Using Artificial Intelligence in Inventory Management

  1. A person acting like artificial intelligence would

In order to grow your business, you must consider some key factors that will affect inventory management. When working with stock you are always managing inventory levels, optimizing space, dealing with inaccurate forecasting, along with customer satisfaction. All these factors are unavoidable. Without the proper technology, it is extremely difficult to keep track of everything. Artificial intelligence (A.I.) can help your business manage inventory effectively.

Using A.I. in inventory management improves and maximizes efficiency across the board.

What is A.I.?

A.I. is a computer system that works and acts the way humans do, using cognition, reasoning, and problem solving. It learns its environment and what actions to take. Some devices are more intelligent than others. They truly learn on their own, with little to no direction or pre-set algorithms. There are many features of A.I. that change the way we look at and operate inventory management. Some even meet the requirements of customers.

A.I. is found in SIRI and Alexa, as well as in behavioural algorithms, facial recognition, self-driving cars, to suggested searches that “pop” up for us.

So what are some perks of A.I. in inventory management? How do you implement A.I.? Are there any risks involved?

1. Automated Inventory Monitoring

One feature of A.I. in an inventory management system is automated inventory monitoring. This eliminates the need to manually check inventory, so employees are more productive in other aspects of the company. A.I. increases productivity, as well as keeps track of products in real time, keeping inventory in the optimization stage. Using A.I. to track inventory will also reduce the manual errors.

2. Data Mining

Data mining is another advantage that comes with A.I. In the past, we relied on customer relationships in order to collect data. Now we predict and recommend products based off of information gathered through algorithms. Through A.I., data mining tracks and records what consumers’ interests are, and companies learn what their customers’ interests and demands are. This helps businesses plan products accordingly. An example of data mining is Netflix. It analyzes billions of data to suggest films and recommend shows that you might like based on your previous viewing choices.

3. Robot Automation

A.I. is also used in robot automation to check, fulfill, and restock inventory. It picks out orders and moves it accordingly based on the sensors and the system set by algorithms that guide them. Using robot automation decreases the amount of time it would usually take to complete tasks manually.

4. Reducing Forecasting Errors and Improving Customer Satisfaction

Product availability is very important to supply chains. Businesses use forecasting to predict how much or how little stock is needed. When there are forecasting errors, products are overstocked or under-stocked. Items that are overstocked means you have money tied up. When they are under-stocked, you lose customers depending on how long waits are. A.I. makes predictions with the data that is continuously being updated, considering more factors. It ensures that there is enough stock in time for future sales by calculating demands. It also scans, searches, and identifies certain items or deals, which help your customers. By using A.I. in your inventory management, the focus is on your customers and product quality, overall improving delivery to your customers and their satisfaction.

What Are Some Considerations?

Before making any decisions about implementing A.I. into your inventory management system, there are a few factors to think about.

First of all, you need to take a look at what the integration will look like with your existing system. Systems vary depending on the size of your company, making it important to be compatible in order to quickly obtain insights.

Next, A.I. systems are extremely data hungry and require a large amount of data to result in a smooth running system. One of the biggest downside today to A.I. implementation, is that there is not enough data for the system to not have any bumps in the road.

Finally, inventory management systems are not all identical. Therefore, when choosing to implement A.I. into your pre-existing system, you need to consider your business’ information to make sure you get the right fit. This helps you understand which items are easily predictable and which are unpredictable.

Risks To Using Artificial Intelligence

There are many advantages to using A.I. in inventory management, but as with anything there are also risks. Consumer patterns aren’t always the same and change suddenly. A.I.  reacts and learns to repeat actions. So, when customers change their patterns, A.I. must learn different actions. It will adapt to its new environment and improve itself over time, but it doesn’t adjust as quickly as humans can.

While there are some risks in applying A.I. into business practices, the advantages overall far outweigh the risks.


A.I. finds the patterns and data that help control inventory management. AI is changing the way inventory management works. Inventory management software with AI adapts the more often you use it, and becomes more and more customized specifically for your business over time.

All businesses should adopt A.I. because it will have a huge positive impact on daily operations as well as achieving better results. A.I. helps to collect data, as well as make fewer mistakes resulting in higher efficiency.

Is A.I. in inventory management right for your business?

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