The benefits of a strong inventory management system

Written by
Get your free ebook. Pick an Inventory Management System that will work for you. Here's all you need to know. Click here to download the ebook now..
Written by
3 Minute Read
Share Blog:

You may have heard others stress the importance of inventory management, and how it is fundamental to running a successful business. This is good advice, but it may leave you thinking “so what?”. There are many aspects to running a business: sales, financing, and marketing for example, and all will have an adverse impact on your business if not done well.

Inventory management can be overlooked because it is a continuous process that operates “in the background” as inventory moves throughout the business. This may not be glamorous, but the everyday nature of inventory management is exactly why it’s important. Because inventory management is relevant to many aspects of a business, it can contribute greatly to success when done well. This has become especially apparent in recent years with inventory management software becoming increasingly affordable. Some examples of how an inventory management system can improve business performance are set out below.

Closing sales

 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.

Another way to keep customers is to be attuned to what they want, and react accordingly. If you are able to properly analyze your sales data, you will be able to find patterns in demand that can help to drive successful sales and marketing strategies. Inventory management software can provide this data, and the tools to analyze it.

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. In addition, having confidence in your forecasts will mean you don’t have to hold as much safety stock (since this is essentially stock that you hold in case you under-forecast demand). Once again, this will mean less inventory held and less holding costs to pay.


Finally, 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 business world is unpredictable, and inventory management is no exception. There is a large scope for problems such as incorrect shipments, warehouse accidents, manufacturing issues and theft. Such problems are often unavoidable, but when they happen, the best thing for a manager is to be aware of the problem as soon as possible so that a solution can be found. Hence, a good inventory management system will give strong visibility over your inventory in order to do this. 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.

More about the author:

Share Blog:
Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

More posts like this

Subscribe to receive the latest blog updates