Inventory management systems are essential for businesses, especially those organizations which majorly rely on inventory. An inventory management system is helpful in avoiding inventory issues. Moreover, it is helpful in providing accurate information and allows us to keep track of inventory. But an inventory management system needs several tools that increase its efficiency more! Those inventory management system tools we will be discussing below. But first, let us know what the inventory management system is!
What Is Inventory Management System?
Inventory management systems assist the organization in providing accurate location and eliminate the manual process. Inventory management helps in managing the supply chain by keeping track of inventory and stock.
The inventory management system keeps track of stock and whenever stock levels are below the defined level the system alert the responsible person and the stock refilling process begin.
An automated inventory management system avoids several types of inventory management issues such as overstocking and out-of-stock issues.
Inventory management is done so that you have the right amount of inventory in the right place in the right quantity. The purpose of inventory management is to avoid overselling or any type of issue so that the bottom line is not impacted at all.
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 Are the Tools That Are Helpful to the Inventory Management System?
Below we have mentioned inventory management system tools that are helpful:
1. Inventory Tracking Techniques
Inventory tracking technology such as Barcode, QR Code (Quick Response Code), RFID (Radio-frequency identification), NFC (Near field communication). These inventory tracking technologies are helpful in providing accurate location of inventory.
When you know the exact location of inventory then you can easily avoid theft and misplacement. In huge warehouses there are lots of inventories kept so when you look for a specific inventory then you can find easily it with this software.
When you have this software, you can know the exact number available of inventory within the software. The inventory tracking technique automates the process, decreases human error, and improves accuracy as well.
An audit is an important aspect for organizations you can get the actual number of inventories available and their quality as well. The audit process helps in the physical verification process.
Sometimes numbers are different in software than in actual. Audit lets you know the exact number of inventories that you have in hand with availability.
3. Inventory Cycle Count
Cycle counting replaces the unwieldy and mistake-prone occasional (typically yearly) actual stock count with a normal program of counting chosen things so more significant things are counted all the more regularly than less significant ones.
The enchantment of cycle counting is that it gives a design to distinguishing and disposing of the wellspring of blunders to further develop exactness economically.
4. ABC Analysis
ABC Analysis tool is helpful in prioritizing inventory. You can categorize inventory as per class A, class B, class C. In category A you can keep items that are very important and costly as well.
In Class B you can keep inventory that is more in numbers and less expensive but less critical than category A. and In class C you can keep items that are less expensive and non-critical for organizations.
This categorization is done in order to set the priority of inventory.
This analysis is also known as Pareto Rule. According to which top 20 percent represent the 80 percent value. Some people also refer to it as the 80/20 rule.
What Are the Benefits of Efficient Inventory Management?
The benefits of inventory management are discussed below:
1. Better Analytics & Trends
This software provides analytics that is helpful in avoiding unnecessary overspending and out-of-stock issues as well. Furthermore, with this software, you can track trends that will give you an extra edge in business.
2. Improved Productivity
Productivity increased when employees do not have to waste their time just looking at specific inventory. Productivity increases when your data is error-free and accurate. When manual work is automated then productivity increases.
3. Accurate Records
Wrong inventory data can lead to a penalty during the audit and a decision based on wrong information would be wrong. But when you have this software, accuracy is ensured.
4. Better Decision Making
With accurate data and accurate analytics, your business decision improves because now you do not make a decision based on assumptions.
This software provides you a complete picture of where you have inventory more or less. So that you can move or draw inventory from one location to another.
For effective inventory management you not only need an inventory management system but you will also need inventory management tools. These tools are helpful in optimizing the efficiency of inventory management.
Inventory management tools can be integrated with this software to achieve maximum profit. These tools play an important role in providing visibility, control over inventory and they can also assist in inventory operations.
Managers know how difficult it is to manage inventory, you need proper records and everything in order that is why investing in inventory management software is essential along with inventory management tools.
For a growing business, it is one of the important software that your organization must have.
Frequently Asked Questions (FAQs)
Various methods of inventory management are:
A. Just in time (JIT) method
B. Batch tracking method
C. ABC Analysis method
D. Dropshipping method
E. Minimum order quantity method
F. Economic order methods
Manufacturing, e-commerce, logistics, healthcare industries are a few of the industries for which this software is very important. Other than this all organizations which are inventory intensive can take benefit from this software too.
The most important is inventory tracking techniques tags as they provide the exact location and with real-time information, you can get data that is helpful in making crucial business decisions. They also help in improving accuracy and increasing the efficiency of the inventory.