How To Improve Inventory Visibility?

Inventory Management

For your business to shine, you ought to improve inventory visibility. Sitting on extra inventory implies wasting money, and having an inadequate supply may mean stockouts and backorders. 

Consider a scenario where you have a queue of customers waiting on your website to finish your stock up, but you don’t have enough to provide to them. Or consider a scenario in which you have an endless supply of stuff to sell but no one to sell it to.

Either arrangement is by no means ideal from the perspective of a company that sells physical products. Read on to see how to improve your inventory visibility and make your sales a breeze.

What is Inventory Visibility?

Inventory visibility is the capacity of a business or organization to keep track of the availability and movement of its stock in real-time or almost real-time. It is a critical component of supply chain management and entails having precise and current knowledge of the place, number, and status of every inventory item throughout the supply chain.

With inventory visibility, businesses can learn more about the amount of inventory at different points in the supply chain, from raw materials used in production to finished goods stored in warehouses and retail outlets. 

What is the impact of a lack of inventory visibility?

The impact of a lack of inventory visibility

“Inventory is money sitting around in a different form. And inventory management is the process of freeing that money up.” – John W. Barlow

Lack of inventory visibility can have a major impact on a variety of operational aspects of a business as well as its overall performance. Since uncontrolled inventory is simply money hanging around, as was previously mentioned, inventory visibility is crucial for efficient money management. The following are some major effects of having unclear and outdated inventory visibility:

  • Overstocking or Stockouts-

Consider this- Reducing stock-outs and overstocks can lower your overall inventory costs by 10 percent. 

Without precise inventory visibility, companies run the risk of overstocking some products while running out of others. This can lead to increased carrying costs, wastage, lost sales, dissatisfied customers, and missed revenue opportunities.

In order to order the right amount and meet demand, inventory visibility lets you see which SKUs are currently in stock against those that are running low.

  • Inefficiency in Supply Chain-

Lack of inventory visibility hampers supply chain efficiency. It becomes difficult to efficiently plan production, schedule deliveries, and coordinate logistics, which drives up prices and extends lead times.

  • Bad Customer Experience-

According to Forrester, Customers are 2.4 times more likely to stick with a brand when their problems are solved quickly. 

Now imagine that a consumer is waiting to make a purchase from your website but wants to know whether or not that item is in stock. You could have simply fixed their issue if your inventory had been available. Hence, you are already on top of the 2.4 times higher likelihood of customers sticking with a brand when their complaints are immediately resolved. With Kapture CX’s mobile app, field agents can keep track of all the extra components used to fix the issue at hand. In order to prevent technicians from running out, it sends out a low inventory notice. The inventory count can be updated by the field agents based on usage.

  • Inaccurate Financial Reporting-

The value of inventory has an impact on financial statements and is a key asset for the majority of organizations. Financial reporting may be erroneous in the absence of adequate visibility, which could result in poorly informed decisions. Therefore, it is crucial that you take care of inventory visibility to avoid making mistakes when it comes to money-related matters.

  • Difficulty in Identifying Theft or Loss- 

Sources of inventory shrinkage: improve inventory visibility



The National Retail Federation said that in 2017, inventory shrink cost American retailers an average of 1.33 percent of sales, or $46.8 billion. Inventory shrink is defined as a loss of inventory due to theft, shoplifting, error, or fraud.

Without adequate tracking and visibility, it is more difficult to spot and look into cases of theft or inventory loss, which could result in lost sales and security issues. 

What are the 5 challenges of inventory planning?

A crucial component of supply chain management, inventory planning has its share of difficulties. Here are five typical issues with inventory planning businesses encounter:

  • Limited visibility-

With several SKUs and a big warehouse, finding the needed goods for a firm could become very challenging. Managing the inventory is very challenging because of the poor visibility. As a result, it could be challenging for you to complete orders on time.

Thus, it is essential for your organization to have total visibility of your inventory.

  • Balanced stock controls-

Another major difficulty is finding the correct balance between keeping enough inventory at hand to meet consumer demand and reducing holding expenses. Unnecessarily low inventories can lead to missed sales and dissatisfied consumers, while excessive inventories tie up money and raise storage costs. In order to optimize the volume of safety stock and reorder points, demand, lead times, and service level objectives must be taken into account.

  • Confusion in lead times-

Lead time is the amount of time it takes to complete an order after it is placed. Inventory supply is dependent on both wholesalers and suppliers. The lead times of suppliers can change as a result of things like transportation delays, customs clearance, or production schedules. 

Dealing with lead time variability can be difficult because it has an immediate influence on when orders should be placed and how much safety stock should be kept on hand.

  • Inaccurate demand forecast-

Predicting customer demand for items accurately is one of the major problems. It can be challenging to forecast inventory requirements due to fluctuations in demand brought on by seasonal variations, shifting consumer preferences, or unforeseen events. Inaccurate demand predictions can result in overstocking or stockouts, both of which have detrimental effects on the company’s operations.

  • SKU Proliferation– 

To serve various customer segments, many organizations offer a large variety of products and product versions. It can be challenging and inefficient to maintain a high number of stock-keeping units (SKUs), which might affect inventory planning and management. Which SKUs are profitable and contribute the most to overall sales demands rigorous investigation.

What are the 5S principles of warehouse management?


5S principle used for improving inventory visibility

5S is a lean management strategy primarily used in warehouses. The goal of 5S in warehouses is to utilize available space effectively, organize work areas and production lines, and make effective use of tight spaces. Keeping a warehouse neat and organized involves more than just keeping it appealing. The goal is to make warehousing operations more effective.

The 5S principles were originally implemented by Toyota, one of the world’s top automobile manufacturers, and it has its roots in Japan. It stands for Seiri, Seiton, Seiso, Seiketsu, and Shitsuke in Japanese, translated as Sort, Set in order, Shine, Standardise, and Sustain in English.  

  • Principle 1-5S principle used for improving inventory visibility: Sort


The first step involves separating necessary items from unnecessary ones. Determine which things are damaged, expired, or obsolete and remove any that are not necessary for day-to-day operations. You may make more room and lower the possibility of mistakes by getting rid of clutter and extra stuff.

  • Principle 2-5S principle used for improving inventory visibility: SIO


The following step is to arrange the necessary objects in an effective and orderly manner after you have sorted through the required items. Give each object a specific location, and use labels or other visual cues to show where it belongs. This strategy reduces search time and the possibility of mistakes by making it simpler for employees to find products fast.

  • Principle 3-5S principle used for improving inventory visibility: Shine


This step places a focus on keeping the warehouse area and equipment clean and maintained on a regular basis. To keep the warehouse in top shape, keep the workstation neat and clean, and create cleaning routines. An orderly atmosphere fosters safety, effectiveness, and a productive work environment.

  • Principle 4-5S principle used for improving inventory visibility: Standardize


Setting up uniform procedures and practices allows for standardization across the entire warehouse. Standard operating procedures (SOPs) and visual controls should be used to make sure that everyone adheres to the same rules. You can minimize differences, cut down on errors, and boost overall effectiveness by standardizing procedures.

  • Principle 5-5S principle used for improving inventory visibility: Sustain


The final principle focuses on maintaining the 5S practices over an extended period of time. To ensure that the 5S principles are upheld and continually improved upon, it entails instituting penalties and conducting routine audits. To foster a culture of efficiency and continual development, encourage employees to follow the 5S principles.

Post Implementation of the 5S principle

Post Implementation


Top 4 major barriers to warehouse productivity

  • Warehouse layout-

The average warehouse capacity utilization is only 68%, indicating the ineffective use of warehouse space. Warehouse layouts have a significant role in finding the right inventory at the right time, which makes them a key determinant of customer satisfaction. Longer travel distances between picking locations and inefficient warehouse design can both increase the trip time. Time is lost, and labor prices go up as a result. 

  • Labor costs & Automation-

One of the major challenges faced by warehouse management is the labor costs associated with the warehouses. There are all different types of workers, including office workers, forklift operators, packers, etc. The current difficulty is striking the right balance between investing in automation and labor costs.  

According to Kane Logistics, labor accounts for between 50 and 70 percent of some warehouses’ total operating expenses.

The time to think about adding additional automation technologies or even employing more labor staff is not until you feel that you are fully utilizing all of your present solutions and you have just enough employees to handle jobs that can only be completed manually.

  • Inventory Visibility-

Stockout Risks



Stockouts, overstocking, and incorrect order fulfillment can occur if the inventory records are erroneous or not updated in real time. This is directly connected to inventory visibility and lowers customer satisfaction.

  • Quality Control-

Today, warehouses are under a lot of pressure because of omnichannel sales channels and increased customer demand.  Workers can forget important information during picking, packing, or shipping due to the pressure of completing orders. 

As a result, shoppers may receive wrong, damaged, or improperly wrapped goods. Poor quality control unintentionally makes it difficult to satisfy customers’ expectations and lessens their level of satisfaction.

What are the KPIs in a warehouse?

Key Performance Indicators (KPIs) for a warehouse are essential metrics used to evaluate the efficiency, productivity, and overall performance of warehouse operations. These KPIs help managers and stakeholders make informed decisions and identify areas for improvement. Here are the 15 common KPIs for a warehouse: 

  1. Order Fulfillment Rate: Measures the percentage of customer orders that are successfully shipped on time and completed. 
  2. Order Accuracy: Tracks the percentage of orders that are picked, packed, and shipped without errors or discrepancies. 
  3. Inventory Turnover: Calculates the number of times inventory is sold and replaced within a specific period, indicating how well the warehouse manages stock and avoids overstocking or stockouts. 
  4. Inventory Accuracy: Measures the percentage of inventory accuracy by comparing physical counts to recorded inventory levels. 
  5. Receiving Efficiency: Evaluates how quickly and accurately goods are received into the warehouse and put away. 
  6. Picking and Packing Time: Measures the time taken to pick and pack individual orders. 
  7. Order Lead Time: Tracks the time taken from order placement to shipment, including processing and preparation time. 
  8. Backorder Rate: Monitors the percentage of orders that cannot be fulfilled immediately due to stock shortages. 
  9. Return Rate: Measures the percentage of products returned by customers, indicating potential issues with product quality or order fulfillment. 
  10. Space Utilization: Evaluate how effectively the warehouse uses its available space. 
  11. Employee Productivity: Tracks the performance of warehouse staff in terms of units picked per hour, orders processed, or other relevant metrics. 
  12. Safety Incidents: Monitors the number of workplace accidents and safety incidents to ensure a safe working environment. 
  13. Transportation Costs: Measures the costs associated with inbound and outbound transportation to and from the warehouse. 
  14. Order Cycle Time: Tracks the time taken for an order to be processed, picked, packed, and shipped to the customer. 
  15. Fill Rate: Measures the percentage of ordered items that are available in the warehouse for immediate shipment. 

These KPIs will vary depending on the specific nature of the warehouse, the industry it serves, and the goals of the business. It’s crucial to select KPIs that align with the company’s objectives and regularly analyze the data to identify areas for improvement.


Warehouse and inventory management is not just a one-day task, it is a full-time job. Although it might not be simple, it makes things easier for the warehouse once understood. 

The customer experience is directly impacted by inventory visibility, which is a crucial component of warehouse management. 

Hence, great inventory and warehouse management = great CX!

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