Effectively managing inventory is key to the success of companies in the business of selling goods. Without accurate and efficient inventory management, a business can experience delays in order processing, overstocking or understocking and more. These things end in customer dissatisfaction, and ultimately the demise of the business.
Traditional inventory management methods carry out inventory management with manual, time-and-labour-intensive processes. Traditional brick-and-mortar businesses may rely on a simple pen and paper record management system, for example. While this form of inventory management has been used for centuries, there are fortunately more effective ways of doing the same job.
In this article, we outline some of the drawbacks of traditional inventory management and demonstrate why cloud-based inventory management software can be more effective.
What does traditional inventory management look like?
Traditional inventory management relies on business personnel recording, tracking and forecasting inventory trends and needs with hands-on processes. For example, a business model where traditional methods are used may rely on multiple staff to keep accurate stocktakes – that is, staff will manually count each item in stock and record them with a pen-and-paper or something similar.
While this type of inventory management may be sustainable for very small start-ups, for businesses expecting any form of growth, it is simply ineffective.
What are the drawbacks of traditional inventory management?
Using traditional inventory management processes can be time-consuming and error-prone. Take for example the task of counting stock – this is a mammoth task to do manually, and many companies don’t have a single dedicated ‘stocktake’ employee. Rather, any employee could, at any time, do a stocktake.
This situation can easily lead to inaccurate record keeping. Aside from the fact that one staff member may have a different stock counting style than another, the process is already easy to get wrong as it is. Poor stocktakes can lead to inaccuracies in sales patterns, low or excess stock, and unfulfilled or delayed orders. Moreover, these things can accumulate and lead to dissatisfied customers.
What is the alternative?Rather than relying on traditional inventory management processes, we suggest using cloud-based inventory management software. This software will allow you to manage inventory more efficiently and accurately, without the same risk of error.
Cloud-based inventory management software can allow you to keep all data about inventory in the cloud, which is accessible from any location and device with an internet connection. That way, inventory managers can access relevant data at the touch of a button from multiple warehouses or stores. This helps not only speed up the process of managing inventory, but it also means that each store or warehouse will have access to the exact same data, reducing the likelihood of mistakes.
Cloud-based inventory software also helps with predicting sales trends for future orders. Whereas traditional inventory management may be a barrier to accurately predicting future sales trends, cloud software can enable inventory managers to make accurate predictions. In turn, managers can then order inventory appropriately, and negate the possibility of low, excess or obsolete stock.
Take a look at how West Winds Gin transformed their inventory management system by switching from spreadsheets to 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.