Business – 4.2 Inventory management – Managing inventory | e-Consult
4.2 Inventory management – Managing inventory (1 questions)
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Technological tools have transformed SCM in several ways:
- Enterprise Resource Planning (ERP)
- Integrates procurement, production, inventory, and finance into a single platform, providing real‑time visibility.
- Facilitates data‑driven decision‑making and reduces information silos.
- Radio‑Frequency Identification (RFID)
- Enables automatic tracking of goods throughout the supply chain, improving accuracy of stock levels.
- Reduces manual counting errors and shortens order‑to‑delivery cycles.
- Advanced analytics & AI
- Predicts demand patterns, optimises routing, and identifies potential bottlenecks before they occur.
- Supports dynamic pricing and inventory optimisation.
Potential drawbacks include:
- High implementation costs: Large upfront investment in software licences, hardware, and staff training.
- System dependence: Over‑reliance can leave a firm vulnerable to cyber‑attacks or technical failures.
- Data quality issues: Inaccurate or incomplete data fed into the system can produce misleading insights.
- Change management challenges: Employees may resist new processes, leading to under‑utilisation of the technology.
While technology offers powerful enhancements to SCM, firms must balance benefits against costs, security risks, and the need for robust change‑management strategies.