Effective inventory management is crucial in two aspects – the growth of your business as well as handling the increased number of items as your business grows. In terms of the growth of your business, well-evolved inventory management delivers excellent results if done right and can prove disastrous if poorly done. On the other hand, as a business grows, it results in an increased number of items in its inventory and subsequently, complicated management. Therefore, a well-evolved and proper inventory management becomes the need of the hour.
Though necessary, inventory management is a difficult business process. However, many software are designed to help businesses automate their inventory tracking and manufacturing. Using well developed and efficient systems can not only help foster growth and productivity but also provide a stable platform to support operational health. Let’s explore what a matured and evolved inventory management system must provide:
Controls Operational Expenses
A well-designed inventory management system controls operating expenses in several ways. It can help you determine where to keep certain products, materials, and equipment to optimize the flow of your warehouse; avoid deadstock & overstock situations; choose the most effective use of space and labour; prevent loss revenue etc. Some advanced systems also have warehouse floor simulators which help users to create potential floor plans within the system.
Additionally, it provides standard support for both LIFO and FIFO principles. Streamlining inventory management is not just cost-saving, but one can also get their product history which helps in refilling the stock and managing inventory accordingly.
Inventory visibility is an essential component of an inventory management system. While choosing the system, the user must make sure that it provides real-time data on their inventory through RFID tagging, serial numbers and barcoding. This enables the user to record each item as it enters the warehouse, track its movements on the floor as well as during transportation from one location another. Inventory visibility not only helps in creating demand forecasts but also guides the product investment decision, i.e. which product is popularising in the market and which is getting out of demand.
Increased Stock Accuracy
Stock management is a vast and complicated process, consisting of an array of internal management procedures. If done manually, there are high chances of inaccuracies, such as data duplicity. Inventory management software automates all the data recording and tracking processes, therefore, leaving no scope for errors. These systems are capable of providing inventory counts with complete accuracy, even for millions of products spread across multiple warehouses.
Inventory Turnover Ratio To Do Stock Replenishment
A well-evolved inventory management system must provide inventory turnover ratio which helps the user know the rate at which the company sells and replaces its stock during a particular period so that new inventory requirements can be estimated. The ratio is the key to efficient stock replenishment as well as efficient warehouse management.
Increased Efficiency And Productivity
When your stock is managed efficiently, and there is no room for errors, it results in smooth, efficient and productive business operations. The inventory management systems provide analytics and reports which give insights into what items are selling quickly via your business channels and which ones are low in demand. These insights assist the user in making more intelligent business decisions.
Additionally, it helps the user in determining the best person for a particular job considering factors such as skill level, proximity and other tasks. Using KPIs and labour forecasting, warehouse managers can seek areas of improvement and see when they may need more or less staff.
Inbound And Outbound Optimization
Just as the system allows users to optimize the location of inventory, it also enables them to optimize how it is moved, i.e. track its various stages. Also, tools like scheduling and putaway management allow the user to determine the best time to receive a shipment based on multiple factors.
A well-designed inventory management solution is the best way to manage a wide variety of stock as the business grows. It is perhaps the most important investment a business can make for its growth, efficient management and smooth operations. Therefore, a decent inventory management system is significant in controlling the flow of incoming and outgoing products.