Inventory management is essentially a variety of techniques, tools and technologies that a business uses to manage and control their inventory. The way that it’s utilized and implemented ranges from simple right through to complex. It depends on the needs and scope of the business and the capabilities and functionality of the management software used.
For all inventory-centric businesses, inventory management software is an essential and valuable tool. It is what controls the flow of stock in and out, it maintains the correct inventory levels for all items and stock, it allows access to sales data and analytics, and is how businesses set individual safety-stock requirements.
In a nutshell, everything that is related to inventory falls under the umbrella of inventory management, and thus, inventory management software. This includes a business’ manufacturing processes, ordering and invoicing, logistics, customer sales, and even warehouse management, to name a few.
In a sense, inventory and its management forms the lifeblood of a business – it is what drives sales, which in turn drives profitability. Unsurprisingly, many businesses invest a lot of capital in getting the best inventory management software and staff.
In a very real way, how well a business manages its inventory can have a significant impact upon its overall success. The benefits of a highly optimized and efficient inventory management system can be huge. Equally, the opposite is also true – many businesses have failed largely due to the continuing mismanagement of their inventory.
By way of an introduction to the foundations, let’s take a closer look at the basics of inventory management software.
Control and command
A large part of inventory management has always been about controlling inventory. This includes tracking inventory from its initial delivery to once it’s sold and sent to the customer. Inventory management software is the way in which a business can accurately keep track of each item of their stock.
The next logical step for businesses was to develop the ability to, via inventory management software or systems, manually command that stock did certain things. This is most commonly seen when a business wants to send an item to another branch or warehouse, perhaps to fill an order that that location can’t fill due to a stock-out.
Visibility and access
Another important feature that inventory management provides to businesses, is to make every item of inventory visible within the supply chain. This is supremely important for businesses with a complex and varied amount of inventory. If an individual item, or group of items, needs to be found – let’s say to enact a product recall – then visibility is key.
Inventory management solutions provide ways for a business to search for an individual item and find exactly where it is, right down to where it’s stored in the warehouse and what its barcode or serial number is.
Data and analytics
Important for sales forecasting, but also for a variety of other reporting functions, inventory management provides businesses with a wide range of real-time data and analytics. Depending on the platform used – some provide more detail than others – businesses can request reports on almost anything to do with their supply chain. The number of items sold within a certain time frame, the amount of a specified product currently on hand at all locations, or the length of time that certain products were stocked before selling. Within reason, there are no limits to what data can be accessed with inventory management software platforms.
Technology and innovation
One of the most exciting things about inventory management software, especially now, is how flexible it is regarding new technologies and innovation. Barcode and mobile technologies are now a standard part of many business’ operations, something which is made possible via the use of good software.
It isn’t uncommon now, especially with the rise of cloud computing, to see warehouse managers, sales and even logistics staff using mobile devices to enter and access inventory information in real-time, and from any location. Where once a staff member would need to sit at one of the onsite, linked PCs in order to access the management systems, many inventory management platforms are now completely mobile and portable.
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.