An inventory management system is a handy tool to organize and keep track of your inventory and therefore it affects costs and profits associated with inventory. Your company can still grow without an inventory system, to a certain extent. However you may find things are not as organized as you would like and you are required to spend more and more time simply just getting a handle on what inventory you have and where it is stored.
When the future is considered and significant growth is the goal, a Software-as-a-Service inventory system is really the way to go in terms of facilitating the growth and optimizing both time and profits.
Here are some reasons as to why an inventory management system is required to solidify your decision:
A very big part of good inventory control is knowing exactly what stock and how much of it the company has, and where it is located. The pitfalls of not having this information could be having too much stock on-site or alternatively not being able to fulfill customer orders. These are both regrettable situations because money and sometimes trust and reputation are compromised. If the company owns too much stock on-site without moving it (selling it to customer), it means they have a lot of money (what the stock cost them) tied up in it. Additionally, the longer stock sits there, the more it could be exposed to something that could compromise it such as fire or theft or the closer it becomes to expiring and therefore losing its value.
If the company does not keep enough stock on-site to satisfy customer orders then they will start to lose the trust of customers which could ultimately cost them money. Data is the foundation to knowledge in inventory management. Having a good idea of how much is being sold and therefore how much needs to be ordered to replenish stock is a key to ensuring the business runs smoothly and costs associated with acquiring and storing stock are kept as low as possible.
Sometimes it is not enough to simply ensure a certain quantity of a certain product is on site to satisfy current customer demand. To facilitate real growth in the company and excel, there needs to be a component of educated decision-making about future trends. The information needed to make these decisions comes from analyzing trends of past sales and factors affecting them (seasonal, economic, social etc). An example of decisions that may need to be made regarding future trends could be an apparel label that needs to decide on the color scheme and styles for the following season’s collection. These decisions can be based on what is happening worldwide regarding fashion trends, but also they should be made on what sells, for example, which colors and style types are the most popular. Understanding past sales really does aid good decision-making to enhance company growth, and inventory management systems such as Unleashed Software are ideal for gathering and analyzing company sales data.
Excel is a fantastic tool for storing and ordering data however it falls short of providing everything inventory management software can (tried building in margin currency fluctuation across thousands of products?) Specifically, a key component of inventory management software is its automation that allows for up-to-date stock counts and locations. This may not be something a company has considered important if they are small and have one branch with a pool of loyal customers who order regularly. However, if the company was large with multiple branches and looking to grow the online store, then automation is absolutely essential. If stock is sold at any particular branch, the stock-counts can be updated accordingly at the point-of-sale. This not only aids re-ordering, but also allows the company to avoid situations where stock is promised wrongly to customers.
In terms of the online store and perfecting their website, automation is absolutely critical because a customer will order and pay for their item immediately, without physically viewing the item. This means, that to avoid the aforementioned embarrassing situation, there needs to be stock backing up the online stock-counts in the company warehouse. To ensure this happens, stock being receipted and sold at the warehouse, branches and online store respectively needs to be automatically updated so that there are real-time values of physical stock obtainable at any given point.
Finally, a benefit of inventory management software for company growth which can be indirectly acquired but is still of the utmost importance, is reputation. As previously mentioned, this can be enhanced by consistently being able to provide stock to satisfy customer orders with no glitches. However, there are other things to consider.
It is becoming increasingly popular for companies, no matter how small, to have an online presence (sometimes this is the only presence they have) so that they can appear organized, accessible and desirable to the customer. Certainly, good inventory control runs hand-in-hand with having a high functioning website. However, another trend for companies is to have a mark of approval or endorsement from an authority to be able to appear organized, trustworthy and desirable; and to achieve this status, organization and transparency of processes and systems are required. This is where inventory management software comes in as it helps to keep all company stock and processes transparent, accurate, up-to-date, within expiry and accessible at all times. The end result of achieving accreditation or endorsement from an authorizing body is that coveted stamp of approval. It can be this stamp that is understood and trusted by customers and therefore fuels company growth.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. When not writing about inventory management, you can find her eating her way through Auckland.