5 Tools for Better Inventory Management

5 Tools for Better Inventory Management | Defined Ventures, Inc.

Inventory control is one of the most critical parts of a successful retail or manufacturing business. You need to have the right items in store, in the right quantities, when they’re needed and where they’re needed. And it isn’t only about having the right items in the right place; how you manage your inventory needs to be efficient, too.

Modern businesses can’t afford to have forgotten boxes sitting on shelves in a dusty warehouse, It also isn’t reasonable to simply hope that the storeman is keeping a record of what’s in stock and what’s running low. Keeping excess inventory is wasteful, but running low can lead to dissatisfied customers or cause an expensive standstill on the production line.

It’s vital to have a modern, effective way to manage your company. With the obsolescence of paper-based records systems, more businesses than ever are turning to specialized software. These software tools have been developed to handle different aspects of inventory management flawlessly while integrating with other systems. They can be standalone or part of an integrated management system; either way, they carry immense benefit.

Inventory Forecasting & Suggested Purchasing

Building and maintaining inventory takes up a significant percentage of a business’s budget. It’s vital that the money is spent as effectively as possible. Poor decisions mean either spending money on surplus stock that isn’t needed – which has to be either stored or returned – or expensive short-notice purchases to make up for a shortage.

Inventory forecasting applications analyze historical sales data and use it to predict future performance. Based on these estimates, it’s possible to assess the most efficient inventory levels that will minimize or eliminate both over-purchasing and shortages.

Suggested purchasing systems are an expansion of inventory forecasting. They take the forecast then create purchasing recommendations based on both the projected inventory requirements and a variety of other factors. These can include optimizing order quantities to:

Good purchasing software will balance these factors to reach maximum efficiency and optimum inventory levels.

Warehouse Management

Warehousing is traditionally the core of maintaining an inventory, but it’s also a source of a lot of inefficiency. Unless the inventory is well managed it’s easy for goods to get misplaced or overlooked.

If items are in inventory but can’t be found, they’ll have to be re-ordered. That adds costs, and the misplaced items also take up warehouse space that could be used more productively.

Warehouse management software allows items to be scanned in and out of the warehouse, automatically tracking the remaining level of each item. By scanning the product code and a location code on the shelving or bin, the location of each item can also be easily tracked.

Another common warehouse problem is dispatching the wrong item, leading to delays and increased costs. This often happens when similar items are stored close together; the result is that the incorrect product’s return has to be paid and a new item shipped out. The solution is to scan products before they’re packed; the bar code can then be checked against the item code on the invoice to verify that the right product is being packed.

Workflow Tracking & Alerts

The effects of inventory problems can quickly spread knock-on effects up and down the whole supply chain, affecting everyone from suppliers, through distributors and manufacturers to end customers. In a traditional inventory system, issues such as delayed orders or short stock usually only surfaced when paper reports had been completed and distributed – and that could take days.

Workflow tracking software allows all tasks to be accessed and checked by everyone who’s involved in completing them. This allows for very fast notification if there’s an issue, which lets people start working on the problem as soon as it’s reported. The software can also be configured to give automatic alerts, speeding up the process even more.

Cargo & Import Tracking

Inventory tracking picks up whole new layers of complexity when items are being shipped across borders. Multiple extra factors have to be considered, from issues as simple as time zones up to processing customs paperwork. It can be difficult to keep track of exactly where shipments are, what payments or inspections are due, and estimated times of arrival.

Cargo tracking software creates a single, central database of all imports, allowing each one to be tracked through each stage of the process.

Landed costs tools are yet another related software tool that tracks the costs of a shipment. There are many charges that can apply, including import duty, inspection and insurance costs as well as the freight charge itself. The software adds all these costs to the price of the goods, allowing gross profit to be calculated accurately.

Inventory Management Analytics

No business can compete in the modern economy unless it’s constantly analyzing and refining its operations to maximize efficiency – and that applies to inventory management as well. This category contains a large and very flexible set of tools that can help with every aspect of an organization’s inventory management and general logistics.

A common application for analytical tools is an app that generates fill rate reports, showing how quickly customer orders are fulfilled and how quickly orders culminate in reaching the end user. The same process can be reversed and used to track how effectively vendors are fulfilling your orders to them.

For retailers, it’s vital to know how effective their investment in stock is at generating a profit. Many stores focus on items with a high profit margin, but these might not be the ones that generate the most profit. If an item with a lower margin is selling faster, it can be a more effective revenue generator.

Some analytics tools address this need through gross margin return on inventory investment (GMROII) reporting. Many of these tools highlight the items in inventory that are performing best through visualized “big data.”

Finally, an analytics dashboard will show current stock compared to the predicted optimum inventory. This will give insights into how accurate the predictions were and how effectively the inventory is supporting the organization’s core activities.

Inventory management is critically important and needs attention to detail, but with modern software tools, it doesn’t have to take a lot of time. With the right software it’s now faster and easier than it’s ever been (not to mention far more accurate). Well-designed inventory management software is a huge asset to any business, almost to the point where owning such software is no longer just a good option, but an absolute must instead.

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