What is Inventory Management System?

July, 2020

What is an Inventory Management System?

So what is an an inventory management system?

Have you ever found yourself rummaging through your closet wasting time finding a specific shirt? When this could have been prevented if you organized and systematized your closet?

This kind of system and organization can also be applied in business. The way it saves you a lot of time finding that shirt to prevent you from being late to your appointment is the same convenience and efficiency you will get in your business with a proper Inventory Management System.

Managing your business manually consumes a lot of time and involves a lot of manpower to deliver the result you are expecting for the business to run smoothly.

Why do it manually when you can have one system that will do all the inventory tasks for you?

To simply define it, Inventory Management System (IMS) aims to make sure that you have the right products, at the right quantity for sale, at the right time. That perfect shirt, with the perfect color at the perfect time.

That Inventory Management system will include your sales forecast, supply chain management, warehouse management, and customer fulfilment solutions.

Inventory Management System when done correctly will reduce the costs of carrying excess inventory, missed/incorrect orders, preventing products from being out of stock, making sure products are sold in time to prevent spoilage, or carry obsolete products and thereby maximizing the sales and efficiency.

Why do you Need IMS for your Business?

Maximizes Earning Capacity with Proper Demand Planning and Forecasting.

Maximizes Earning Capacity with Proper Demand Planning and Forecasting.

Having products that just sit in your inventory are considered a loss to your business since you’ve already invested to make or acquire the items, but you can no longer get the capital because the products are not moving. It is like having a doughnut shop wherein the popular flavours get sold-out fast, leaving you to throw the flavours that don’t sell which now becomes a loss for your business.

An inventory management system will help minimize this risk by having the proper demand planning and forecasting of your products. If you monitor your products regularly, such as tracking the number of products that you have sold in a certain period, it can give you an estimate on the number of units you need to produce.

Updating the number of products you have in stock in real-time by integrating your point-of-sale (POS) with an Inventory Management software can lessen the risk of investing in slow-moving products and will help give an accurate projection. The software can also prevent you from overspending on warehouse storage by calculating the exact number of units you need and when you will need to order, this also allows you to have enough stocks to meet customer demands without experiencing any delays.

However, forecasting is not 100% accurate even if you are using an automated or computerized tool. But by using an Inventory management software, it lessens the possible issues brought about by human error.

However, forecasting is not 100% accurate even if you are using an automated or computerized tool. But by using an Inventory management software, it lessens the possible issues brought about by human error.

Improve Customer Satisfaction

Improve Customer Satisfaction

As a business owner, you want to avoid your clients experiencing buying your product only to find out that it is out of stock, or making them wait for weeks for products to arrive, or worse, receiving a product that is damaged or altogether wrong. Noone wants to stand in line to buy something and when it’s their moment to be served, they will find out that the product is no longer available, just because you were not aware that it was already out-of-stock. These kinds of customer experiences will put your business in a bad position and harm customer loyalty and word-of-mouth referrals.

Inventory Management software prevents your product from being out-of-stock and organizes your supply ensuring that customers get the right product at the right time. This also ensures that the customers will find the exact product they need and prefer.

Optimizing Efficiency and Productivity

Optimizing Efficiency and Productivity

Efficiency in managing your inventory is important for a business to run smoothly and deliver the expected results. Although it does not come easy since there are a lot of factors to be considered such as the processes, managing stock, follow through on the orders, and so much more that you can think about. An inventory management system helps to resolve these problems by streamlining the processes and giving accurate data of your inventory whenever the need arises.

Not all inventory management systems can simplify the processes in managing your inventory and utilizing your storage. Some inventory management system can do certain tasks for you such as mapping your warehouse, taking into consideration the sizes of your product, and maximizing the storage space cost per square foot to help you identify what is more efficient and cost-effective for your business.

These tools can also be integrated with barcodes and scanning systems to get real-time movement in your inventory. These features might come in handy, especially, if your business takes into consideration the inventory of your business in numerous locations. This does not have to cause you any issues since there is an inventory management system that can monitor your storage and stocks from different warehouses.

There is an Inventory management system that allows you to integrate a supply chain management feature which ensures that you never run out of the product by making the right  ransfers between locations and based on your needs. It also allows you to keep track of the status of all your products so that you minimise stock shortages.

All these functionality aims to give you a more accurate scenario of what is happening to your inventory. It aims to enhance the productivity of the business and adjust depending on the needs of your business without any delays, which is why it is important to identify the inventory management system suitable for your business.

Managing Profit and Loss

Managing Profit and Loss

Effectively managing your inventory is crucial in any business to control costs and potential losses that may come about. Imagine having a business wherein you have several types of available products in your portfolio that includes something that can spoil. Put yourself in a supermarket, specifically in the fruits and vegetable aisle, if the person who manages your
inventory put out those which arrived just recently leaving the product which arrived first to spoil. If you apply the correct inventory management method, this could have been prevented. An Inventory management system can help you do that. It can assist you in implementing methods that can help benefit your business.

In the scenario given above, First-in, First-out is a method that could have helped you to manage the loss, prevent spoilage of your product, and ensure that the costs of the goods sold are low. Having the right data at the right time, which is of course anytime you need it, can be rewarding to your business. Being prompted by such information can give you a sense of
urgency to move product, maintain your inventory at workable levels, and prioritize tasks with high importance to help give your negative impacts on your business.

Selecting the right method for your business has the same principle also of selecting the right inventory management system, you always need to keep in mind what will work for you and is value-adding for your business.

In Summary

Inventory management may seem like an easy task but many factors go into managing your inventory. The decision you will make in addressing all the variables that may affect your business will have a long-term impact on your business.

When you use the right inventory management system you mitigate all the possible errors in your inventory management, which in return makes your business more efficient thus becoming more productive and profitable through better service rendered to your customers.

If you want to know more, contact our staff for a free scope

Are you ready to bring that perfect system in your head to life?


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