When someone starts a business thinking that they will keep their customer happy! Every product will be available in their shop customer will not have to visit another store to purchase products. However, when the business started owners have so many things to take care of, effective inventory management is also one of them. Unfortunately, managing inventory is not a simple job, it is a very tough task. Store managers and organizations take the assistance of inventory control software for phenomenal inventory management!
E-commerce sales are also very critical for the retail sector. According to Statista, “In 2018, global e-retail sales grew 22.9 percent compared to the previous year. During that period, retail e-commerce sales accounted for 12.2 percent of global retail sales.”
What Is Inventory Management?
Inventory management is the art of managing inventory efficiently. In this procedure inventory is counted, the inventory life cycle is taken into account, and according to that inventory is sent to the customer or stored in the stock room.
The objective of inventory management is to know how much inventory you have at a given time. In simple words, keeping track of inventory and monitoring their weight, location, and amount. For effective inventory management, automated software is used with tracking technology such as barcode and QR Code. Inventory management is the basic need of a well-function retail chain business.
Why Inventory Management Is So Crucial?
Inventory management is crucial because it saves an organization from overstocking inventory issues or low stock issues as well. It reduces the risk of miss-shipment and keeps your supply chain good.
If proper inventory management is not done then it can result in a chaotic warehouse and disorganized inventory shelves. Proper inventory management provides control over your inventory, it makes you aware of your inventory.
Efficient inventory management can save you a lot of expense and if it is not done in the right way it can cost you a lot furthermore labour work will not be productive. It can decrease your customer satisfaction level also.
How Inventory Control Software Can Help in Providing Control Over Inventory?
To understand this first, we need to know what is inventory management software is!
Inventory management software helps organizations, retail managers in managing inventory efficiently. The main function of the software is that it eliminates the “manual” factor and makes the process automated.
This way inventory management becomes simple. Other than this it keeps track and monitor inventory! The software makes the life of workers easy as it does the hard work of calculation and inventory management and keeps employees free for other activities.
Now that we have a basic understanding of inventory management software. Let us come to the main question!
The inventory control software can help in providing control over inventory in various ways:
1. Inventory Count
For getting control over your inventory managers must know the exact numbers of inventory and stock available on the shelf. Inventory management software provides real-time numbers of inventory. So that customer does not go empty-handed thinking that the item is not available.
Now employees do not have to count manually all the inventory. Moreover, it reduced the chances of human error as well. As we know, people can mistake in counting inventory numbers but when inventory is barcoded and a barcode scanner is used. It makes a precise inventory count.
2. Overstock and Under Stock Issue
This is one of the biggest issues in inventory control. Out of stock and overstock not only impact the bottom line but also create a huge impact on inventory control.
Because too much stock will not be finished on time and chances are that it may turn into deadstock. Deadstock is no good for business. On the other hand, understock or out of stock can lead to potential loss of sales which is also no good for business.
Inventory management software maintains the right level of stock and avoids overstock and stock problems. In this software, you can set a limit for re-ordering which means it will alert the team whenever stock is about to end and the team can start the stock refilling process.
3. Regular Compliance
Every sector has its law and policies that need to be followed by every organization under that sector. The retail sector has health products, beauty products, and consumables. They all have an expiry date.
Thus, it is the responsibility of the risk management team to check & verify all documents. These days the retail sector is a huge compliance risk and if the found rule is violated or not meeting the norms of the industry during an audit then the company will be penalized and declared faulty.
Inventory control software keeps a quality check and ensures that all rules and regulations are followed.
4. Inventory Reports
Inventory reports are helpful in future planning and with the inventory control software reports managers can track trends also. These trends must be analyzed and followed as they can be helpful in business growth. Most importantly you can track trends with software only. For instance
- Which is your most popular product in summers & winters?
- Which is your least popular product in summers & winters?
- How many items purchased and sold?
Reports and analytics can assist in you making good business decisions & they can help provide control over inventory also with proper inventory management. Data-driven decisions can help you understanding the game of demand and supply, providing you with a competitive edge. These reports can also help in inventory forecasting the demand of the customer.
Inventory management is important not only for the retail sector but for all organizations. Any business is not complete without inventory and companies spend a lot of money on inventory.
Thus, it should be managed efficiently. When a business is based on inventory then inventory or asset management software is compulsory to run a business effectively. As we said above there are several factors that need to be kept in mind for proper inventory management. This cannot be done with human power and capability only inventory management software is also required.
Frequently Asked Questions (FAQs)
1. Why Inventory Management Is So Important for Retail Sectors?
Inventory management is important for retail sectors because it avoids the over-stocking issue and out-of-stock issue as well as these both problems can reduce the profit ratio. Moreover, it provides an accurate inventory level of each item.
2. How Many Types of Inventory Exist?
Inventory types are as follow:
1. MRO (Maintenance Repair & overhaul) - This type of inventory is required during maintenance such as nut-bolts etc.
2. Finished good - Product is ready to use. They are also known as consumables.
3. Raw material - With the help of raw material end product is prepared.
3. How Do Store Managers Organize Inventory in the Retail Business?
There are several techniques are used for this purpose such as:
1. FIFO (First in first out)
2. Use par levels
3. Audit (Cycle count)
4. Prioritize with ABC analysis