Inventory management software controls the flow of stock in and out of the company, maintains the correct inventory levels for all items and stock, and provides access to sales data and analytics. The benefits of inventory management software also include financial gains, such as improved cash flow and reduced inventory holding costs.
This article breaks down the biggest benefits of inventory management software for businesses that produce or sell physical goods. Let’s get started.
17 benefits of inventory management software:
Benefits of inventory management software
Good inventory management is the lifeblood of a business – it enables healthy sales, which in turn drives profitability. Unsurprisingly, many businesses invest a lot of capital in getting the best inventory management software and staff. Let’s break down the main benefits inventory management software offers its users.
Access for all users wherever you are
The first, and most obvious benefit for any cloud-based solution is the ability to access your inventory management software wherever you need it. Some scenarios in which cloud-based software comes in handy include the following.
- If you have multiple locations, this will allow employees at your warehouse in Texas to enter valuable data for your salespeople in California.
- If you have one location, this will allow employees traveling to a trade show in North Carolina to access data from your office in Oklahoma.
- If you’re on vacation, this will allow you to easily check in on your business or run a quick report for your board from the beach on your laptop (although we do hope you’ll be relaxing not working).
As you can see, cloud-based isn’t just for businesses with locations worldwide. Even a single-office business can benefit.
Access for all users whenever you need it
Have you ever thought of something you forgot to do before you left the office, but had to wait until the next day (or possibly over the entire weekend) to complete it? Or worse, maybe you forgot before you got back to the office?
With cloud-based inventory management software, you don’t have to wait until you’re back at your desk. You can sign into your account from home, check to see if you entered the last shipment’s manifest, and spend the rest of your evening or weekend relaxed that you took care of things.
No more backups
You may not feel like cloud-based is something you need at this stage of your business.
But what happens if your laptop crashes? If you’re not keeping a backup of your inventory database, then you’ll lose all of your data.
If your inventory management software is on the cloud, you won’t have to worry about losing your data. If your computer dies, you simply buy a new one, download the Internet browser of your choice, log in to your account, and all of your data will be right where you left it.
Scale quickly when more resources are needed
When your business is growing it is important to ensure your staff has access to the software they need to fulfil and ship customer orders. For businesses using software that needs to be installed on each user’s computer, this can be a costly and time-consuming exercise.
With cloud-based inventory management software, you only pay a monthly subscription fee, software is frequently upgraded at no additional cost to the user, and because the software is online, new users can be up and running on their software within the same day.
Streamline with other cloud-based solutions
Let’s say you already use Google Chrome to manage your store through Magento and then send invoices through Xero.
If your inventory management software is cloud-based, then you can just open another tab to manage your stock as opposed to having to flip between two different programs.
A good inventory management system will allow up-to-date stock levels to be available to staff, preferably in real-time.
When your staff know exactly how much of an item is in stock, where it is, and consequently how fast it can get to the customer, they will be in a much stronger position to make a sale.
This will lead to better customer retention, which is critical in the modern marketplace where consumers have more and more options.
Customer retention benefits
While knowledge of stock levels is helpful, the best method of selling items to a customer is to have it in store in the first place.
Again, inventory management can assist here. Modern systems can help you to analyze historical data to make accurate forecasts for future stock levels, and prevent costly stock-outs that can cause customers to go elsewhere.
Reduction of holding costs
Another benefit of having a superior inventory management system is saving on inventory holding costs.
These costs can be extensive, and can severely undermine your bottom line when not kept under control. They include financing costs, warehouse rent, warehouse staff wages, lighting, heating and security.
The key to minimizing these costs is to only have as much inventory as is needed. With an inventory management program that assists you to make good forecasts, you can avoid over-stocking, and thus overpaying on holding costs.
A key advantage that a good inventory management system will provide is the ability to be flexible and adapt to situations as they arise.
The best tool to have here, which can be provided by modern inventory management software, is to view inventory data in real-time, as this allows you to analyze and solve a problem as soon as it occurs.
Although often easier said than done, a common problem encountered using multiple channels lies in managing sales, orders, and inventory stock.
It is prudent to have a reliable, centralised way of managing all your stock so your businesses does not end up placing duplicated orders or allowing customers to place orders for products that are out of stock.
An inventory management system that integrates with popular eCommerce platforms like Amazon or Shopify is a must to manage this. It can simplify all the administrative processes by syncing data between all these platforms into one central place.
In addition to taking care of your eCommerce online channels through smart inventory management integration, your solution should also link with your physical stores so that the system may also integrate with your POS system and other sales data mediums.
Automatic supplier orders
If a business lets inventory stocks reach zero, this creates lost sales and decreases customer satisfaction until a new shipment arrives. The ability to automatically refill stocks by modernising your inventory management system can radically minimise this type of stock out situation occurring. For example, as soon as inventory stock for a given product reaches a minimum threshold, it can automatically generate a new order.
Scanner and sensory data integration
Although barcodes have been around for a while now, modernising inventory management means your business should be actually using a system such as barcodes, optical scanners, RFID technology or sensors with GPS tracking.
For example, these can all be used to help warehouse staff accurately find, pull and pick products from shelves, allowing your business to track product movements in the warehouse more easily.
This also can reduce the risk of theft, as well as human errors that lead to inconsistent data when an audit or stocktake is performed.
Accounting systems integration
This integration can take away manual arduous tasks such as adding an accounting entry every time you make a sale. A modern system can add an accounting entry automatically whenever a transaction occurs.
Smart inventory management systems can be a strategic part of a business’ cash flow strategy that can speed up processes, streamline activities and improve customer satisfaction. The ability to modernise inventory management systems and the benefits this can create should no longer be overlooked and underestimated.
Cut down labour and hardware costs
For many retailers, the biggest cost of doing business is often labor. Thanks to technological advancements, many tasks that were previously done by humans can now be automated by cloud inventory management software.
This includes ordering and most number crunching activities. Cloud solutions do not require any additional hardware and are usually inexpensive. An Internet browser capable device is all that’s usually required to access the software.
If you want your employees to be more productive, you need to provide them with the right tools to do the job. By taking your business to the cloud, you will equip your employees with the most up-to-date tools that simplify and speed up their work.
With cloud computing being such an integral part of everyday life in terms of communication and collaboration, retailers will only lag behind their competitors if they refuse to embrace the cloud.
Accurate quotes and forecasts
Since the data is compiled in real-time, the cloud can collate information from your online inventory management tool to show you where your inventory sits at that very moment.
This means decisions about forecasts can be made with the most up-to-date, accurate information available. This leads to a healthier decision-making process because cloud-based data is readily available and can help managers make decisions quickly.
Increased employee satisfaction
Being able to work from home decreases office disruptions and distractions for employees. This means they are able to be more productive when they aren’t always getting distracted in the workplace; both employees and employers appreciate this.
Moreover, employees might experience increased satisfaction levels because they don’t have to commute. Sometimes commuting can take a substantial amount of time and mental toll on employees. If you can decrease or eliminate this time, it can tangibly increase productivity for those employees.