Any manufacturing, retail, or similar business that deals with large quantities of product needs a defined inventory management system. Inventory management is how companies track what they have in stock, what is needed, and when they will replenish their stock. And falling short unexpectedly can mean significant delays, depending where in your supply chain the shortage happens.
Instead of trying to do inventory control manually, now there are lots of digital solutions you can use to streamline your inventory management.
Table of contents
2.1. Increased accuracy
2.2. Lower costs
2.3. Higher productivity
3.1. POS integrations
3.2. Automatic reordering
3.4. Demand forecasting
What is inventory management software?
Inventory management software is a way for your business to automate inventory management. What that means is that tracking and maintaining your inventory and consistent warehouse management take far less time than they would manually. Inventory management software allows you to check your stock at any time, receive real-time updates when something changes, and is usually cloud-based, meaning you can use it on either a computer or a mobile device.
How does inventory management work? First off, inventory management software is managed by a third-party, meaning choosing a vendor with robust customer service is critical. Secondly, inventory management software is generally subscription-based – these subscriptions range from fairly affordable ($30) to expensive ($3,000). Prices depend on factors like business size, number of locations, and the size of your inventory.
Inventory management software has features like:
- Tracking incoming and outgoing items, known as item control
- Order tracking, so you can see where your shipments are
- Automatic accounting
How does inventory management software help your business?
Inventory management software is much more accurate than manual inventory inspections. Because you remove the potential for human error, fewer items are missed or wrongly categorized, and you have a more comprehensive overview of your stock.
Improving the accuracy of your inventory management system helps you streamline production and meet every order that comes in. In case of a shortage, knowing about it in real-time gives you the opportunity to mitigate the impact.
Because inventory management software makes your operations more precise, it helps prevent overstocking. Overstocking is a major source of excessive spending, and also a major source of wasted product. You also save money on transportation costs when you avoid overstocking.
Avoiding errors means less time spent doubling back to fix mistakes, and more time actually producing. That means higher turnout in the same amount of time. Inventory management software also makes companies more efficient by improving their organization and allowing for more specific item categorization.
Better organization makes filling orders faster and makes finding the correct components easier, speeding up manufacturing. In fact, an organized inventory is crucial if you’re using a method like the 5s system.
Better business relationships
Streamlining your inventory management system helps you communicate more accurately with suppliers and other stakeholders. This creates trust with business partners.
The effect is similar when communicating with customers. More accurate inventory tracking and more precise inventory stocking help you fulfill orders faster, without having to wait for unstocked materials. And in the event orders are interrupted, having real-time information on your inventory means you can communicate any updates to your customers.
How do you choose the right inventory management software?
The wealth of features inventory management software includes means it’s almost always a good addition to your business. That said, there are definitely things you should be careful of and prioritize when choosing a software provider.
Whichever inventory management software platform you choose should integrate with your point of sale (POS) system. That will make tracking sales much easier, and help you decide which products are most popular. Sales information is essential when determining the quantity of materials to order.
Inventory management is much smoother when you can automatically replenish items. In addition to placing the orders, automatic reordering entails specifying a minimum stock level to make sure you’re never short on essential items.
If online ordering is a part of your business, you need to make sure your inventory management system supports ecommerce. Both retailers and manufacturers frequently sell directly to consumers; an inventory management system that integrates with your ecommerce platform will track online sales and take those into account when replenishing stock.
Some inventory control systems include demand forecasting, which adds another layer to your restocking protocol. In addition to triggering reorders when quantity drops, demand forecasting helps you set accurate priorities.
Demand forecasting analyzes data from sales, orders, production costs, and more to estimate how many orders are likely to come in and how much it would cost to fulfill these orders. This helps you adopt the least expensive warehouse management strategy possible.
Using a platform like Lumiform for inventory management software helps you optimize your processes. By completing one of many pre-made inspections, or creating your own inventory management checklist, you can get real-time data on your inventory status, automatically stored in the cloud. And because all checklist data is compiled into regular visual reports, you can easily refine your inventory management system by consulting the numbers.