Using AI to Automate Inventory Management

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Efficient inventory management is vital for industries like aviation. It's a high-stakes game where every second of delay can lead to bottlenecks and major financial losses, yet inventory-holding strategies have changed very little in the past 30 years.

Many companies still hold onto old parts. While preparation is a good thing, clinging to a "just-in-case" mentality can tie up capital and is a major drain on resources. For airlines in particular, holding excess inventory costs $10 billion a year, or 21% of total inventory value. Some studies even put that figure as high as 25%.

While preparation is a good thing, all this extra inventory ties up capital and is a major drain on resources.

When ERP (Enterprise Resource Planning) data is used to automate inventory management, aviation businesses can realize efficiencies and cost savings in the millions, on a scale previously unimaginable. This proactive, data-driven approach improves accuracy, simplifies complex processes, and can save aviation companies, who apply it, millions per year.

In this article, we’ll explore how feeding ERP data into AI-based automated inventory management systems drives incredible ROI. We’ll dig into the benefits of using these systems, and tips for choosing the right automated inventory management software for your needs.

What is ERP data?

ERP data refers to the information collected and managed by enterprise resource planning systems. ERP software syncs data from various business functions, such as finance, supply chain management, customer service, and other operations. When combined with the power of AI Inventory Management, the data provides powerful insights for overall efficiency.

For aviation, this includes an accurate look at inventory levels, demand patterns, order cycles, and more. ERP systems track MRO (maintenance, repair, and overhaul) inventory for automated inventory processes and consistently optimal stock levels.

When MRO inventory typically turns over less than once a year and AOG (aircraft on ground) scenarios cost up to $15,000 an hour, data precision is everything.

What is automated inventory management?

An automated system uses software, technology, and feeds off a continuous stream of data to get the inventory management process right. Automated inventory systems streamline tasks like stock tracking, order management (including tendering processes), maintenance scheduling, and demand forecasting.

Using an automated inventory system that is connected to your ERP and other systems, instead of cobbling together information manually from siloed platforms, ensures the data is accurate, real-time, and seamlessly merged for a full, precise picture of all operations.

For industries like aviation, with complex inventory needs, this automation is vital. Extra inventory adds up to significant recurring costs, not just for the unused parts but the storage and upkeep costs. And AI is here to make that more affordable than ever before.

When insurance alone costs about 5% of the total MRO inventory value, using an automated approach makes sure critical components are available without tying up capital on overstock.

How can AI use ERP data to automate inventory management and drive massive efficiencies?

ERP data is the foundation for automated inventory management. Here's how it works:

1. Demand forecasting: ERP systems analyze historical and real-time data like inventory data, performance logs, and multiple sales channels (passenger demand, MRO orders) to predict future demand. This reduces the risk of stockouts or overstocking.
2. Stock level optimization: Automated systems use ERP data to maintain ideal inventory levels. Alerts can signal when stock is running low or when an item is nearing obsolescence.
3. Streamlined replenishment: ERP systems automate purchasing decisions by tracking reorder points and supplier lead times so materials arrive in a steady supply.
4. Real-time visibility: ERP-driven automation provides a bird’s-eye view of inventory across all locations, critical for businesses managing global supply chains.

For instance, platforms like IBM Maxim and ePlaneAI’s Inventory AI demonstrate how ERP data can fuel automated aviation inventory management with AI.

How to choose an automated inventory management system

Selecting the right automated inventory management solution requires careful consideration of your business needs. Here are some factors to keep in mind:

1. Industry focus: Check that your existing provider supports your specific industry requirements, such as aviation regulations or MRO inventory management.
2. Integration capabilities: The system should integrate seamlessly with your existing ERP software or existing technology stack to maximize efficiency.
3. User-friendly interface: A system with a clear and intuitive interface, with a dashboard that tracks the standard metrics and key insights, reduces training time and allows staff to adopt the technology with ease, especially as manual data entry is no longer necessary to track inventory. 
4. Scalability: Choose a solution that grows with your business, accommodating new inventory categories, locations, or other capabilities as needed.

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Case studies

Alaska Airlines

Alaska Airlines enhanced its inventory management through the integration of RFID technology with its TRAX ERP system. Passive RFID tags were applied to roughly $30,000 worth of parts at select maintenance sites, enabling real-time tracking of part locations and usage.

The RFID system provided location and usage data directly to the TRAX ERP platform, improving inventory visibility and accountability. This setup identified which technicians accessed specific parts and recorded the timing of their actions.

Leveraging ERP data and automated processes informed by RFID input, Alaska Airlines achieved more efficient resupply workflows and fewer stock shortages. This approach ensured smoother MRO operations and significantly reduced capital tied up in obsolete or stagnant inventory.

Airline MRP Parts (AMP)

AMP implemented an automated inventory management system to improve efficiency and reduce MRO costs. AMP streamlined procurement processes when it integrated its ERP platform with Aeroxchange, so the company was able to handle thousands of purchase orders with minimal manual intervention.

Collins Aerospace's ERP-driven inventory optimization

Collins Aerospace collaborated with Supply Chain Consulting Group (SCCG) to enhance inventory management processes at one of its facilities. SCCG developed an automated solution that included ABC classification and minimum inventory levels for reorders.

This ERP-integrated model automated calculations, enabling Collins Aerospace to evaluate how service level changes and supplier lead times impacted inventory costs. It provided a clear method to optimize inventories, balancing costs and service levels. As a result, Collins Aerospace maintained excellent service levels while minimizing inventory-related capital costs.

Benefits of automated inventory management systems

An automated inventory management tool offers several advantages that can significantly impact business operations:

1. Cost savings: Automation reduces labor costs associated with manual inventory tracking and minimizes losses due to errors.
2. Increased accuracy: Real-time data reduces discrepancies, ensuring inventory records reflect actual stock levels, maintaining ideal PAR levels.
3. Improved efficiency: Automation speeds up tasks like reordering and stock audits, freeing up staff to focus on higher-value activities.
4. Enhanced decision-making: Provides actionable insights into inventory performance, helping businesses make informed decisions.
5. Regulatory compliance: In aviation, automated systems help maintain compliance with strict industry standards by tracking and documenting inventory usage.
6. Customer satisfaction: Automation ensures critical parts are available, reducing delays and building trust through reliable service.

Other considerations when selecting an aviation inventory management solution

For aviation businesses, inventory management solutions must address unique challenges:

1. Regulatory compliance: Aviation industries operate under strict safety and maintenance regulations and need a system like Inventory AI from ePlane that tracks and correlates parts certifications and maintenance records.
2. Supplier relationships: Aviation relies on global suppliers. Automated systems can streamline communication for shared updates and timely deliveries.
3. Risk management: The solution should provide contingency planning features, such as identifying alternative suppliers or tracking critical spares.
4. Cost-effectiveness: Balancing automation costs with ROI is essential. Look for systems that demonstrate tangible savings through improved efficiency and reduced downtime. When businesses use ePlaneAI to manage inventory, they see ROI from day one.

Simplify your inventory management with AI

Using AI to automate inventory management is transforming industries like aviation by enhancing accuracy, reducing costs, and improving operational efficiency. Whether you’re managing one warehouse or optimizing a global supply chain, the benefits of automation are clear.

When you select the right inventory management system that integrates with your existing ERP software and other legacy systems, addresses industry-specific needs, and offers scalability, you can position your business for long-term success. 

Embrace the power of automation. See how ePlaneAI takes the guesswork out of inventory management.

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