There used to be a time when businesses used ledgers and spreadsheets to keep track of their inventory. This manual record keeping was reliable for the time being but one human error away from piling up losses.
Nowadays, these methods are outdated. The availability of inventory management software has streamlined processes. Thanks to advancing technology, inventory management systems have automated several inventory-keeping tasks.
Let’s understand what these systems are.
What is an inventory management system?
An inventory management system (IMS) is a software that tracks your inventory stock levels and helps you manage orders. This software tracks your stock and notifies you about your stock levels. It also predicts when your stock can end and suggest you restock on time.
Inventory management systems use past and current inventory data with market trends to project future sales outcomes. These systems highlight your best-selling products and help you restock wisely to avoid dead stock.
Why Use Inventory Management Systems
Imagine a customer has ordered a product. If you’re out of stock, this negative experience will turn your customer away. Two or more incidents like these will start to slowly tarnish your business reputation.
Similarly, if you have more stock in your inventory than required and you are unable to sell it, it is going to expire. This is called dead stock.
With great inventory management software, you can prevent such issues as stockouts, overstocking and dead stock. You can not only avoid suffering losses but you can also improve your customer retention rate.
The inventory system forecasts the demand for products so you can stock up accordingly. It provides you with information on your current stock in real-time.
You can monitor all the progress of a product in your supply chain. This lets you track the entire flow.
Key Features of IMS
The common key features of inventory management software include:
- Inventory Alerts
- Inventory Control
- Sales and Purchase Orders
- Warehouse Management
Inventory systems provide you with useful analytics based on your data of sales and transaction history, current inventory, stock levels, and market trends. These insights help you to:
- Improve the efficiency of your sales
- Maintain a balance in your stock thus eliminating the fear of:
- Running out of stock
- Gaining excessive stock which turns into dead stock
Inventory alerts are very important in notifying you of the need to add up more stock. You can set your reorder level in your software. Reorder level is the level of your current stock where you need to place an order for more stock.
So when your stock is less at the reordering level, your software alerts you so you can order more stock. This improves customer satisfaction and retention.
People often confuse inventory management with inventory control.
So, the difference between them is that inventory management is a broader term. It involves managing inventory right from the supply chain to the consumer.
On the other hand, inventory control is to audit your stock in the warehouse on a daily basis.
Inventory software helps you to maintain your inventory control by setting up reorder levels. If you do not have stock on hand but it's available on the distributor’s end, you can add backorders in inventory software. Your customers can receive their products once you receive these from the distributors.
Inventory software generates invoices by adding up all the details of an order and prices per item. When you complete a sale, the software sends these invoices to customers mostly via email.
Sales and Purchase Orders
First of all, we need to understand purchase orders and sales orders. A purchase order is a document that a buyer issues to the seller with complete information about a product including its quantity, price, and type. The seller has to accept the request to generate a purchase order.
On the other hand, a sales order is a document that a seller issues to the buyer with complete information about a product including its quantity, price, and type. The buyer accepts to generate a sales order.
Inventory software easily generates purchase orders and sales orders. This software also tracks complete orders and provides you with real-time information about your order progress.
You can manage all the daily activities of a warehouse with inventory management systems. You can audit your stock in the warehouse. Your systems provide you with complete reports of sales and purchase orders.
Growth of Your Business with IMS
A good inventory system helps you avoid inventory problems before they even happen. It helps you fulfill orders quicker which improves your relations with your customers.
And if customers get a good experience by working with your business, they are going to spread good word of mouth about your business. This attracts more buyers to your business. It increases your customers and sales which means better revenue.
You can not only generate revenue but also save money with inventory software by ordering only the required stock. As a result, your stock does not expire. This also saves your time and amount in maintaining stock in your warehouse.
With the warehouse racking system, you can scan barcodes on racks to count your stock in the racks with your systems.
Good IMS tools
If you want to effectively streamline your inventory management, you’ll need a good IMS. It’s going to help your business grow significantly. There are many IMS tools such as inFlow, Orderhive, SeeBiz Inventory Management System, and Zoho which can smoothly manage your inventory.