“The minute you’re satisfied with where you are, you aren’t there anymore.”
~ Tony Gwynn, Hall of Fame Baseball player
A business that aims to scale successfully for growth needs to be able to meet the versatile demands of handling their inventory effectively. As a business expands the level of complexity and challenges for its most critical operations increase, too. Relying on outdated and ineffective systems to manage burgeoning inventory demands will not only stunt growth but could also potentially drive the business towards failure.
For small businesses reliance on standard technologically redundant modes of inventory management such as spreadsheets can be adequate. With a small but manageable customer base to service and modest inventory flow to direct and manage, there may be no need to upgrade to an inventory software system.
That being said, growth and increased profitability is what drives any successful business, and in order to do so competently an inventory-reliant business must not only be capable of meeting its existing inventory demands, but also in forecasting, preparing and executing optimally on its future inventory demands. In order to achieve this, the full functionality of the entire inventory process – from purchasing through to sales and customer delivery – needs to be placed at the fingertips of process managers.
Data needs to not only be up to date and accurate, but also intuitive. Automated alerts to rising or falling inventory levels must be sent out, tracking and tracing of every single component in the inventory flow needs to be achievable with pinpoint accuracy, and integration between all departments within the supply chain needs to be constantly fostered through effective, data-driven communication.
Reliance on spreadsheets will not achieve this level of efficiency but a quality inventory management software system will. Inventory software brings three major advantages to growing businesses:
Enhanced forecasting capability
The holy grail of every inventory manager’s arsenal is the tool with which they can forecast future demand as accurately as possible. Of course, there will always remain a certain degree of uncertainty and unpredictability when it comes to forecasting. No system, regardless of how sophisticated and advanced, is able to predict future fluctuations in consumer demand with flawless accuracy. The fact of the matter is that when it comes to demand forecasting there are simply so many variable factors at play that it is literally impossible to foresee how all of them will play out.
But that is actually okay. Your forecasting capability need not be foolproof, but it must be as accurate as possible, and it needs to be informed by the real-time status of inventory on the ground. Apart from offering a concise accounting of all inventory – on order, on stock and en route to customers – an inventory management software system will also allow you to identify and target past trends in inventory flow, as well as alert you to dangerously low or high inventory levels.
Trends in demand can be studied, and future purchasing for peak and low seasons can be structured in such a way that optimal inventory levels can be maintained. This will ensure that customer service targets can be continuously met (and improved upon), and that losses as a result of stockouts or surpluses are skilfully avoided.
Track trace and account for goods with complete confidence
As your business grows, the number of products and parts moving through your supply chain will grow exponentially too. If a business is unprepared to effectively track, trace and account for every item quickly and accurately, mistakes will begin to pile up and losses will start to manifest.
Delays in customer delivery, miscounts as a result of incorrectly stored or lost parts, and theft due to management’s inability to keep stock of how much inventory is on hand will all begin to eat away at profitability.
Inventory management software imparts the ability for process managers to remain completely informed of the number of products there are in storage, in transit and on order – for all of its branches, in all locations, and at all times. Theft, fraud, collusion, corruption and other losses resulting from bad business practice can then be detected and resolved, far more quickly than if the business still relied on an annual paper-based inventory report.
Maintain and enhance synergy
Another crucial component of a business that’s able to scale successfully is the ability for all departments in the supply chain to communicate effectively. This means that process managers all need access to the same information, and that information needs to contain real-time data.
Cloud-based inventory management software systems are ideal for ensuring that your entire process management team is kept informed and in sync with the fluctuation status and demands of your inventory. Smoother, better informed communication leads to more streamlined inventory control. This means surplus inventory levels will be avoided, safety stock will be kept within sufficient levels, and any unexpected fluctuations in consumer demand can be met with complete confidence and competency.
In short, when a business has the capability to track trace and account for its inventory in real-time with pinpoint accuracy, forecasting is dramatically improved and communication between departments is integrated. When this is achieved growth is not only manageable but significantly enhanced.
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.