AN ASSESSMENT OF CONTEMPORARY INVENTORY
MANAGEMENT TECHNIQUES USED WITHIN UK SUPPLY
CHAINS ANS THE LOGISTICS INDUSTRY
1
Table of Contents
Chapter 2: Literature review ........................................................................................................... 3
2.1 Introduction ........................................................................................................................... 3
2.2 Evaluates advanced inventory management techniques in UK logistics industry ................ 3
2.3 Explores contemporary inventory management practices in UK supply chains .................. 7
2.4 Examines how UK logistics sector integrates cutting-edge inventory techniques ............... 9
2.5 Literature gap ...................................................................................................................... 12
Reference List ............................................................................................................................... 13
2
Chapter 2: Literature review
2.1 Introduction
The literature explains how the inventory management has a transformation characteristic that this
increasing efficiency and flexibility of operations plays enormously crucial to supply chain
management. The main themes having been discussed are a replacement of traditional techniques
by hi-tech systems, data analytics, models via optimization, that allow to increase visibility of
stocks, demand forecasting, and inventory level optimization. Scholarly references mention the
numerous barriers that logistics suppliers face in realizing the actual benefits of advanced
approaches of material handling, for example, organizational change resistance, system integration
issues, and requirement of advanced skills (Richards and Grinsted, 2024). Through summarization
of said background research, the ground is laid for further examination of the present reality of
supply chain management within the UK logistics sphere.
2.2 Evaluates advanced inventory management techniques in UK
logistics industry
Figure 2.2: Inventory Management Plays a Crucial Role in the Logistics Industry
3
(Source: Rushton et al. 2022)
UK logistics industry has gone through quite a revolution in its inventory management methods,
as answers to all the questions related to speed, responsiveness, agility and cost saving within the
chain of supply are being looked for. The management of company's inventories is rapidly
improving and has, as the only key to competitive advantages, been adopted by many enterprises
(Rushton et al. 2022).
While one of the important trends widely adopted by the UK logistics companies nowadays is the
use of predictive analytics and demand forecasting. Firms are employing maturely processed
algorithms and machine-learning patterns to process the earlier sales information, market
variables, and evolution factors which by the end create more precise demand forecasting
predictions. As a matter of fact, the past-year study on the topic of inventory analytics in helpline
monetization picked out a 15-20% drop in inventory for below average UK logistics providers
(Rejeb et al. 2020). Through more the close-knit linking between your anticipated inventory level
of demand and stock, these companies have been able to take off excess stock, lower the costs of
carrying, and improve service standards.
One of the most fundamental tactics used by the British logistics companies is fitting the real-time
inventory monitoring and visibility. Companies can capture the goods movement and status
through technologies such as Radio-frequency identifications (RFIDs), barcodes, and linked
connected sensors in a an almost real-time base. CILT UK identified that 82% of logistics
companies in the UK are implementing some form and have completed the transition into real time
inventory. The statistics finally show an average saving of 12% in inventory write-off and an
improvement of 9% in on time delivery (Ghadge et al. 2020).
UK logistics companies, which are the carriers of omnichannel retail, are investigating new
inbound and intracycle pooling and allocation strategies. Omnichannel has thoroughly changed
the method of the logistics, which is reflected in the term "busy" warehouse, where already stored
goods can be picked and packed for delivery to different customers. These firms are taking a
holistic approach of inventory which entails unification, connection and real-time data sharing
with the goal of automatically directing stock to meet demand wherever it may be whether it is
physical location, ecommerce platform or collection service. The UK Logistics and Supply Chain
Management Research Centre has carried out a survey (Blanchard, 2021). It was found that the
4
companies which apply advanced pooling techniques with inventory management succeeded not
only in lowering their overall level of inventory (23%) but also in improving order fulfillment rates
(17%).
And in the same way, the UK warehousing industry has taken on the development and
implementation of the automated storage and retrieval systems (ASRS) that help to optimize the
stock management process. These futuristic, computer-controlled systems are able to
accommodate huge amounts of inventory in very limited spaces, allowing for faster storing,
retrieving, and replenishment. The end result is higher efficiency across the warehouse, and less
expensive labor. Based on the statistics estimated by the logistics sector, they asserted that the shift
to AS/RS in UK led to average 30% more productivity in the storage space utilization and 25%
drop in the operational expenses which has symbolized the major characteristics of the AS/RS
(Fatorachian and Kazemi, 2021).
Moreover, an increasing number of UK companies have been involved in adopting blockchain
technology-linked supply and inventory chain management applications. Using the inherent
properties of immutable and traceable chain, companies can strengthen supply chain
tracking/sharing, reduce the probability for fraud, and more importantly, make sure that employees
of supply chain partners have access to easy and quick information. A lately performed pilot
project from one of the most prominent UK logistics companies has demonstrated that the applying
of blockchain-based stock control to their system resulted in a 19% decrease of inventory
inconsistency, and a 14% boost in the visibility of an experienced stock (Altekar, 2023).
When these technology-oriented turn a blind eye to the vitality of long-term sustainability and
circular economy principles in inventory management, the UK logistics industry also recognizes
the issue and advocates for a circular economy. Companies come up with tactics like retrograde
logistics to reclaim wastage, product refurbishment, and closed-loop supply chains which basically
reduce the environmental consequences and maximize resources utilization too. Green inventory
management is considered to be the most important part of sustainable logistics practices (Altekar,
2023). The ability to reduce wastage, optimize picking, and fill-in orders quickly has been a key
driver to achieve a 21% reduction in carbon emissions and a 17% increase in customer satisfaction.
Through the utilization of modern logistics improvement methodology, the UK supply chain faces
few difficulties that stand in the way for the industry to fully avail the positive output of these
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techniques. The first issue is the fact that the operation of such complex systems and their
optimization are mostly determined by certain analytical and modeling skills and expertise
(Cigolini et al. 2022). A survey conducted by the UK branch of CIPS – Institute of Procurement
and Supply (CIPS UK) – revealed that 68% of logistics companies confess they have staff
deficiency and the employees are failing to exploit the inventories management tools and
techniques.
There is complexity in the process of uniting multiple systems and of data sources in the chains of
supply which are so complicated. The very important requirement of being able to access
information or define inventory data across from different partners and channels is hence the key
concept for the full implementation of developing sophisticated inventory management strategies.
But what UK Logistics and Supply Chain Management Research Centre have proved was 52%
logistics enterprises in that country are having enormous difficulties in integrating their inventory
management systems with those of their suppliers (Wisner et al. 2021). The UK logistics industry
is taking quite a determined manner when it comes to improving its workforce training, adopting
collaborative measures and eventualizing industry-wide standards and best practices. CILT UK
and Logistics and Supply Chain Management Research Centre are the organizations that help in
creating good networks where they exchange knowledge, skills, and adopting advanced techniques
of inventory management to be utilized in the sector.
In the finale, the UK logistics sector has shown quite a willingness to move the advanced inventory
asset management technique and made use of a broad range of data-driven, technology-based, and
sustainability-oriented approaches. These technological solutions which include predictive
analytics and real-time inventory tracking but not limited to automated storage systems and
blockchain provide significant benefits to the supply chain operators looking to boost their
efficiency, responsiveness, and cost optimization (Fernie, 2023). Despite that many folds still
remain in the way to overcome barriers such as the development of specialized skills and system
integration; what comes out undeniable is the need for industry-wide collaboration, knowledge
sharing, and the development of industry-wide standards and best practices.
6
2.3 Explores contemporary inventory management practices in UK
supply chains
UK supply chain sector has been greatly reformed in relation to the inventory management
approach in the last few years due the requirement of higher efficiency, agility, and cost
minimization. Since the competition is intensifying, more and more companies try to make
themselves stronger by improve their current methods. A key area of interest that many UK supply
chains are adopting nowadays is forecasting and planning using more sophisticated demand
management systems (Tirkolaee et al. 2021). Companies are empowered with sophisticated
algorithms and machine learning models to poorly make demand predictions based on historical
sales, market segmentation and external factors. The last few months brought us an amazing
industry report which showed an enormous reduction in inventory levels for the leading businesses
that had been caused by advanced demand forecasting implementation. Such firms have been in a
position to ensure that the levels of stock in hand are indeed in sync with the projected demand,
that has inadvertently caused them to reduce excess stock, carry costs and admitted them to service
levels increase (López et al. 2022).
Figure 3: Maturing supply chain analytics for optimal inventory management
(Source: Abideen et al. 2021)
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Apart from the frequent flow of information built into their system, UK supply chain organizations
also incorporate the practice of real-time inventory tracking and visibility. With the help of
technologies which have if not RFID, barcode scanning and connected sensors but may be also
business verticals that can track their goods in a near-real-world. The study by CILT UK disclosed
that almost all supply chain companies in the country has tried to apply real-time inventory
tracking and which have contributed average 10% reduction of inventory write-offs and a 7% of
on-time delivery (Abideen et al. 2021).
With the new sales channels that have come up the UK supply chain management forces are now
searching for intelligent inventory pooling as well as allocation strategies. The benefit of it is that
it allows these companies to have a holistic, centralized view of inventory across all their
distribution channels. Hence, they can dynamically move stock to whatever channel most readily
fills customer demands, be it the brick-and-mortar stores, online shopping platforms, or just clickand-collect service. Advanced inventory pooling research by UK's Logistics and Supply Chain
Management Research Centre affirmed that those firms performing modern technology
successfully decreased inventory reduction by up to 19 percent and improved order fulfillment rate
by 14 percent (Arji et al. 2023).
Moreover, the UK supply chain industry uses AS/RS to pick, pack and therefore move inventory
by the use of data-driven strategy in order to optimize the inventory management. These computerdriven, close-packed systems result in decreased labor cost as well as higher efficiency of the
warehouse while allow to do inventory faster and easier due to decentralize storage, quick retrieval
and replenishment of inventories. It was calculated by sector data that an average 27%
enhancement of storage capacity usage and 22% drop of operational expenses were applied as a
result of extended adoption of AS/RS in UK supply chains (Liu et al. 2021).
Besides this, UK supply chain companies have been pioneers while trying to apply blockchain in
supply chain management and inventory management. Through incorporating this permanent and
transparent blockchain capability, businesses are capable to enhance inventory tracking, minimize
the risk of fraud, and satisfy easy sharing of process information between all supply chain
members. For instance, a UK-based supply chain operator has undertaken a pilot project using
blockchain for inventory monitoring. The result was immense and 16% stock wastage and 12%
inventory visibility improvement were witnessed (Zahraee et al. 2020). Apart from these digital8
related approaches, the UK supply chain companies have also paid attention to the other principles,
namely the sustainability and circular-based approach, in terms of inventory management.
Organizations develop measures like reverse logistics, product refurbishing, instead of developing
the closed-loop supply chain system to emulate the proper utilization, waste reduction, and
lowering the environmental impact. As shows a report by the UK Logistics Research Network,
organizations that make sustainable inventory management practices implemented, they have got
carbon emission decreasing 18% and customer satisfaction increasing 14% (Frei et al. 2020).
Notwithstanding the well embraced form of the present-day inventory management techniques,
UK supply chain industry still undoubtedly faces several challenges to effectively achieve the
benefits of those skills. One crucial barrier is the requirement for technical skills and vast
knowledge, as the rollout and fine-tuning of complex inventory management systems mostly entail
a profound understanding of data processing, supply chain simulation, and transformation inner
workings. According to the Shashi et al. (2020), over 60% of supply chain companies in their
country experience skills shortage as regards the knowledge of and ability to properly leverage
modern inventory management solutions.
2.4 Examines how UK logistics sector integrates cutting-edge
inventory techniques
In the case of the UK logistics sector, the latest and ground-breaking inventory management
techniques are used innovatively to improve the efficiency and swiftness to the different supply
chain operations. This technique has given provider logistics companies a chance to maximize
their stock levels, as well as to make them have quality customer service and this has kept those
companies ahead of the industries.
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Figure 2.4: Evaluating the Role of Supply Chain Management in Enhancing Operational
Efficiency
(Source: Friday et al. 2021)
The UK logistics industry was one of the first to deploy in-built solutions in order to track and
monitor real-time shipment inventory and visibility. Through the deployment of technologies like
radio-frequency identification (RFID), barcode scanning, and IoT sensors, these companies can
thus get to know in almost real-time, how goods are being shipped and their status. A study by
Chartered Institute of Logistics and Transport in UK disclosed that 85% of their logistics
companies adopted some form of real-time inventory tracking. This has led to a reduction of the
average 14% in accuracy in inventory and an improvement of 12% in the on-time pick-ups (Friday
et al. 2021). These elevated viewpoints have enabled logistics providers to make more fact-based
judgment and to respond to incidents with more planning. Supply chain performance can be further
improved as a result.
The emergence of the omnichannel retailing has created a real impulse for the logistic sector of
UK and study of advanced inventory and the allocation strategies are included in such process.
Through maintaining a single, standalone perspective of inventory across various distribution
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channels, these companies are able to apportion stocks to meet customers’ needs as and when they
are generated from on site shops, e-commerce channels or click & collect services. An article by
the UK research group on Logistics and Supply Chain Management stated that the firms who
employed wide-ranging in-place pooling techniques saw stock levels reduce by 27% and
fulfilment rates rise by 21% (Huang et al. 2020). It has been a driving force that has helped them
to achieve better customer experience as well as having an organized running of their operations.
Adopting the technology driven techniques largely includes the usage of automated storage and
retrieval systems (AS/RS) which is the one key for inventory management perfection. By using
the large-scale, computer-operated method they can speed up the process of ordering, taking and
delivering stock this thesis improves warehouse's effectiveness and decreases labor fees. The UK
logistic sector’s transition to AS/RS, as substantiated by industry expert evaluations, has yielded
an average of 25% higher storage capacity utilization and lower operational expenses by 23%,
according to them (Huang et al. 2020).
In addition, the UK logistics sector stands as a pioneering trailblazer in the adoption of blockchain
technology, focusing mainly on supply chain and stock management functionalities. Blockchain,
because of its immutable and transparent nature, provides businesses an opportunity to develop
tools that are capable of tracking the inventory, reduce fraud risk and facilitate exchange of
information between the supply chain partners. There was the latest pilot experiment done last year
by a British logistics giant. It is proven that this new type of a blockchain can be used in store
management and it reduced the discrepancies by 22% over its conventional equivalent and made
visible inventory by 17% (Abu Zwaida et al. 2021). Additionally, the UK logistics industry has
been spending huge amounts in training and cooperation program to aid in the blending of these
more advanced methods into the established systems. Companies such as Chartered Institute of
Logistics and Transport (CILT UK) and the Logistics and Supply Chain Management Research
Centre have played the role of the trainer, setting up practices, the industry-wide standards and
education platforms that provides the room for more businesses to adapt to these best practices
(Shekarian et al. 2022).
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2.5 Literature gap
The literature that already exists defining the current methods of inventory management along with
the operations of the supply chain and logistics has a robust and inclusive coverage. Nevertheless,
the
study experiences
a
set
of
points
that
can
be
considered
as
weaknesses.
Holding this in mind, with limited emphasis on UK logistics industry. The literature mostly
surveys the supply chain and logistics management, there is insufficient evidence that directly
address the disparity in inventory management techniques adoption and integration within the UK
logistics sector (Ghadge & et al., 2020; Fatorachian & Kajemi, 2021). This specific lack of
involving industry in the program thereby retarding the comprehension of those unique atomic
challenges and opportunities which UK logistics companies encounter in the process of adopting
current supply chain practices.
Additionally, there still exist some shortcomings of the literature such as the fact that there are not
many research works with specific numerical data. The dominant narratives in these articles are
about conceptual architectures and theoretical discussion in their core, but empirical studies or
solid figures proving the application and the implementation of the innovative inventory
management methods and tools in UK logistics market seem to be rare (Tirkolaee et al., 2021; Arji
et al., 2023). This absence of empirical findings hinders the possibility to draw in-depth
conclusions and that is consequently a poor basis for officials in the logistics industry of the UK.
Also, the literature already out there doesn’t cover the issues and roadblocks that the UK logistics
businesses confront when they get into putting up and upgrading of their inventory management
techniques. The information given does not focus on the major issue which come as how these
systems will be integrated together, the skill gap and the resistance from the organizations to
change (Fernie, 2023; Friday et al., 2021). Resolving these practical challenges will not only ignite
the adoption of the latest inventory management techniques, but it will also help in the ensuring
the industry implementation in the UK logistics sector.
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