Are you managing Inventory efficiently? We know every organization tries to do the inventory management right way, but they are not able to do so! The reason is inventory management is not simple actually it is very complex! That is why the organization needs to implement inventory management software in the organization.
The inventory management software market is growing! According to Global Market Insights, “Inventory Management Software Market size crossed USD 3 billion in 2019 and is estimated to grow at a CAGR of over 5% from 2020 to 2026.”
What Is the Inventory Management Process?
The inventory management process allows you to manage inventory efficiently. It is the procedure of ordering storing and selling inventory.
Also Read: What Are the Various Strategies to Improve Inventory Management?
This also includes management of raw materials, finish products, MRO (Maintenance repair operation) parts. Supply chain management to warehouse management is also part of the inventory management process.
What Are the Best Practices to Improve Inventory Management?
The best practices to improve inventory management are discussed below:
1. Invest in Inventory Management Software
First thing first the best practice is to implement inventory management software. In an organization that is filled with a lot of inventory and inventory is a major part of their business for example a retail-based organization.
Most of their problem will be resolved easily. In every inventory management practice, inventory management software can assist you.
2. Eliminate Pen-Paper Method
Pen and paper practice is not effective practice for inventory management. Human error chances are increased because there is a lot of data entries needed to be done. It can lead to wrong shipping and other mistakes as well which is not good for business.
3. Set Reorder Point
Without software assistance, you will get data through which you can set a reorder point. An organization needs to set reorder point. It saves your business from getting out of stock.
Out of stock is a serious problem without it you will lose several potential customers and the top line and bottom line will be impacted as well.
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4. Utilize ABC Analysis Technique
ABC techniques allow organizations to categorize their inventory into three categories.
Category A contains an expensive item which is less in quantity category B contains less expensive item but more in quantity & they are easy to sell compared to category B. Category C items are economical and more in quantity & easily sold.
This technique organizes the way of selling products and you can identify items that are selling frequently, which are expensive, and so on.
5. Perform Audits Regularly
It is one of the most important practices for effective inventory management. When you perform an audit regularly you will get the actual number of inventory availability.
With the real numbers of inventories, you can check with the software you have and compare them! Are they matching or not? The audit is helpful in revealing inventory theft, malicious activity, or inventory misplacement.
Although audit can be a long and hectic procedure with automated software you can do it easily without any problems. It will also help in saving time.
6. Ensure Quality & Optimize Inventory
If the product is not as per the customer's expectations, then the customer won't hesitate to post their thoughts on social media. Therefore, you should always aim for improving inventory quality from production to delivery optimization as much as possible.
Sometimes light, humidity and temperature impact the quality of inventory. Quality control is of most extreme significance in any size business and ought to be executed as right on time as could really be expected.
Having an interaction to guarantee quality can be straightforwardly connected to consumer loyalty and business development.
What Are the Various Benefits of Inventory Management Software That Help Businesses?
Various benefits of inventory management software that helps business are given below:
- Eliminating stock issues such as overstocking with data analytics and out-of-stock issues through setting a reorder point.
- Provide reports that are helpful in making an important business decision. It also helps in identifying pitfalls.
- Saving inventory theft with inventory tracking.
- Increasing productivity by knowing where each inventory is kept.
- Alerts team when inventory levels are below the defined level.
- Manual work is eliminated, and automated process is emphasized.
The inventory management process helps the organization in keeping inventory organized and optimized. However, all the above-mentioned inventory management practices are essential for business especially if your business is growing.
Effective inventory management can save your business from stock issues such as overstocking issues and understocking issues. Since inventory management software comes with cloud computing technologies it provides several other benefits as well.
Also Read: Why Mobile App Is a Smarter Way to Control Inventory Process?
Frequently Asked Questions (FAQs)
1. What are the main categories of inventory?
Mainly there are main three categories are raw material inventory, finished goods & product inventory, MRO (maintenance repair operation).
2. What are the benefits of cloud-based inventory management software?
The benefit of cloud-based inventory management software are as follows:
1. Accessibility - You can access the application from anywhere all you need is a good internet connection. It gives you the flexibility to work from home. This advantage comes in handy when you are away from home or official trip.
2. Cost-effective - When you are equipped with cloud technology software you don't have to buy heavy software or advanced computers. So, it saves your unnecessary expenses. Moreover, you only need to pay on a subscription basis for the assets you are using.
3. Data security- Data security is a sensitive issue; with cloud technology, you don't have to worry about data security as the cloud service provider will be responsible for data security. So, your security expenses are also saved.
3. What are the various types of inventory management techniques?
Main inventory management techniques are given below:
A. Just in time (JIT) - This technique was first used by the Japanese then it is evolved by company Toyota Motor company. It reduces waste and enables an organization to save money. It avoids keeping excess inventory and saves warehouses expenses.
B. Economic order quantity - Economic order quantity computes the number of units an organization should add to its stock with each cluster request to lessen the absolute expenses of its stock while expecting steady shopper interest.
C. Quality inventory analysis - Inventory analysis is important it let you know what is the quality of inventory that you are using in order to compete with your competitors. Moreover, your customer will be satisfied when they get the best quality product.
The purpose of inventory management is to eliminate unnecessary expenses and increases productivity.