Inventory management systems are important to today’s businesses. Having a targeted and comprehensive inventory management system can save a lot of money, helping them pursue operations in a more successful way. If you haven’t heard much about these powerful business tools, read on; we’ll be covering practically everything you need to know about inventory management systems.
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Benefits of Inventory Management Systems
Below are just a few of the major benefits that come with implementing a modern inventory management solution:
Inventory Accuracy and Efficiencies
One of the most fundamental benefits of inventory tracking is that it reduces the amount of inventory that companies have to keep on hand.
By decreasing held inventory, companies can save massive amounts of cost and effort. Some companies that use a modern inventory management solution can actually close down one or more warehouse locations, and save money associated with these cost centers.
Along with the emergence of new inventory tracking software, there is the idea of just-in-time inventory. A just-in-time or lean inventory strategy involves a company closely tracking its inventory levels, and only keeping what’s needed in the immediate short-term on hand.
Building on the specific kinds of management principles, companies can use the advanced technology of inventory management and inventory tracking tools to make inventory handling processors leaner and more agile. Implementing these strategies can increase the return on investment from these types of systems.
Businesses are always looking for ways to save time and decrease labor costs. Inventory management systems provide one of the best ways to accomplish that.
Many of the best systems involve barcode scanning or other agile inventory processing features. This can eliminate labor-intensive and manual processes like individually typing in product numbers or box numbers.
It doesn’t take much to see how these kinds of enterprise systems will make product and inventory handling much less labor-intensive. Bar code scans can be done in rapid succession, where a single worker can process hundreds of boxes or containers in a fraction of the time that it would take to input numbers or apply labels by hand. For warehouses of all sizes, these labor-saving features provide major value for inventory management software products. In addition, inventory tracking tools can help with other key kinds of documentation unrelated to demand. This article shows how, for example, an inventory tracking software can help with “toxics reporting” in chemical handling operations.
Meet Demand Quickly
Inventory management systems also help companies better serve their customers. With all of these inventory features on hand, it’s easier to concentrate on quick shipping. Agile inventory processes help firms meet supply and demand curves with rapid responses. This leads to happier, more loyal customers and, ultimately, a higher level of repeat business.
This is another advantage for firms to consider when shopping for modern inventory tracking and management tools.
Coordinating Multiple Locations
Larger businesses have been some of the earliest adopters of inventory tracking software, as well as other kinds of enterprise resource planning software. That’s because these types of software work extremely well with economies of scale. As mentioned, inventory management software can allow a business with multiple warehouses to consolidate and sometimes close out an entire individual warehouse operation.
By the same token, these systems can help companies to effectively manage multiple locations — if a company has 10 or more warehouses, the inventory tracking software can be applied to each one of them to provide a better big-picture analysis for long-term decision-making.
When considering the benefits of having an inventory management solution in-house, it’s important not to forget the value of business intelligence.
Bar code scanning and other features mentioned above allow for easy data transfers, and in conjunction with a central data warehouse, companies can build up their data assets to more closely analyze what’s happening within the business. Using this information, companies can answer questions such as: where is inventory going and what customers are being served? How can agile inventory processes make these processes even better? What does customer demand tell the company about its customers, and how can that be applied to marketing operations?
In today’s high-tech business world, business intelligence is key. It allows companies to fine-tune their marketing and outreach processes, which boosts conversions and drives profits. So while inventory management is very helpful on the production side, it’s also helpful on the marketing side as well.
Think about all of these impressive benefits that inventory tracking and management systems can offer a business. Finding a solution that’s well-suited to your particular company needs is key. And when you do, you’ll realize just how beneficial inventory tracking software can be.
Strategies for Using Inventory Management Systems
Different companies have their own unique inventory management strategies based on the needs of their business, the resources they work with, and the types of products they deliver to customers. But understanding the fundamentals of inventory management strategy can help any business leader choose a path forward, improve warehouse and inventory operations and modernize a business of any size.
Some of the most useful models for inventory management involve strategies that are relevant to a broad spectrum of business objectives, and those that are supported by modern enterprise software architectures.
Push Inventory Models
A “push” inventory model is, in many ways, like a traditional model that a business uses to get its product out to customers. Push models accumulate inventory to meet anticipated future demand. As a result, push inventory models depend on very precise forecasting. Tools such as demand planning resources can be effective in optimizing push inventory models, but some companies choose to go with alternative models in order to optimize business operations and reduce inventory costs.
Just-in-time inventory is a relatively new concept that originated in Japan, and has now spread all over the world. Some experts refer to just-in-time as a “pull” inventory model, one that is fundamentally different from the push inventory models mentioned above.
With just-in-time inventory, inventory orders are triggered by actual customer requests. In some ways, this is similar to what many drop shipping companies do with modern e-commerce models. The basic idea is that companies aren’t holding stocks of inventory on hand without actual demand — they’re waiting until the demand occurs, and then quickly trying to bring inventory through internal processes to deliver.
Just-in-time inventory models can have a dramatic effect on business costs. Some of the companies that have switched to these models can consolidate warehouse space, reduce overall costs related to labor, real estate and equipment. That’s why just-in-time inventory is a large part of how many operations officers and executives are managing the modernization of business production practices.
Materials Requirements Planning
In modern manufacturing, an inventory management strategy called material requirements planning can play a major role. Material requirements planning, or MRP, utilizes software applications to keep inventory by running consistent production levels. Much of this strategy is focused on the assembly of finished products from various supply parts or materials. MRP is particularly useful in the pursuit of discrete manufacturing, where units of production are individually assembled products that go out to customers on a regular basis, rather than bagged or otherwise contained volumes of a given refined material.
A particular key part of many corporate inventory management strategies involves the use of real-time analytics.
In many cases, vendors provide products to plug into enterprise resource planning (ERP) architectures. These individual programs look into what’s happening inside the business, and drive the forecasting that is so important for inventory control.
Various products can assist in assembly line operations to see at a glance what’s being produced, how much is being ordered, how it flows through warehouse spaces, and how it’s delivered to customers. Utilizing all of this business intelligence, companies come up with much more defined and ordered inventory plans. They enhance their inventory management strategy to the point where they become capable of rapid delivery — saving enormous amounts of resources as mentioned above.
Strategies Dependent on Inventory Management Systems
Another important part of inventory management strategy involves tailoring the company’s overall plan to the vendor resources that the company uses to track inventory levels and everything else.
Simply put, a given inventory management strategy is only as effective as its relationship to an inventory management system. Inventory management tools are built for specific types of inventory management models. Unless they’re aligned with these models, they’re not going to provide the best ROI or direct inventory practices in the most efficient way.
Unique Uses for Inventory Management Systems
Real-Time Inventory Management
The majority of online shoppers spend little time thinking about how products make it to their front door, as long as they arrive unscathed and on schedule. So they might not realize just how complex this journey can be. Getting an order from warehouse to home is no easy feat, and it depends on an intricate network of third party providers.
Whether this means a mainstream delivery service like FedEx or UPS, a transportation specialist, or a local sorting center, order management is very much a team operation. For it to be successful and profitable, every part of the cycle needs to run smoothly. This is why using real-time inventory management is highly recommended for eCommerce businesses.
What is Real-Time Order Management?
The term is used to describe computer software with the ability to effectively automate and run online stores. It’s particularly important for eCommerce businesses that are growing at a steady rate. While it might be possible to handle order processing manually at first, even a small amount of upwards development can make this a very difficult task.
Order management features offers a way to streamline inventory, purchase fulfillment, and shipping processes. As errors can be costly, investing in automated tools boosts revenue and strengthens your relationship with customers. Ultimately, the faster you can complete an order journey without compromising on quality, the more money you stand to make.
Outside of an increased revenue flow, there are all kinds of benefits to using real-time order management, including:
Automated Order Processing
Third-party fulfillment software is essential for businesses that work with more than one warehouse or supply chain. You should certainly consider it if you liaise with a combination of facilities and your own self-managed supply chain. With these tools, you can automatically direct orders to the correct warehouse. This saves a lot of time usually spent manually selecting and contacting distribution hubs.
Faster Processing Times
Don’t forget that the order ‘clock’ starts ticking as soon as a customer hits the buy button. From this point on, you have a responsibility to get that product out as fast as possible. Real-time order management features ensure that the whole process is expedited. Everything from pick sheets to packing slips and delivery labels can be created just moments after an order is logged by the system.
Fewer Mistakes, Faster Shipping
The right inventory management system has the potential to substantially reduce shipping errors and speed up overall shipping times. For eCommerce businesses, it really is all about speed. There are so many rival companies out there, and many customers make their purchasing decisions based on how soon they can get their hands on a product. To stay competitive, you need to invest in tools that help you identify optimum shipping rates within minutes.
Real-Time Inventory Updates
Keeping on top of your inventory is the most basic requirement, but this doesn’t mean that it’s always an easy task. If you implement real-time order management, you’ll increase accuracy, cut down on stock control processes, and gain an instant window on any part of your stock. This approach adds transparency to warehouse operations because it’s easy to zero in on the total number of products, items sold, or items predicted to be sold.
An area that shouldn’t be overlooked is automated inventory management and replenishment. This is particularly useful for popular products that are prone to selling out. In fact, you should have alerts set up on every item that you sell so that you know when the stock is low. The last thing that an eCommerce business wants is to be taking orders and money for products which can’t be sold.
The other big benefit of analyzing specific details about your inventory is the chance to identify patterns. Inventory management software records every transaction, and this data is a minefield when it comes to maximizing profitability. If you know what sells fast and in large quantities, you can put more money into advertising it. Alternatively, if you have products which aren’t leaving the shelves, you can make them a target for improvement.
When you’re ordering the same SKUs from multiple suppliers, at varying price points, your finances can get pretty complex. Luckily, order processing tools are able to monitor the cost of inventory, no matter where it is coming from or whether it involves multiple vendors and price points. Most importantly, keep you updated with real time changes to inventory value.
Managing inventories and orders is a critical component for any inventory-based business. The inability to track these items can lead to delayed orders, lost orders, and in a worst case scenario, a loss of customers. Carrying out inventory audits on a regular basis is essential to ensure that you avoid any operational headaches. That’s why businesses have turned to using inventory management systems to conduct audits. It’s been proven to save them time, effort and money.
The standard way of conducting an inventory audit is to choose a selection of items, physically count how many of them you you have in your inventory and compare that to the records in your software. However, this approach might not work if you’re a part of a large organization with inventory stored in multiple locations. In such cases, using an inventory management system to conduct an audit helps you keep better track of your inventory. The software also lets you know if your business’ procedures for inventory audits are effective, or if they need to be fine-tuned. In addition, inventory management systems help reduce both understocking and overstocking as a result of inaccurate data. It also helps cut down the risk of theft.
Some of the benefits of using an inventory management system to conduct an audit include:
Cutting Down on Preparation Time
Scheduled audits mean getting your paperwork ready for the inventory auditor to assess. However, this can be time-consuming and tedious when your teams have to go through stacks of paperwork, especially if they’re stored in multiple locations. Inventory management systems let you prepare accurate reports in minutes. As a result, you save time and unnecessary frustration both for yourself and for the auditors.
Access to Verifiable Data
An inventory management system records all of your asset stocking, ordering, and tracking, as well as the inventory processes for each work order. During audit time, accurate, current and historical data is available to auditors with just a few keystrokes. As a result, verification happens much quicker.
Easy Access for Auditors
Auditors shouldn’t have to wade through an ocean of paperwork or shift from one location to another. With an inventory management system, they have all the information they need right at their fingertips. Whether it’s on a computer or a mobile device, the data can be accessed anywhere. This software should also help you maintain inventory control
Inventory auditing procedures differ from one company to the next, even within the same industry. Misplacing inventory numbers can lead to customer dissatisfaction, theft, or budgeting mistakes. Furthermore, you may run foul of your compliance requirements if there’s missing information unearthed by an auditor during an internal audit. The use of an inventory management system increases your efficiency, saves time and effort, and helps you ensure that you successfully meet compliance requirements.