Inventory is the key to your business success and growth, but it can cost you time and money if not well managed. This is true, especially if you use spreadsheets, paper manifests, or disparate software solutions across your business.
Talking of inventory, 43% of small businesses neither don’t track inventory nor use a manual method. The manual track has more potential for human error, and avoiding tracking can cost you time, and money. Also, it means you are likely to waste storage space.
With inventory management software, you can control your inventory, eliminate repetitive manual activities, automate routine processes and integrate with other important functions across your business.
Inventory management software is a tool used to automate inventory management. Here is how it can save your money and time:
Predicting demand accurately is the perfect way of optimizing inventory. Whereas many variables make real-time forecasting difficult, few areas should be considered while projecting future sales. These areas may include current market trends, historic sales at the same period in the previous years, seasonality, projected and current growth, and general economic climate.
A good inventory information system paves the way to capture sales history that helps you establish forecasts and future sales by identifying patterns and trends.
Accurate forecasting reduces risks of waste, spoilage, and overstocking.
Supply chain management
Businesses can reduce inventory stock and reduce cycle time by streamlining the entire supply chain. Certainly, the optimization of the supply chain gives a clear visible customer service performance.
A good relationship with customers is important, whether you need to return slow-moving stock, handle manufacture issues, or restock a fast-selling item. A good relationship is all about good communication that leads to quick responses to supply problems.
For instance, alerting the supplier while expecting an increase in sales gives them time to adjust production in sales to meet the increased demand. Likewise, receiving notifications from suppliers when a product is running low in stock allows you to hold on to advertising and look for a temporary substitute.
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Flexibility in manufacturing
Immediate customers demand more than just the lowest price. Short lead times and quality products are important to contemporary customers. The impacts of non-compliance to these demands can lead to lost business, costing you money and resulting in excess inventory over the year.
Flexible manufacturing means producing goods adaptable to changes in type and quantity in the product being produced. Manufacturers need flexibility within their operations for timely customer responsiveness.
It helps you know your periodic automated replacement (PAR) level
Do you know the least amount of stock your business should have to meet current and future customer needs?
While many companies know it as PAR, some refer to it as minimum stock level (MSL). Whichever term you’ll use, the inventory management system helps you know the minimum product amount you should have on hand.
If your product is running out of stock, you’ll be giving way for your customers to walk out and to your competitors. Instead of losing a sale because your stock is running low, you can track your current inventory using inventory management software. Also, you can set notifications when your products get near your PAR level.
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Centralized inventory management
With your PAR level and well-tuned forecasting, inventory control can help you with important functions for central management.
Your inventory management system can give you an instant insight into the product you have in hand, the type of product you have in stock, how much is needed in the short and long terms, what has been reordered, and what needs to be ordered. Additionally, a centralized management system can help you avoid stockpiling old products.
Products change as time goes. So, you always need to make sure your oldest products are the first to be shipped out.
Lastly, central inventory management helps you when it comes to auditing.
An IMS with an automated inventory system is the type of inventory you need, regardless of how large or small, your operation is.
Saves on storage space
Inventory management software can help you save storage space. The right inventory on hand means you never have an excess of what you need, taking up space in your warehouse.
An inventory management system can help you manage supplies you always don’t want in your stock but want it available for your customers. A good inventory management system facilitates drop shipping, so when you need it, you can directly send products to your customer without storing them in your facility.
Better relationship with customers
All the insights you get with your inventory management system mean better management of time, resources, and bottom line. Additionally, it can improve your relationship with your suppliers, vendors, and customers.
An inventory management system can help you with supply chain management. You’ll always know the type of supply you have on hand, the supply quality, and the price changes.
For instance, if you have a pending reorder that’s taking longer than expected to get to you, your inventory management system can help you make adjustments. So, you can place an order with other vendors.
With this insight, you can always be aware of what is happening with your supply chain to give room for better communication with your vendors. The next time you have a product quality issue or need a rush to reorder, you can quickly address it with your vendor.
And better collaboration with your vendor means you’ll likely to have the products your customers want in stock and when they want. This leads to happier customers and positive cash flow.
The bottom line
Inventory tracking and management are a basic part of running a successful business. The entire process can accurately be performed using inventory management software. Inventory management software tracks the product flow from the supplier through the production process to the buyer.
The main aim of inventory management is to understand the stock level and location in the warehouse. Although it seems challenging to practice good inventory management techniques while juggling multiple sales channels, effective inventory control saves you time and improves cash flow.