In an inventory-heavy business, effective inventory control is important, and perhaps even critical, to ongoing success. Whether you’re a FMCG wholesaler, a fashion retailer or a manufacturer, having enough stock on hand is critical to keep the cogs turning.
Implementing, or improving inventory management controls represent a major growth opportunity for most businesses – bringing in new efficiencies and control.
Yet in spite of this potential, many firms shy away from investing in improving their inventory management capability.
Because inventory management is (often understandably) perceived as a difficult endeavor — and in particular, unappealing for already stretched small business owners.
Let’s look at some of the reasons that inventory management can be considered difficult business, and some of the ways that inventory management software can simplify things.
Inventory is unpredictable
Stock levels fluctuate, and customer demand is highly dynamic.
For businesses with fairly fluid order patterns, knowing how much stock to have on hand can be difficult. This stress is understandable – managers face competing pressures to have enough stock on hand for every eventuality while at the same time avoiding costly, inefficient overstocking.
If a food manufacturer has too much raw material on hand, they will incur ‘inventory carrying costs’ as well as the risk of being saddled with expired or unusable ingredients. However, if they do not order enough of a key ingredient, production may have to cease for a time, costing the manufacturer factory downtime and potentially damaging relationships with wholesalers and distributors.
Inventory management software has two main advantages in this regard; that inventory data is updated in real time and that trends can be derived out of that data. Both advantages mean that businesses can more easily plan their inventory needs ahead of time, thus reducing the scope for problems to arise.
It can be hard to keep track of every moving part
A common metaphor for a stock system is a machine with numerous moving parts. In reality, the moving parts are not actually a metaphor; businesses often operate multiple factories, warehouses and stores and constantly ship items between locations.
A common inventory challenge is simply keeping track. When the pressure’s on, it can be incredibly frustrating to be unable to locate a key part required for a product build. Salespeople find it very disappointing if they are unable to close a sale because an item can’t easily be located.
Stock management software typically includes tools that make it easy to keep track of every unit – for example, by using barcodes and serial numbers to track and log item movements.
It is often time consuming
Manually tracking hundreds or even thousands of items, orders or SKUs can take up a significant amount of time that could be better used elsewhere in the business.
That wasted time also has a financial cost, especially if an extra staff member is required. Manual stock control, such as in a spreadsheet, can also be mundane work. The susceptibility of spreadsheets to data entry or formula errors is another source of difficulty for staff.
A best in class stock management software package will be intuitive to use, and significantly faster than using Excel.
Simplify inventory management with specialized software
Implementing a stock management software package is a good step towards mitigating some of the difficult aspects of stock management.
Although getting in control of your stock will still take some work, the intuitive tools in a good software package will make the process much easier.
There are a a range of stock management features – while your business might not need every feature now, having them available simplifies the process of managing new aspects of inventory as your business scales up such as holding stock on consignment or working with multiple currencies.