Inventory Management
Inventory is a big asset for a business. And managing this asset effectively plays a big part in maintaining high levels of customer satisfaction and profitability.
Inventory management aims to ensure that businesses are consistently able to supply enough goods to meet the demand of their customers. Organizations need accurate data to be able to make the right decisions in this area. However, effective inventory management also means striking the right balance between enough and too much. Overstocking increases storage costs and if those goods don’t sell can lead to stock being written off.
For companies that sell products, inventory management is essential to everyday operations, powering key purchasing, storing, and shipping processes that keep business moving. The right inventory management system can save a company time and money while improving the customer experience.
If you work in or around inventory management, you know how impactful it is. Ecommerce managers and business leaders need to understand the value of inventory management too, and the tools that are available to help manage inventory more effectively.
What is inventory management?
Inventory management refers to the processes a business uses to acquire, store, track, and ship items it sells. It involves managing a physical space (typically a warehouse) where inventory is stored, as well as the people and processes moving items through that space.
Inventory management is related to but different from supply chain management. A supply chain is the network of suppliers a retailer uses to acquire products it sells. Inventory refers to the products and their storage once they’ve been acquired.
Why is inventory management important?
A critical factor of inventory management is a company knowing how much inventory it has on hand. Maintaining the right amount of inventory prevents selling out of items and upsetting customers or over-ordering and having overstock that costs money.
Businesses that don’t manage inventory effectively face several risks, a big one being poor application of financial resources. Inventory is the lifeblood of a business, and it represents a huge investment. Businesses incur costs to acquire inventory and for the taxes that may be due on items stored within inventories. There are additional costs such as utilities, insurance, and other security expenses associated with warehouses and associated storage spaces.
Inventories also represent a significant investment of time and effort. Employees must perform periodic inventory counts, which may occur only once per year for seasonal items. They may also happen as often as every few weeks for other types of inventory types.
The benefits of inventory management
The benefits of inventory management range from greater financial efficiency to improved customer satisfaction. Overall, these benefits add up to greater business success. A well-managed inventory provides many important advantages, including:
- Cost and time savings: Inventory management helps to make the monetary and time investments associated with this activity more efficient. If you have a precise accounting of the stock on hand at any time, you don’t need to perform frequent, time-consuming recounts. Nor do you need to spend money reordering items when your existing stock is sufficient to meet consumer demand.
- Better organization: How your inventory is physically organized impacts the time it takes for employees to find and ship items, which affects how quickly you can fulfill orders and grow customer satisfaction. Inventory management lets you know which items are most popular, which are frequently combined in the same orders, and which take the longest to transit in and out of storage. You can use this data to determine how to arrange inventory efficiently.
- Customer satisfaction: Difficulty finding or picking items from inventory leads to slow delivery and unhappy customers. Inventory management enables faster shipping by helping a business manage the storage and movement of items. It also minimizes the risk of having to cancel an order or list items as out of stock due to insufficient inventory, which causes customer frustration.
-
- Automation and analytics: Automated tools provide opportunities to systematically track and analyze inventory data. By using inventory management software, a business can automatically collect data about existing stock, how frequently and quickly it moves through the inventory, and more. This information can offer insight into sales patterns, highlight opportunities for improving inventory management practices, and help automate processes like estimated shipping times.
-
- Better Inventory Accuracy: With solid inventory management, you know what’s in stock and order only the amount of inventory you need to meet demand.
-
- Reduced Risk of Overselling: Inventory management helps track what’s in stock and what’s on backorder, so you don’t oversell products.
-
- Cost Savings: Stock costs money until it sells. Carrying costs include storage handling and transportation fees, insurance and employee salaries. Inventory is also at risk of theft, loss from natural disasters or obsolescence.
-
- Avoiding Stockouts and Excess Stock: Better planning and management helps a business minimize the number of days, if any, that an item is out of stock and avoid carrying too much inventory.
-
- Greater Insights: With inventory tracking and stock control, you can also easily spot sales trends or track recalled products or expiry dates.
-
- Better Terms With Vendors and Suppliers: Inventory management also provides insights about which products sell and in what volume. Use that knowledge as leverage to negotiate better prices and terms with suppliers.
-
- More Productivity: Good inventory management solutions save time that could be spent on other activities.
-
- Increased Profits: A better understanding of both availability and demand leads to higher inventory turnover, which leads to greater profits.
-
- A More Organized Warehouse: An efficient warehouse with items organized based on demand, which items are often sold together and other factors reduces labor costs and speeds order fulfillment.
- Better Customer Experience: Customers that receive what they order on time are more loyal.
Benefits of Inventory Management Software Integrated with ERP
Inventory management practices can help you save money and keep an accurate stock count. However, you can see more benefits when you add an ERP system with inventory management capabilities. With this type of system in place, you’ll be able to:
-
- Understand Inventory Levels Across the Business: ERP systems can provide an end-to-end view into orders through all departments, from sales to accounting to fulfillment. Centralized purchasing reduces duplication when replenishing stock, and having the ability to purchase in bulk saves money.
-
- Automate Manual Tasks: Barcode and RFID scanning can speed stock-taking, receiving and fulfillment. Using software reduces errors from manual entries and frees staff from repetitive tasks.
-
- Greater Visibility with Real-Time Data: The right inventory management software will give you access to real-time information on all SKUs, in all facilities. It will deliver this data to all devices, no matter where you are.
-
- Improve Forecasting: Software that handles data collection and analytics can provide insights into trends. And when you understand trends, you can improve your stock forecasting.
-
- Data-Driven Decision Making: Leverage the analytics capabilities of inventory management software to make data-driven stock decisions. Save money by reducing inventory and carrying costs.
-
- Support Uninterrupted Production: By forecasting both demand and lead time, you can ensure production never experiences a shortage.
-
- Harmonize Multiple Inventory Locations: Get an overview of stock levels in all your warehouses, distribution centers as well as retail stores and suppliers.
-
- Optimize All Inventory: A robust inventory management software system helps maintain the right mix of stock and quantities, and at the best carrying costs. It’ll help you ensure you never have too much or too little on-hand.
-
- Scale Inventory as Your Business Grows: You can’t accurately track 1,000 SKUs in 15 facilities manually. Inventory management software can handle that.
-
- Improve Product Visibility in Recalls: Digital systems allow managers to use lot or serial number records to trace products by date and location.
Essential Features of Bizzyeasy Inventory Management System:
-
- Centralized inventory management
Bizzyeasy inventory management system has the ability to centralize all pertinent inventory data, offering comprehensive oversight of stock levels, product histories, and item specifics. This centralization is pivotal as it ensures the synchronization of inventory information across multiple channels and departments, enhancing accuracy and facilitating seamless operations. Centralized systems empower teams, regardless of their physical location, to collaborate effectively, ensuring that everyone has access to uniform and up-to-date inventory data.
-
- Tagging and barcoding:
Tagging and barcoding are vital features for minimizing human error in inventory management. The implementation of these technologies significantly accelerates the data entry process and reduces the time and resources spent on staff training and data recording.
With barcoding, what once took hours of manual labor can now be accomplished in a fraction of the time, improving efficiency and reducing the likelihood of costly mistakes. By enabling precise tracking of products through tagging and barcoding, inventory systems ensure that each item’s journey from warehouse to customer is accurately monitored.
With Bizzyeasy you can customize the QRs and Barcodes to match your desires through the use of our embedded QR code generator.
-
- Reporting of business activities
The ability to generate detailed reports is an invaluable function of an inventory management system. Real-time reporting tools offer managers and stakeholders up-to-the-minute insights into various facets of the business, from the location of delivery drivers to the status of current stock and the progress of shipments. This feature ensures that decision-makers are well-informed and can respond quickly to changing market demands, logistical challenges, or inventory issues. By integrating advanced reporting capabilities, an inventory management system becomes a powerful tool for strategic planning and operational oversight.
-
- Forecasting of the inventory
Inventory forecasting is an indispensable feature that ensures businesses can anticipate demand and manage supply effectively. Bizzyeasy with its robust forecasting tools can identify trends and patterns, alerting companies to which products are depleting quickly and which are overstocked. This predictive capability not only helps in maintaining customer satisfaction by avoiding stockouts but also optimizes resource allocation, enabling smarter purchasing decisions. By leveraging historical data, the system aids managers in aligning inventory levels with customer demand, reducing the risk of excess stock.
-
- Alerts regarding inventory details
Bizzyeasy will help you elevate efficiency with automated alerts that notify managers about critical stock levels. These notifications help preempt potential issues, such as running low on a high-demand item, by alerting the responsible parties before it becomes a problem hence saves valuable time and resources that would otherwise be spent on manual stock supervision, ensuring that inventory management is both responsive and strategic.
-
- Backup and security of the inventory
Ensuring the integrity of inventory data is crucial, and Bizzyeasy provides robust security features to safeguard against unauthorized access and cyber threats.
In addition to strong security protocols, our systems offers comprehensive backup solutions to prevent data loss. Should a security breach occur, the backup ensures continuity of operations without significant disruption. This dual approach to data protection is essential for maintaining operational resilience and trust in the system’s reliability.
-
- Internet of Things (IoT) and Cloud data software
The integration of IoT with cloud-based inventory management systems is transforming inventory tracking and management. This technology allows for the real-time collection and analysis of data across all types of devices, making inventory management more dynamic and responsive. IoT devices can automatically record and update inventory levels, providing employees with immediate access to current information.
The cloud-based nature of these systems means data can be accessed remotely and securely, ensuring that all team members have the most up-to-date information at their fingertips, facilitating better decision-making and inventory optimization.
-
- Integration with other systems
The ability to integrate inventory management software with other systems, such as Enterprise Resource Planning (ERP), is a significant advantage. Seamless integration allows for uninterrupted data flow and enhances the functionality of both systems.
With this connectivity, businesses can leverage a unified platform that consolidates various operational facets, including finances, customer relationship management, and supply chain operations, leading to improved accuracy and a more holistic view of the company’s performance.
-
- Optimized inventory
Inventory optimization is a key feature of sophisticated inventory management systems. Algorithms and analytics to guide managers in maintaining the ideal stock balance, preventing overstocking, and avoiding running out of items. By ensuring that inventory levels are precisely calibrated to current business needs, managers can operate more efficiently and meet deadlines more easily, ultimately contributing to smoother operations and cost saving.
-
- Demand and supply of the product
Business owners and managers are able to align the supply of products with customer demand accurately. By analyzing sales trends and forecasting demand, businesses are able to maintain the right amount of stock to meet customer needs without overproducing.
This balance is crucial for minimizing holding costs, reducing waste, and ensuring that capital is not tied up in excess inventory. Thus, businesses can operate more sustainably and maximize their revenue potential.
Inventory management software is the solution that businesses turn to when they find that their manual methods for managing inventory have become insufficient. Using a system like Bizyeasy can help you grow more efficiently, while taking care of all of your end-to-end inventory management needs including tracking, multiple sales platforms and warehouses, vendor management, reports, and integrations. Take our free trial and find out how Bizzyeasy can help streamline your inventory management processes.
Data privacy and Security issues
The growing dependency on digital technologies is becoming a way of life, and at the same time, the collection of data using them for surveillance operations has raised concerns as some industries require a high level of data security to comply with data protection regulations.
