Inventory management refers to the process of maintaining optimum stocks at all locations of your business to ensure smooth sailing the year round. While small and medium businesses have long used MS Excel for inventory management, the tremendous advantages and simplicity of intelligent, custom-made inventory management software are drawing SMEs to explore tools that offer real-time inventory clocking along with a host of other features such as product identification, report generation, stock alerts, and sale/purchase order management.
Growing businesses keen on expanding operations to multiple locations are realizing that they cannot rely on excel inventory management after a certain point as its limitations, some of which are listed below, can severely constrain business growth.
Here are some reasons why excel will not serve your inventory management needs in the long run:
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Lack of real-time inventory tracking and reporting
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The possibility of human error in data management
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Impractical for tracking inventory across multiple locations
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An outdated user interface unsuitable for modern businesses
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Suited to slow-paced small enterprises that can do without automated, user-friendly inventory management process
Customizable to suit a business’s specific needs, inventory management systems empower business owners to have better control over their inventories across locations, thereby increasing efficiency and enabling more informed decisions.
So what are the must-haves of an effective inventory management system that’s simple to use and offers the best value for your money?
Intelligent inventory tracking
The key feature of a good inventory management tool is, of course, the ability to effectively track inventory at multiple locations. Do check if the software you’re planning to purchase has all that your company needs for robust inventory tracking. Some important features to look out for include easily editable product identification system (SKU, barcode, RFID, etc.), efficient purchase/sale order processing, multi-location management, vendor management, automatic report generation, and audit logs (detailed information about which user used which function of the inventory tool at what time), which helps enforce accountability.
Restock alerts
An inventory management tool will alert you to low stock levels so that you can restock well in time. You can set low-stock limits so that every time inventory of a particular item at a given location falls below that threshold, you’ll be prompted to replenish the item at that particular location. Not only this, an intuitive tool will predict the quantities you need to order based on your purchase/sale history, thus making stock-outs and overstocking a thing of the past. This will not only allow for better product organization, it will give you greater insight into specific product categories and subcategories in terms of order processing, sales volumes, payments, returns, and forecasts.
Purchases and vendor management
By giving vendors access to your inventory management system, you will empower them with greater insight into your processes, including reordering history and delivery and payment patterns. This will enable greater collaboration with your vendors and distributors and will lead to a more organized and seamless supply chain process as you will be able to keep real-time track of payments and receivables.
Reporting
Any inventory management tool worth its price will offer a robust in-built report generation capability. These reports are based on real-time inventory data and are therefore extremely useful in forecasting future demand and supply. Order history reports, for instance, can help you track the performance of a specific product group and take decisions accordingly. A system that can generate various types of reports suited to your business needs is what you’ll want when switching to automated inventory management.
Integration with the accounting system
An accounting system cannot replace a custom-made inventory management tool and vice versa. While inventory management is about having up-to-date information about quantities and locations of your products, accounting takes care of whether your inventory assets match the value depicted in your financial reports. Integrating the two is necessary to achieve seamlessness in business operations. Additionally, an inventory tracking software that can be easily integrated with your accounting package will enable you to have better control over your other business costs as well.
A small- or medium-sized company can eliminate much of its growing pains by investing in an effective inventory management system that can efficiently handle the demands of a growing business. The excitement that comes with expanding your business and watching the orders grow should not be overshadowed by faulty or outdated inventory management that’s incapable to adapt itself to your new business goals. Therefore, streamlining your inventory tracking processes by employing a tool built for this very purpose might be worth exploring if you’re looking to upgrade your inventory processes—inarguably the heart of your business operations.