In the success of any business, there is a great role of its inventory management system’s contribution. Because without an effective system, no business could fly in the way of profits. It is your inventory system that helps you to organize your thoughts and act wisely according to the conditions of your business and the demands of the customers of course!
But one would wonder who uses this system? Are you kidding? Every business! YES! The inventory management system is essential and is being used by almost every business. However unless your business includes only a single product and not many inventory issues, you are free not to use it. But utilizing an inventory system would only bring out the best in you and your business!
What is an Inventory Management System?
The activities of managing the stock of the company i.e; examining the stock ins and stock out level, knowing when to reorder the items, tracking the shipping of the products carefully, understanding the customer’s preferences in terms of the items, etc. all such factors comprise an inventory management system.
In addition to this, you should always be careful and wise enough when choosing an inventory system for your business, because it is a known fact that inventory is the backbone of any company. It can make or break your business in a few seconds. No carelessness should be taken on your part of managing the inventory of your firm. Moreover, if your stock is updated from time to time and managed effectively, it will earn you a never-ending profit throughout the life of your business. Therefore, large as well as small companies prefer to employ inventory management systems so that all the operations related to their stock are managed efficiently.
Types of Inventory Management System:
When we talk about the types of inventory system, there are the two most common and widely used inventory management systems;
- Perpetual Inventory management system
- Periodic inventory management system.
Perpetual Inventory Management System:
In a perpetual or JIT (JUST IN TIME) inventory management system, you are able to take some real-time decisions regarding the stock of your company. It could be further understood as, all the items of your firm, when sold or even purchased in the stock are recorded simultaneously in the books of your inventory system. This helps to be informed about every single and current situation of the inventory of your company.
On the other hand, if you are not being updated regarding the stock in and out levels, it would be a lot difficult to manage the future threats that could occur in such a situation. Some of the key features of a Perpetual inventory management system are;
- Keep a real-time track of your inventory.
- Helps to decide the prices of the main products.
- Enables you to understand the demands of the customers prevailing in the market.
- Being alert in case of any over or understocking threat.
- Makes you able to stand well in front of the competitors.
Periodic Inventory Management System:
Another type of inventory management system that is used by most large organizations is the Periodic Inventory System. This helps you to just record the purchases at the time when they occur, and all other things either profits, income, and loss are updated at the end of the month or a year. Most huge and multinational firms use this type of inventory system to manage their stock because it helps to avoid creating alerts and problems during hectic work schedules.
Moreover, the main benefit of this Inventory system is that it enables the owners as well as the employees to focus on other important tasks and be undisturbed by the involvement of real-time checking and upgrading, which surely saves their time a lot.
Why is the Inventory Management System used?
When a firm employs an inventory management system to monitor and handle the operations of its inventory effectively, it could notice a prominent improvement in the outcomes.
It could be said without a doubt that using an inventory management system to manage the inventory-related operations could lead your firm to a higher position among the others standing in the competition.
Some of the major benefits that one could attain by using an inventory management system includes;
- Returns and refunds are managed easily.
The main advantage that you get by using a perfect inventory management system for your business is that you are then able to manage the returns and refunds more easily than ever. According to a survey conducted for observing the customer’s buying behavior, it was concluded that almost 17% of the customers return the goods that are bought through an online platform. Therefore it is compulsory to manage the returns and refunds in order to retain your customers.
- Future predictions could be made about inventory.
When an effective and suitable inventory management system is employed in an organization, it automatically generates messages and alerts about future predictions. All the businesses thrive upon future needs and work accordingly. Therefore, using an inventory management system helps you to make some important as well as accurate predictions about the future.
- Risks and threats are overseen.
No one would ever want their business to be affected by the threats and risks that were not overseen. An inventory management system when used helps a lot to recognize the negative forces attacking the organization. As a result, all the necessary measures are being taken to prevent any uncertainty in the future.
- Helps to maintain the costs of storage.
It is no secret that a poorly managed inventory system could lead to excess stock or overstocking conditions which will, in turn, increase the holding costs of the products. All these costs when rising up to a great level would minimize the level of your business’s profit ratio.
- Reduction in Overstocking.
Another main problem in the working of any business is the overstocking issue. When the stock has crossed the maximum line, it creates situations of chaos in the business and prevents the new products from entering the storage houses. Therefore, when using a suitable inventory management system, you are facilitated in a great way to manage your inventory and prevent the overstocking situation.
- Increases Production which increases profit margin.
An effective inventory management system when used will guide you on how to automate your production-related process which will fasten your process and save your time as well. As a result, when your production increases, it has a positive impact on your inventory, and all your customers are served well and on time. It in turn lets you earn a handsome amount of income.
Using Softwares for managing Inventory:
As we all have seen that technology has been improved to a great extent, people are not left alone now in terms of any operation related to the management of their businesses. Automation in managing the inventory has been obtained by many of the firms, to fasten their production processes and increase the level of their profits. It is no secret that humans take a lot more time than machines, a common and simple example of a calculator is in front of us. Therefore, there is no shame in using the digitalized software and machines in improving the work activities of your business.
Furthermore, an inventory management software when used will help you to examine and update your inventory simultaneously by recording the ups and downs in the level of your company’s stock. There are numerous choices when you have to select an inventory management software for your business. But in order to select the right one for your firm, you should always research the most demanded and proven software. It will create an atmosphere of safety while working with it to manage your business’s inventory.
Following are the topmost software that will guide you in terms of managing your business’s inventory effectively;
- Vend POS software.
- Profit books inventory management software.
- Cin7 Inventory management software.
- Fishbowl inventory management software.
- Bright pearl.
- inFlow software. (best for B2B companies)
- Lightspeed retail.
Inventory management includes all the tasks that are relevant to manage the stock of your business. These could be about optimizing the stock levels, generating alerts of risk or threat, estimations according to the reorder points of the inventory, and also examining the supplier’s relationship with your business. All these factors if managed efficiently would create an environment of peace in your business that will ultimately result in the production of items effectively and increasing the levels of the profit to a great extent.
You need to be careful and wise enough while choosing an inventory management system for your business, as it will be with you throughout the entire life of the business and guide you to manage your stock much more efficiently.