Role of Big Data in Inventory Management

Managing and analysing data has always been the most challenging tasks for organisations, of all sizes and across all industries. Nowadays, organisations have tremendous amounts of data, but without proper usage, the data moves fast and exceeds the processing capacity of the existing technologies and soon becomes a burden rather than an advantage. Big data helps the organisation in processing structured and unstructured data which is too large to process using traditional databases or technologies. The processed data will empower businesses in making informed decisions. As Carly Fiorina puts it, “The goal is to turn data into information, and information into insight.”- Former CEO of HP.

What Problem Is Big Data Helping To Solve?

When organisations grow larger, it isn’t about the data that an organisation cares about. Rather, it’s the solutions that the data provides. In today’s ecommerce, inventory is often the largest tangible asset an organisation has, which means it must be monitored accurately and efficiently. Improper inventory results in stockouts and missed sales opportunities.

Few businesses have to move inventory more quickly than others, as excessive amounts of stock can lead to overstock situations. This is what Big Data is all about, it helps the organisation in capturing and analyzing data. Which helps the organisations in gaining actionable insights at much lower cost compared to traditional methods. By using big data, organisation will be able to answer the following questions:

  • How much inventory level is required to meet consumers demand
  • How to optimise stock.
  • How to reduce the impact of product recalls
  • How Big Data is transforming inventory management:

The supply chain process involves several players and many decisions, each step needs to work in perfect alignment with other factors. By using Big Data supply chain operators brings out insights that were previously not clear. It helps them in understanding how to coordinate all the factors which are critical to supply chain management. One of the requisite parts of the supply chain is inventory management. The importance of inventory management can be traced back to the days before the age of computers. In recent years, we have seen great progression in technological advancement, which is making the process of inventory management faster, cost-efficient and convenient.

Role of Big Data in Inventory management

The retail industry generates enormous amounts of volume every second. In reality, the volume is just one of the key factors of big data. Big data is influenced by 4 V’s, namely; Volume, Velocity, Variety and Veracity. Now that we have an understanding of Big Data, it is time for us to look at how Big Data is making Inventory Management faster, smarter and convenient.

  • Order Management: Advancement in technology has given humans multifold benefits, and supply chain management is no different. With the help of big data, supply chain operators can find whether the order will arrive at the right time and in the right quantity . This process leads to reduction in lead time, and shorter the lead time the better it is for the organisation.
  • Inventory Management: Having the right amount of inventory is an important part of any retail business. It would be appropriate to always have a significant amount of stock so that the situation of stock-out won’t arise, as it would give a negative impression on the business. By using big data, organisations can better understand product demand, plan and optimize inventory to its full potential.
  • Improved Demand Forecasting: When inventory lags demand, organisations suffer losses. Which is why Accurate forecasting of demand is one of the crucial aspects of the supply chain that an organisation should focus on. By using Big data , supply chain operators can better estimate the demand of the products. It gives the organisation the insights of the products which are performing well and also of the products which are not performing well, so that we can make a timely action.
  • Visibility In Real-time: Visibility is the key for organisational success. Big data helps the organisation get an intense vision of the end to end supply chain. It can track the movement of every product with efficiency and consistency, whether it be the status of shipment, the arrival of time or monitoring stock levels.
  • Pricing Management: When the organisation knows exactly how much inventory is required to meet the customer demand, the information of supplies, their cost and the value of the product. Then, Big Data helps the organisation in deciding the best price by evaluating the above said factors.
  • Better Insight: Human errors can be eliminated using Big data, with automated data capture and enhanced accuracy of supply chain data analytics systems. Additionally, Big data can help the organisation in differentiating between an event and an exception in inventory operations.
  • Increased Sales: The whole point of a business is generating more sales, and increasing profit margins. Big data helps the organisation in demand forecasting, pricing management , real-time visibility, inventory management and order management. All the above said factors will increase sales and efficiency of the organisation.


The concept of big data is not new, it has been around for many years now, as the amount of data available to organisations is growing at a fast pace. Managing and analysing data has always been the most challenging task, and Big Data helps in gathering information, running analytics and pulling out useful information for future decisions whether it be in logistics, inventory management or reduction in cost. Big Data brings out insights that were previously not clear.

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