Inventory Management and How Technology Keeps Improving It

Originally posted March 19, 2021, updated August 27, 2025.

In 2025, inventory management goes far beyond “keeping count;” it’s the driving force behind omnichannel supply chains. Businesses need materials and goods in the right place at the right time for optimal efficiency, and they need to know where items are in the supply chain process. However, these companies are simultaneously juggling increasing complexities: global sourcing, nearshoring, sustainability pressures, and evolving expectations.

Modern inventory management requires technology, which provides the visibility, resilience, and profitability needed across the supply chain. But technology offers more, adding clarity and accountability into inventory processes and workflows.

What is inventory management?

Inventory management covers a large range of processes, from ordering and storing raw materials, components, and finished goods, to tracking and fulfilling a business’s stock. Good inventory management means striking a balance; ensuring there isn’t too much stock or too little. This can increase storage costs and tie up capital or create unhappy customers.

As one of the most critical elements in the supply chain, inventory management plays a large role in making sure products are available while also preventing waste and maximizing profitability.

Different industries use varying inventory management techniques, including:

Inventory management techniques, industries, and descriptions

Technique	Industries often used in	How it works	Technology enablement
Just-in-time (JIT)	Automotive, electronics, manufacturing	Inventory arrives only as needed for production or sales, reducing carrying costs but requiring precise forecasting and reliable suppliers.	IoT sensors, AI forecasting, ERP/WMS integrations
ABC analysis	Retail, ecommerce, wholesale, pharmaceuticals	Classifies inventory into A (high value/low quantity), B (moderate), and C (low value/high quantity) to prioritize management resources.	Advanced analytics, BI dashboards, AI-driven categorization
First-in, first-out (FIFO)	Food & beverage, chemicals, pharmaceuticals, apparel	Oldest inventory is sold or used first to prevent spoilage, obsolescence, or compliance issues.	Barcode scanning, RFID, automated picking systems
Last-in, first-out (LIFO)	Some manufacturing, commodities	Most recently acquired inventory is used or sold first, often applied for tax or accounting purposes.	ERP modules, automated accounting systems
Economic order quantity (EOQ)	Wholesale, manufacturing, distribution	Mathematical model calculates optimal order quantities to minimize ordering and holding costs.	AI optimization engines, cloud ERP, predictive analytics
Safety stock	Retail, ecommerce, manufacturing, healthcare	Extra buffer stock is kept to protect against demand surges or supply chain delays.	AI forecasting, real-time dashboards, supply chain visibility platforms
Cycle counting	Logistics, 3PL, retail, ecommerce, pharma, chemical	Small portions of inventory are counted regularly instead of full counts, improving accuracy without disruptions.	RFID, robotics, WMS with automated count scheduling
Dropshipping	Ecommerce, retail	Products are shipped directly from supplier/manufacturer to the customer, bypassing retailer’s warehouse.	Ecommerce platform APIs, real-time inventory sync, order management systems
Vendor-managed inventory (VMI)	Retail, grocery, healthcare, industrial	Supplier monitors and replenishes customer inventory, improving collaboration and reducing stockouts.	Cloud-based portals, IoT-enabled monitoring, EDI integrations
Consignment inventory	Apparel, electronics, specialty retail	Supplier owns stock placed at retailer’s site until sold, reducing retailer’s financial risk.	Blockchain for ownership tracking, cloud inventory platforms
Batch tracking	Pharmaceuticals, food & beverage, chemicals	Groups items into batches with lot numbers for traceability, quality control, and compliance.	RFID, IoT sensors, blockchain for traceability
Demand forecasting (AI/ML-driven)	All industries, especially ecommerce and retail	Uses data analytics and machine learning to predict demand, guiding purchasing, stocking, and allocation.	Machine learning models, predictive analytics, cloud ERP

Warehouse operations continue to change to satisfy customers and businesses. As a result, inventory management processes are also changing. Today, new technologies are streamlining the process to make it more accurate while reducing repetitive tasks.

Technology’s role in inventory management

Technology is now the backbone of visibility and agility in inventory management, offering key data and insights throughout the supply chain. Consider this: The inventory journey begins at the factory floor, where IoT sensors assign batch details and feed data into cloud systems.

As shipments move across borders, GPS tracking and AI forecasting provide real-time visibility of location and delays. At the warehouse, RFID scans update stock levels instantly, while AI-powered systems decide the best storage spot.

When a customer order comes in, automated picking tools and barcode scans ensure accuracy before shipping. Even if an item is returned, self-service portals and WMS logic manage whether it’s restocked, refurbished, or recycled, closing the loop with efficiency and transparency.

Key inventory management technology advancements

A business’s logistics partners are essential in providing inventory management support, and the right partners have invested in modern tech stacks. These key technologies should cover:

• Real-time visibility across networks: Logistics technology now integrates and provides a 360-degree view of inventory using software and tech tools such as cloud-based WMS systems, IoT sensors, and APIs. Businesses have access to live dashboards where they can find real-time information about location and demands shifts, and track SKU velocity.
• AI-powered forecasting and demand planning: Artificial intelligence (AI) has changed the supply chain significantly. Machine learning models can now predict inventory needs by region, seasonality, and promotions.  Human oversight can pair predictive models with insights, adapting to industry shifts and variables. This powerful tool can help reduce overstocks and stockouts while improving working capital efficiency
• Centralized and collaborative systems: Unified inventory records integrate data across ERP, OMS, and 3PL systems, ensuring accuracy and real-time updates. This shared visibility empowers cross-functional teams, from sales and operations to procurement, to collaborate more effectively and make faster, informed decisions.
• Scalable and modular platforms: Platforms should make it easy to customize with the functionality each unique business needs. In essence, the technology should be modular and scalable, with the ability to add functions like returns management, compliance reporting, or sustainability metrics as businesses grow. Modern platforms tailor to distinct data and needs.
• Advanced reporting and analytics: Smarter procurement and fulfillment decisions start with predictive and prescriptive analytics, which help businesses anticipate demand and optimize resource use. Not only that, but these analytics provide insights and enable benchmarking against industry standards to give companies a clear path to being competitive.

The evolution of inventory management technology

Like anything, industry evolution necessitates adaptation. In the supply chain, things have morphed from manual methods into AI-driven ecosystems. For example:

• Barcodes remain relevant, now enhanced with 2D codes and mobile scanning apps.
• RFID adoption is accelerating across apparel, pharma, and high-value goods.
• IoT sensors provide real-time environmental monitoring, including temperature and humidity, for sensitive goods.
• Robotics and automation reduce human error and speed up cycle counts with automated picking systems and robotic arms.
• Digital twins create virtual replicas of warehouses to stress-test inventory flows before implementation.
• Blockchain is increasingly used for compliance, recalls, and traceability in high-value supply chains such as pharma, food, and chemicals.

Benefits of modern inventory technology

The supply chain has entered another period of uncertainty, and 65% of executives are prioritizing supply chain and manufacturing costs as a primary area for cost savings. The efficiency of inventory management can have a big impact on cost-saving efforts.

When inventory management partnered with the right technology and optimized, it offers many benefits, from faster more accurate order fulfillment to improved order accuracy and shipping speed, improving the customer experience.

Additionally, improved inventory management can help businesses in their risk management and compliance efforts, especially in compliance-driven industries such as chemicals, giving them greater traceability for audits, recalls, and environmental standards.

WSI’s Inventory Management Solutions

With WSI, you’ll always know where your operations stand, whether you’re managing ecommerce fulfillment or complex manufacturing supply chains. Our warehouse inventory management system provides real-time visibility into stock levels, demand forecasting, and order status, powered by WMS, OMS, and TMS integrations within the Partner Portal. We also support EDI with major retailers, ensuring seamless connectivity across the supply chain. Backed by a commitment to accuracy, efficiency, cost savings, and sustainability, as recognized by our EcoVadis Bronze Award, WSI is the partner you can trust. Contact us today to explore smarter inventory strategies for your business.