How to optimise the annual inventories of large groups with the IoT?

Physical inventory is the classic method of warehouse inventory for large industrial groups. It requires a high level of staffing, a high administrative burden and is not 100% reliable.
IoT is the solution that will enable your company to improve its inventory management performance. How do you connect your assets? What are the benefits of RFID for managing your warehouse inventory? Answers.

Physical Inventory in the warehouse 🔎

What is physical inventory in large groups?

Physical inventory consists of a manual count of the products available in storage. This work, carried out by the warehouse staff, can be complex. Especially if it is not organised efficiently.

Counting can be general (global inventory where all products in the warehouse are counted) or selective (references or targeted locations).

What are the different types of inventory?

• Perpetual inventory: this is also known as "computerised inventory". This process allows you to know the composition of your stock in real time. Each time an item is received or issued, the quantity available is adjusted in the computerised system. The main advantage of this type of inventory is the reduction of errors. However, it can be difficult to implement in the case of a large number of items in rotation.

• Annual inventory: carried out once a year, the result of this inventory serves to confirm the results obtained with the accounting inventory. In a large distribution company with many references, several days are necessary.

• Rotating inventory: with this last type of inventory, you choose the periodicity of the counts, of one or more parts of the references.

Whichever method you choose, it is preferable to carry out your physical inventories during your company's slow periods of activity in order to have the maximum number of human resources available.

What is the purpose of conducting the inventory?

Stock is a very important asset for a company: if it is not managed optimally, it will cost the company money. The inventory is therefore essential to ensure the proper management of the company's goods.

It avoids stock-outs or overstocking. The inventory is also necessary to monitor the expiry of products, or to follow up on possible thefts on the shelf.

How do you take inventory in a warehouse?

There are several strategies available to you for carrying out your physical inventories: 

• Counting method ;

• ABC method ;

• Value or unit reporting;

• Use of an Excel file;

• Use of inventory-specific software.

The most common mistakes when carrying out the inventory

The results of the manual inventory are not 100% reliable. Several categories of errors can be made:

• Human error: forgetting or even stealing goods, incorrect data entry or difficulty in handling IT tools;

• Poor internal organisation: several tools, handovers between teams, obsolete files, CRM not up to date;

• Compliance with deadlines: delay between the entry of the product into stock and its entry into the stock file. A discrepancy can then be created.  

The benefits of RFID and IoT for physical inventory

Radio Frequency IDentification to simplify inventories

This new technology is attractive to many industries. It can be an important asset in improving inventory management and facilitating the inventory process.

• The RFID revolution 

Thanks to the data transmitted by radio frequency, it is possible to track any asset in the stock in real time. Unlike traditional barcode marking, with RFID it is no longer necessary to handle the products one by one. Each asset equipped with a chip is automatically counted. 

• Active RFID and passive RFID

This distinction corresponds to a different level of signal range. Active RFID allows the flow of goods to be tracked on a warehouse scale (up to 150 metres). Passive RFID, with a range of 15 metres, allows an inventory to be taken in a truck or small room. The choice between one or the other technology differs according to the needs of your company.

• The 3 benefits of RFID in inventory management

  1) Saving time

In one step, the inventory is immediate and faster. It is, for example, no longer necessary for employees to open boxes containing assets: RFID chips are detectable through them. The control stage is faster with this technology and the work is less tedious for the employees. Inventory time is reduced by 80%¹.

          2) Reliability

Thanks to the IoT, stock data is provided accurately.  The reliability of information is between 98% and 99% with RFID, according to a case study of the giants Metro and Walmart. RFID chips are not only used for tracking. They also hold a lot of information about the product (name, reference, shelf...).
With the incorporation of software, there is no longer a delay between stock entry and entry by staff: quantities are updated in real time.

          3) Security

RFID chips are real anti-theft devices for your goods. In the food industry, this technology provides greater transparency between the distributor and the consumer (e.g. by tracking animal products). Being able to locate assets in real time is a guarantee of security for the company. Theft or loss is reduced.

Other IoT tools for inventory management

RFID is not the only technology available to support large groups in carrying out physical inventories.

• IoT sensors: thanks to the multiple functions of sensors, it is very easy to connect products in a warehouse. The information retrieved is of several kinds: location for traceability, temperature, humidity or luminosity which are crucial data for a good storage of products. 

• Intelligent storage and automation: the use of robots facilitates warehousing and stock management. Companies can, for example, use drones if their goods are small.

• The IoRT  - Internet of Robotic Things: it is a combination of robotics and IoT. In the warehouse, robots can be implanted with sensors to improve their performance.

• Artificial Intelligence: AI in supply chain is mainly used for sales forecasting through projection models.

Why is RFID so attractive to industry?

IoT and RFID are the most widely used technologies today for inventory or stock management, as they address the concerns of companies: securing their assets but also ensuring the reliability of exchanges. In increasingly large warehouses with a significant multiplication of references, these technologies facilitate the work of logisticians. Better stock management saves time on inventories, but also on daily order preparation.

The three key points to remember:

• Manual stocktaking in the warehouses of large groups is not an optimal method.

• RFID is a technological solution with many advantages, suitable for inventory. There are other solutions, which have also proved their worth in logistics (connected objects, artificial intelligence).

• By connecting its assets, inventory management is facilitated with RFID. The company improves its productivity to increase, in the long term, the turnover. 

RFID and IoT can save millions of hours during annual inventories for large corporations. The implementation of these technologies requires an initial financial investment, but in the long term they grant an increase in the company's turnover. 

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 ¹https://eprints.usq.edu.au/33757/13/Ali_Hingst_Ch8_PV.pdf