Inventory management is no easy task. Not only does it require high levels of accuracy in tracking, counting and forecasting, the process becomes more challenging as your business grows and scales. Though daunting, effective inventory management is made easier with an inventory management system. This article explores the benefits of using an inventory management system, and explains how to choose a solution that positions your business for success.
What is an Inventory Management System
The term inventory management system (IMS) refers to software used to track goods as they move through your supply chain. From purchasing to production to end sales, an inventory management system helps organizations account for incoming and outgoing stock, meet customer demand, and avoid the expense of stock outs and overstocking.
An inventory management system also governs the processes, and procedures that support the storage, control and maintenance of stocked items. It’s this visibility that enables retailers to oversee and organize their inventory, regardless of its stage in the supply chain.
Why You Need a Sound Inventory Management Solution
A company’s inventory is generally one of its largest assets, which makes the system used to to manage that inventory equally as valuable. Though every company manages inventory differently, how they choose to manage it impacts every essential business function, including:
- Warehouse management
- Customer service
With so much riding on your inventory, it’s essential that you choose the right inventory management system for your business. That said, the type of inventory management system you need will depend on your business.
How to Choose the Best Inventory Management Solution for Your Business
Though every business is different, a constant among those with inventory is the need for an inventory management system. Finding the right inventory management system often requires a close examination of your business as it is now, and how you wish to scale in the future.
Questions to Ask Before Investing in an Inventory Management Solution
The answers to the following questions should provide the clarity and direction you need to choose the best inventory management system for your business.
What Challenges Does Your Business Face?
Choosing the right inventory management system for your enterprise is a difficult task, with differing steps depending on the size and nature of your business. As such, the best way to start the process is to assess the needs of your team, and identify the challenges in the way of achieving your goals:
- Have you outgrown an outdated inventory management or enterprise resource planning system?
- Is your small business growing faster/slower than expected?
- Are inventory levels inconsistent across your sales channels?
- Are you running out of stock faster than anticipated?
- Do you have the ability to track inventory KPIs to meet your goals, or do you need to improve tracking to determine where units are at any given point?
The answers to these questions, and others related to your business challenges will help identify pain points, and gauge the functionality you need from your next inventory management system.
What are Your Inventory Management Policies?
Inventory control dictates how products move through your supply chain, how you track costs, and minimize losses or shortages. A clearly defined inventory control policy (e.g. FIFO vs LIFO) will not only maximize the efficiency of your supply chain and fulfillment processes, but also help you decide what inventory management software is best suited to your business.
What Features do You Need to Run Your Business?
The right inventory management software should do what you need it to do, and suit your budget. To ensure you find the right IMS for your business, it’s best to evaluate your options based on scalability, capability, quality, and price.
For these reasons, it’s important that you identify the additional features that your managers need to run your business.
- Do you need to track stock using lot control, RFID tags, serialization, or bar codes?
- Does your industry have specific requirements you must meet?
- Will your team be using mobile devices to scan barcodes?
- Do you need real-time visibility regarding your products’ availability, or comprehensive reporting on your inventory across warehouses or wholesalers?
Inventory management systems also have features that help manage, control, track and plan inventory. Here’s what to expect from those features:
- Inventory Control – Inventory control tools can categorize products by type, location and SKU. They also audit data, generate reports in real-time and search, filter and view products.
- Inventory Management – Inventory management features govern the data from other parts of the system; include tools for multi-location warehouse management, and integrations with other software or enterprise resource planning (ERP) platforms.
- Inventory Tracking – Inventory tracking features help automate manual tasks, and better manage customer relationships by sharing what items are in stock, shipping times, and tracking updates.
- Inventory Barcoding – Collecting, storing and organizing digital inventory data makes inventory operations faster and more accurate. Barcoding software helps eliminate data entry errors, automate business functions, improve inventory accuracy, speed up back-office processes and enable paperless documentation.
- Inventory Optimization – Inventory optimization tools provide automated reports, inventory trends and a view of changes across the entire supply chain. This information enables a closer match in supply and demand so you can optimize the inventory on-hand.
- Inventory Alerts – Inventory alerts (automated email or SMS messages) offer an added level of operational control for demand forecasting, materials planning, shipping logistics and supplier management.
Why an Inventory Management Tool Could Be Vital to Your Success
If you learn anything from this inventory management guide, it should be this – far too many business owners wait until they are overwhelmed with missing, lost, and damaged products before they consider investing in an inventory management system.
Inventory management systems help companies of all sizes automate their processes and improve their operational efficiency. Contact us today to try our advanced inventory management system and position your business for success.