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What is Automated Inventory Management? How Does It Work & Why Does It Matter?

In this article, we’ll explore how automated inventory management works, the tech that makes it happen, and how you can implement it in your own business.

What is Automated Inventory Management?

Automated inventory management uses different technologies to automate the inventory management process. Artificial intelligence, private 5G, machine learning, and inventory software monitor stock levels, calculate material needs, and even forecast inventory demand based on data.

These technologies work together to provide businesses with a deeper insight into their fulfillment process, ultimately improving customer satisfaction and the ability to process orders at scale.

Why Automated Inventory Management is Important

Automating inventory management is vital for any business looking to scale its growth. For example, Amazon started slowly implementing autonomous robotics to improve their fulfillment accuracy and times. Today, Amazon deploys over 520,000 robotic units to automate its inventory management and fulfillment process.

Smaller companies can also benefit from automating their inventory procedures. It’s estimated that 40% of lifelong customers are generated simply by having their orders delivered on time. While businesses can only own so much of the supply chain, automated inventory management ensures that fulfillment on your end is as accurate and timely as possible.

But robotics is only one piece of the automation puzzle. Let’s explore how different technologies come together to completely automate the inventory management process.

How Automated Inventory Management Works

Automated inventory management works by collecting data throughout the fulfillment process and transforming that data into actionable business intelligence through inventory management software. Automated systems enable retailers to pivot to market demand quickly, and implement inventory changes at scale.

Product Tracking

All automated inventory management systems must be able to track products to track inventory. How products are tracked depends on the type of products, and how far it needs to be tracked. For example, simple boxed products can be tracked via an RFID tag, where each package is automatically scanned in as it moves through the conveyor belt.

In contrast, for more accurate and side-scale real-time tracking, companies use small IoT sensors. These sensors can continuously track assets throughout the fulfillment process using Wi-Fi or new private 5G wireless technology. Tracking methods that utilize larger networks such as Wi-Fi and 4G/5G can provide an exact location of each shipment, helping businesses track down lost or stolen inventory. 

Each scan updates the inventory management software detailing where the product is in the supply chain, and where it is going next. But before product data can enter the inventory management system, it must travel through a network.


The network plays a vital role in your automated inventory management system. Businesses often use a variety of different networks for different use cases. For example, an enterprise might use a private 5G network to support its autonomous fulfillment robots, while leveraging inexpensive short-range Bluetooth for product tracking across its assembly line.

Here are a few examples of how different networks can fit into your automated inventory system:

  • Bluetooth - Provide inexpensive close-range tracking with extensive battery life and low power requirements.
  •  LoRa - Long-range, Low-power wide area networks offer tracking over more considerable distances, but lack the capacity for higher bit rate applications or the ability to provide on-demand live tracking.
  • Wi-Fi - Provides moderate indoor coverage for small to medium-sized areas. It can suffer from signal dead zones and outside interference.
  • 4G/LTE - Offers extensive real-time tracking both indoors and outdoors. Ideal for assets that require connectivity throughout the supply chain.
  • Private 5G - Provides unmatched reliability, signal coverage, real-time tracking, and seamless data integrations, with complete control over data privacy and intellectual property. It is owned and operated by the enterprise rather than a commercial carrier.

Inventory Management Software

As the data arrives via a network, inventory management software collects and transforms that data into valuable insights and automated procedures. For example, if the latest inventory scan indicates product levels are low, an automated script can queue a resupply order before the product runs out. The same principle can be applied to preparing for seasonal and dynamic fluctuations in demand.

On the backend, artificial intelligence and machine learning enable the software to forecast demand, estimate materials, and provide accurate delivery times. Inventory management software also provides advanced reporting capabilities and simple rule-based engines allowing managers to craft their own automations.

Benefits of Automated Inventory Management

You don’t have to be an enterprise giant to benefit from automated inventory management. In fact, many growing enterprises slowly implement automation to reduce their CapEx and OpEx by ensuring automation is deployed properly in their environment.

Here are a few benefits you can expect when using automated inventory management:

Improved Customer Experience

A major byproduct of inventory automation is an improved customer experience. Inventory automation improves fulfillment times and order accuracy, improving overall customer experience. Inventory and sales forecasting also allows your businesses to prepare for peak demand, and offer products while competitors are out of stock.

Avoid Miscalculations

Even the best human inventory managers make mistakes. Whether it’s miscalculating stock levels or failing to anticipate demand, a simple miscalculation can lead to lost customers and revenue.

While it’s true automation can take time to perfect, the computers and artificial intelligence that monitor inventory levels don’t make simple mistakes. Avoiding miscalculations alone helps enterprises increase their sales and retain loyal customers.

Save on Time and Labor

Unsurprisingly, automated inventory management saves businesses considerable time, and can even reduce labor costs. With manual counting and motoring replaced by automation, businesses can shift staff into other roles that rely on a human touch. Automation also reduces the labor impact during staff churn, ensuring your fulfillment process continues during staff shortages.

Scale Predictably

Lastly, automation platforms enable enterprises to scale their fulfillment and inventory management in a predictable and cost-effective manner. With each process arranged according to an organized system, organizations can scale their inventory management simply by increasing their network resources and infrastructure.

How To Choose an Automated Inventory Management System

There are a few things to remember when choosing an automated inventory management system.

  1. Consider your workflow: Make a note of your product, where you need to track it, and what insights you wish to achieve in your automation efforts.
  2. Consider key features you’ll need. Look for automated inventory management software that supports features such as automatic reordering, cellular support, inventory alerts, and integration into your distribution channels.
  3. Pick the right network. Your network is the foundation of your automation. Consider your coverage, performance, and reliability needs when choosing what network will support your automated inventory management system. 

A Network Built For Automation

Celona provides enterprises with their own turnkey private wireless solution for automated inventory management. Through a robust and private 5G LAN architecture, organizations maintain complete control over their cellular resources and data privacy across the supply chain.

The 5G LAN solution integrates directly with your existing IT architecture allowing administrators to integrate and synchronize QoS across the enterprise from a cloud-based console. Behind the scenes, the Celona Edge O/S provides advanced traffic management for your service level objectives that are enforced for individual applications or device groups.

Deploying a Celona 5G LAN takes hours, not days or weeks. The 5G LAN integrates directly with your IP domain structure, QoS policies, and security framework already in place.. Onboarding can be done alongside existing wireless and IT infrastructure, without interrupting business operations.

If you’re looking for unmatched network performance for your inventory automation, Celona can help. Check out our network planner to estimate the size of your 5G LAN on a private cellular spectrum, or test-drive Celona’s unique solution for yourself with a free trial.

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