In the last 12 months, 81% of the global shoppers have faced an out of stock situation while globally, retailers have recorded losses of over $1.75 trillion because of mismanaged inventory or not using an inventory management software.
Inventory management and supply chain problems are global and are faced by businesses of all scale and sizes. If you are one of these companies that are still using excel sheets to manage the inventory or ones which are not managing it at all, it’s time to change that.
In this article, we are going to talk about the benefits of inventory management software for business, highlighting how it solves the issues pertaining to mismanaged inventories.
The limitations of inventory management
The list of advantages of inventory management is very huge. It helps with the optimization of stocks, saves costs, and makes supply chain efficient, etc. But the other list which is equally long is of the challenges or limitations of inventory management.
While there are a number of issues in the inventory management process –
Let us address the key problems which are present on a global scale.
Using the manual inventory tracking processes across spreadsheets can be redundant, prone to errors, and time-consuming. Even the small businesses can use a centralized inventory management software for ecommerce that would include accounting, tracking features.
At any given point in the day, you should have transparency around what amount of inventory you have. To enable this, it is important that you get a complete set of data from multiple sources on an “as it happens” basis.
Customer demands operate in an ever-changing mode. So while keeping a lot of stocks can lead to obsolete inventory, having too little can prevent you from fulfilling customer orders.
What helps is having an order strategy wherein you are able to predict and fulfill demands.
Supply chain complexity
Global supply chains move on an everyday basis, which places a burden on the inventory management tasks. In order to address the usual mode of operation where the wholesale distributors and manufacturers dictate the when, where and how, your inventory management process should be flexible and come with unanticipated lead time.
Insufficient order management
One of the most common issues of robust inventory management is two-fold: overselling of a product and running out of the inventory. While making use of the seasonal and historical data can help predict the orders, it requires a software-based approach to inventory management in logistics.
These pestering issues find a solution in inventory management software for businesses.
What is inventory management software?
Inventory management software is a platform which automates certain aspects of warehouse management and inventory. They streamline the tasks which are needed to track inventory, manage the rendering process, and update the accounting data.
Fundamentally, the benefits of inventory management software lies in giving you real-time updates on what is happening with your stocks.
With the basics now addressed, let us look at what is leading to the growing popularity of inventory management software.
Benefits of inventory management software for business
Inventory management processes can help save money and maintain the right stock count. However, you can see more benefits come in when you add the tool in your enterprise software development tech stack. With this sort of a software in place, you would be able to:
1. Perform inventory tracking
Inventory management software when integrated with your ERP can help better the inventory control by tracking it in real time. It shows where the product is located and how it is moving through the system. This leads to elimination of human error from the process, something which can never be made possible through a manual spreadsheet.
A majority of these software track each product as it enters and exits the cycle right from production and storage to sales. This way, businesses are able to lower the inventory management cost and create better relationships with the partners and their customers.
2. Enable accurate reordering
The key advantages of inventory management software lies in offering you a clean record of the inventory, while streamlining reordering. The sales/consumption data that you get from the software can help you know when to reorder a product.
These software can be designed to go a step further by helping you order just enough items so that you are not holding any dead stock for an extended period of time.
3. Prevent stock overselling
Overselling is a prime challenge for businesses, especially the eCommerce businesses. When you do not have an accurate picture of your inventory, it gets easy to run out of products. What this leads to is the inability to meet customers’ demand and in some cases suspension from the marketplaces.
An inventory management software helps you monitor the demand and measure if your current stocks level is able to meet them. This way, you have a clear idea when to restock the products and by how much.
4. Reduce business costs
Inventory management reports inform you of the stocks which are there in the warehouse. So, when the order comes you know the amount of stock you have and the amount you will have to arrange. This saves the last minute hustle of getting stocks at high prices.
Another way you get to save money is by not ordering products with low demand (which in turn leads to overstocking and the attached storage space costs) – an insight which you get through a clear understanding of the products in demand.
The inventory management software can also help bring down the business costs around –
- Employee wages – When the employees have less clarity on the stocks they will have to manage, they end up storing and managing more than what’s necessary, leading to the increased labor cost.
- Transportation – Storage of excess inventory can lead to a rise in transportation costs of moving the product from one warehouse to another.
- Insurance – Leasing or renting a storage space generally requires an insurance policy that would protect the place and the assets. So when a business ends up creating and storing stocks which are not in demand, they continue to face losses on both customer satisfaction and insurance front.
5. Improve supply chain
When we talk about supply chain operations, unexpected challenges come as part of the parcel. With the right inventory management software in place, the retailers are able to make a proper supply chain diversification strategy.
With the data that you generate about your inventory stocks, you are able to lower the risk of long waiting time if a supplier is unable to deliver products on time plus you are able to prepare for peak seasons in advance so as to keep the optimal amount of stocks in the warehouse.
6. Add new selling channels
Every eCommerce seller wants to try out new sales channels or platforms to list their products on. An inventory management software makes managing these multiple channels easy by centralizing the inventory management into one place. Doing this, enables you to have a clear view on how much of your inventory is being sold at which channel.
Moreover, a majority of inventory management software for ecommerce comes with feature sets like real-time inventory syncing and forecasting. This makes it possible for you to maintain inventory control across multiple locations.
7. Automate inventory management
Probably one of the biggest transformations of inventories can be seen in the many benefits of automated inventory management systems. Automation eliminates all the risks of human error while saving you hundreds of hours in doing repetitive tasks.
The importance of inventory management in logistics, especially when you add automation in the mix, comes to the surface when you get real-time visibility on where your stocks are. This doesn’t just give you real time visibility into the inventory levels since the stock count updates automatically when the sale is made, but also helps perform accurate forecasting, which delivers a great customer experience through the elimination of overselling.
In the end, automation also comes in handy when you work with multiple warehouses and selling channels as it gets you real time visibility of where the product is.
8. Forecast inventory for seasonal buys
When the order volumes rise substantially due to holidays or some events, the amount of inventory you have should be able to meet the demand. This planning is something that can be achieved through proper demand forecasting.
The importance of inventory management systems lies in gathering and analyzing seasonal and historical data to note the sales pattern and make necessary adjustments in the stock levels.
9. Manage multiple warehouses
Large businesses tend to be the first adopters of any kind of inventory software. This is because the primary benefits of inventory management software lies in connecting multiple warehouses and bringing all the different data points in one place.
These software provide a bird eye view on the entire supply chain by helping track stocks and its movement across different warehouse locations. So when a location runs low on a certain stock, they can order it from another place. The inventory management software can show which locations have the product, in what number, and at what price. There are some advanced inventory management software also that helps place an order while automatically updating the product count.
10. Greater productivity
Businesses that use an inventory management software tend to witness higher production rates. With a lot less inventory mistakes to handle, they are able to concentrate on making high-quality products at a much faster rate. In addition to this, they can reallocate the labor hours to other productive tasks.
Another side to this is better organization. The software helps businesses make a better system for organizing the inventory. Through this, the employees can categorize stocks by name, size, or other key parameters, helping businesses fill orders accurately and quickly.
So here were the many benefits that come attached with inventory management software. As you would have reckoned, achieving these advantages would require you to have a custom inventory management software in place. Now, that is something you would need an expert’s help in.
This is where Trident Technolabs comes into the picture. As an enterprise software development company, we have helped a number of brands across the globe develop and deploy inventory management software for their business. The result? Complete streamlining of the supply chain.
We can help you too. Get in touch.