Inventory Management in a Digital Supply Chain

APIs take inventory management in the manufacturing industry to the next level

One might think that inventory management is an old hat. There are plenty of tools and systems available to create a centralized record of a company’s stock levels. However, this makes up only a small part of inventory management, as today’s supply chains take a much more holistic approach. Your business partners, whether customers, suppliers or third-party logistics providers will also benefit from this information, and their partners in turn. This transparency along the supply chain helps all parties to use the available resources in a deliberate way and ultimately to serve the market even faster. Read on to discover what a digitalized supply chain could look like and what opportunities – and challenges – it could pose to your company.

What is inventory management?

Inventory management, otherwise known as stock management or field inventory management, is essentially a centralized record of stock levels in a company’s – or supplier’s warehouse at any particular time. Armed with such accurate information, parties can make informed, deliberate planning and procurement decisions.  This pool of information not only helps resource planning, it also makes budgeting significantly easier. Based on the collected information, resource planning in production is carried out, but also budget planning is significantly simplified. It is also possible to gather data from dispatch trackers and use this to create insightful reports.

Why is inventory management important for a supply chain?

While initially inventory management was only considered necessary for certain critical goods with costly storage needs, high manufacturing costs or complex transport routes, the discipline has now become quite mainstream. In some industries, stock management is already part and parcel of the entire supply chain.

These days, end consumers using an online shop expect to be able to see whether the retailer has a certain product in stock at a given time. Access to a vendor managed inventory means they do not run the now unacceptable risk of – as just a few years back – ordering, crossing their fingers, and having their order cancelled just a short time later.

Increasingly, customers -whether B2C or B2B – expect to receive a response from the retailer or manufacturer, often in real time. This requires high–quality data. Whether you’re active in the B2B or B2C sector, there’s barely a consumer willing to tolerate a time lag in the information flow, such as happens with email. Real-time updates are crucial for good customer-supplier relationships along the entire supply chain. Should there be a time lag in the information flow, this could lead to the supply chain breaking down, or even to hefty damages payments if late deliveries mean that production lines stand still. Common practices in the automotive sector such as Just in Time and Just in Sequence are fully reliant on real-time information. Even lawmakers are taking steps in this direction with requirements to regularly provide information to show companies are complying with certain laws.

How to set up good inventory management

So, what’s the answer?  Recording inventories manually or in Excel lists is far too time-consuming and error-prone for most companies today, and is largely outdated. Instead, most firms have already taken at least the first steps towards digitalization, such as using handheld scanners and barcodes. Without question, there’s hardly a manufacturer today not using software in their inventory management. This means that the data which their business partners would benefit from has actually already been captured and entered. However, this is usually in the form of data islands, isolated and non-networked. However, that means that the ‘only’ thing missing in disseminating this data is the ability to automatically send it out to partners and partners’ systems in real time. It certainly sounds simple, and indeed it can be simple. But how?

APIs let you integrate your inventory management system with other systems

The key to getting information from a plethora of systems are APIs, otherwise known as Application Programming Interfaces. These interfaces have been designed for real-time communication. In order to properly serve the needs of all the stakeholders of an API, you will also need a professional API management solution. An API provider is the one who has made the API available, while API consumers are anyone who uses the interface to call up information. There are also different types of API, depending on how and where they are used. Use cases include integrating an Enterprise Resource Planning system with other systems such as a Customer Relationship Management system, a Product Information Management system, databases, marketplaces and much more, as illustrated in the image below.

It is not always only inventory management software that needs linking.  ERP (Enterprise Resource Planning) software, accounting tools, production software and others also contain information that business partners would benefit from and therefore also need networking. The API publisher defines the interface (possibly several if there are different use cases) and grants the API consumer/s access to a defined amount of real-time data on demand.

It is also possible to enable the API consumer to transmit information. The API consumer uses an interface specified by the API publisher to either retrieve information from or make information available to the API publisher.

In an integrated supply chain, a company will often have a dual API role. They are a consumer of their suppliers’ information and an API publisher for their own customers. A seamlessly integrated supply chain in both directions is therefore a win-win situation for all involved.

Challenges in using APIs to integrate an inventory management system

Integrating inventory management is often delegated to the IT department. Depending on the size of the company, the IT department may well support the various corporate software packages, including inventory management. However, they may not have the skills or resources needed to integrate these.  Small and medium-sized enterprises in particular often feel overwhelmed by systems integration as this is generally far outside their core competencies and therefore isn’t something that can be done in-house. However, if a business partner requests an API, they need to be able to quickly implement this. Indeed, as a lack of automated information flow is often a knock-out criterion in selecting suppliers, the ability to set up APIs is actually business-critical.  Leave it too late to plan an API integration strategy, and the planning time will end up eating into the tight schedule for actually implementing it.

As discussed above, successful API integration involves a whole range of stakeholders.  There’s not just the supplier/customer relationship, there are also various business partners that have various needs, as well as other use cases such as processes and providing information. These varying needs result in a number of APIs which either need to be provisioned or consumed. It is essential to be able to keep track of all these APIs and their users.

Harness API integration and API management for an optimal inventory management

There are two key elements to implementing APIs. The first is to define the interface. Then, this needs securing and administrating. The first element falls under API integration.

Exchanging data between systems involves opening up these systems. This makes it imperative to define who can access the interface, when and how often so that there is no security risk. This task and monitoring the day-to-day activities pertaining to an API falls under API management.

API security is essential for effective inventory management

Integrating two systems always poses a certain security risk, because in order to be able to output or process information, the systems must be opened to the outside world. It is therefore important to protect the systems from unauthorized users. Anyone who shies away from implementing such API security measures only aggravates the situation. APIs are by no means just a short-term trend that can be “sat out”, but represent the next step in digital evolution that can neither be slowed down nor stopped. Whether in inventory management or other integration use cases, it is no longer really an option to say no to API integration. This would be a definite step backward and catching up later would be difficult and unnecessarily costly. One thing’s for sure, APIs are not the final stop in the evolution of the digital supply chain.

One platform to integrate your inventory management – and more

The SEEBURGER Business Integration Suite is a cloud-based, agile and scalable integration platform that is developed and supported entirely in-house. Its holistic integration approach means that one integration software covers all the capabilities API, B2B/EDI, A2A/EAI, MFT, IIoT and automation. The SEEBURGER BIS reduces the complexity of tasks such as integrating inventory management systems, API management and API integration. This lets you focus on what matters: sharing business-critical data, making quick decisions and maximizing performance.