, upstream and downstream, can lead to shortages, followed by overcompensation and excesses. These issues can result in an increased level of discounting and write-offs for slow moving and obsolete inventory.
  • Inadequate Legacy Tracking Platforms: Older ecommerce platforms and enterprise resource planning (ERP) systems often don’t provide the real-time updates multichannel businesses need.
The growing benefits inventory visibility infographic

What’s Holding Businesses Back From Achieving End-to-End Inventory Visibility?

Retailers have concerns about costs, skills and software integration that are all holding them back from gaining complete inventory visibility. These misgivings keep them from using the right tools to provide end-to-end visibility. However, high inventory visibility may fuel growth.

Challenges of Achieving Real-time Inventory Visibility:

  • Upfront technology costs can be significant
  • Continued use of manual tracking systems
  • Failure to understand automation as a way to improve omnichannel sales
  • Difficulties in integrating legacy software systems with inventory management software
  • Issues entering accurate data into the system

How to Improve Inventory Visibility

Tools and techniques that track goods throughout the supply chain can provide better inventory visibility. A company that can follow its inventory from sourcing through delivery can help meet the rising customer demand for variety and fast, efficient service.

Ways to Improve Inventory Visibility:

  • Use RFID or Barcode Scanners: Scanning provides real-time updates as inventory moves from one location to another or within a building. These tools reduce labour costs for counting, increase inventory accuracy and add quality control.
  • Advanced Tracking Systems: Using manual tools like spreadsheets and email to manage multiple stock locations and sales channels and monitor a supply chain is all but impossible. Businesses need digital tools to be successful.
    • Add a Warehouse Management System (WMS): A WMS controls warehouse activities, from the overall layout and bin location to picking, packing and cycle counting.
    • Implement Inventory Management Software: This software manages activities in the supply chain that are outside the warehouse. Managers also use the tool to help forecast future demand by gathering inventory data. However, implementing inventory management software that integrates with a WMS will provide more information about stock availability and its location. Learn more about how it works in the inventory management tutorial.
    • Use an ERP platform: These robust platforms collect data and manage production, procurement, sales, accounting, inventory and more. These tools help overcome supply chain disruptions and automatically adjust refill orders as stock levels change. ERP controls inventory across locations and channels, including cross-channel transfers. To become more proficient in ERP software, learn more about processes managed by ERP.
  • Optimise All Processes: Effective processes rely on complete data. Businesses use this information to ensure adequate inventory levels. Sticking to the plan, with only approved exceptions, allows you to gauge effectiveness.
  • Automate Cycle Counts: Automating wall-to-wall and small-scale counts reduces labour costs and increases inventory and stock-level accuracy. Staff will have more time for money-making tasks like fulfilling orders. Automation also reduces secondary problems related to stock inaccuracies and indirect costs from data errors.
  • Enhance Space Optimisation: Improved warehouse layout reduces the time pickers spend searching for items and increases fulfilment accuracy.
  • Implement a Distributed Order Management System (DOM/OMS): Order visibility for customers is essential, but so is visibility on the back end. DOMs provide a global view of all supply chain systems used to replenish orders. Order management systems (OMS) arrange orders in an efficient picking sequence.

5 Ways ERP Improves Inventory Visibility

To verify the inventory at all locations at any time, companies need reliable systems to track and manage it across the supply chain. ERP platforms offer this functionality and more.

Benefits of Integrating ERP to Increase Inventory Visibility:

  • Automates Processes: Automation reduces errors and increases efficiency, which means more revenue.
  • Resolves Unforeseen Scenarios: ERP systems ensure that inventory always matches production or consumer demand, no matter the circumstances. Consistency helps businesses stick to their inventory plan.
  • Enhances Just in Time (JIT) Inventory: When companies order and receive products as needed, it reduces inventory carrying costs. Having the right amount of inventory, also known as just-in-time inventory, also helps minimise time wasted scrambling to handle shortages or excesses.
  • Offer Actionable Insights: Managers can find global supply chain data and analytics on a single screen. Access to this information when they need it is crucial in making better business decisions.
  • Supports Mobility: Cloud-based ERP means sales and customer service can work anywhere. Staff can continue to provide customers with up-to-date information about inventory and order details.

Building the Business Case for Inventory Visibility Software

According to a study from Gravity Supply Chain Solutions, only 15% of U.S. retailers have completed their supply chain digitisation. These companies saw perceived costs and ROI concerns as primary hurdles.

Inventory visibility software provides transparency along the supply chain, improving customer service, forecasting and overall operations. But how do you make a case for investing in a digitised platform?

9 Questions to Ask to Help Make a Case for Inventory Visibility Software

  • How many hours do you spend each quarter taking inventory ? How much could software limit that?
  • How many hours would you save if you automated cycle counts?
  • How many sales did you lose because you didn’t have the inventory available?
  • Have online shoppers visited your brick-and-mortar store to find out an item was only available online?
  • How much time does customer service spend answering questions about delayed orders or dealing with complaints about incorrect or damaged orders?
  • What would the penalties of not being able to trace a recalled or defective product cost?
  • Do you have to search through files and send emails to find out when stock will arrive?
  • How much capital do you have tied up in stock with little demand?
  • What would the increased accuracy of fulfilment mean to your bottom line?

When you have the answers to these questions as they apply to your business, you’ll be ready to make a solid case for investing in inventory visibility software.

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Streamline Inventory Visibility With NetSuite

Inventory visibility is a must for businesses to thrive in the omnichannel marketplace. Cloud-based inventory management platforms such as NetSuite offer visibility by providing real-time data for all inventory locations. NetSuite provides a unified ERP platform that combines a warehouse management system, supply chain management and order management, together with financial and customer data that delivers inventory visibility to every part of the organisation in real time.