In current times, several sectors are being bombarded with extreme demands, and to fulfill those demands, they continuously struggle to find a balance between stock and demand. After the start of the pandemic, there has been an immense increase in the demand for FMCG products and other daily essential items. Apart from the essential items, there has also been an increase in the IT products such as software, applications, and much more as the work from home culture has strengthened its roots. All these factors contribute to a valid need for an inventory management system.
Integrated inventory management solutions are the need of the hour to balance any business. Small businesses are constantly on the verge of making it big as they are committed to their business a success, and to meet a sudden demand or manage any unused stock, they need a robust inventory management solution. It’s not about businesses without any such system, but even those who have a working system, but an ever-changing market situation compels them to implement some changes to yield results. In this blog, we will talk about the ways to streamline a business with a flawless inventory management system (IMS), along with the benefits, how to develop one.
Let’s start with a brief introduction to the subject and the process behind a necessary system.
What Is an Inventory Management System?
Inventory management systems can be described as the tool that manages all your stock from monitoring to maintenance. It allows businesses to manage their products whether it is in unprocessed form or the products are ready to deliver. It allows you to keep accurate track of your products and easily manage the supply chain. You can think of it as a complete process map that monitors every step taken from the order placed by the customer to delivery. It delivers much-needed transparency in the system that allows businesses to notice any flaw in their supply chain management and fix them. These systems are designed to increase the efficiency of the overall business process, minimize waste, notice any trend, reduce cost, and much more.
Whether you have a physical business or any e-commerce store, or any business, everything involves keeping tabs of the products or services sold or produced. An integrated inventory management system helps in keeping the right item in the right place so that at any time, you know the exact location and status of any product or service. There are mainly two types of inventory management systems; Periodic IMS and Perpetual IMS.
What Are the Different Types of Inventory Management Systems?
Periodic IMS: It is a kind of inventory management system that involves keeping tabs on the status of the inventory periodically. The duration of keeping checks on the inventory depends on the businesses; it can either be three months or six months or more. The problem with this type is that at any given time period, the data updated in the spreadsheet is always old. It’s only suitable for small retailers and stores that don’t have a great rate of sale. In case you are a big business, this kind of system will not be able to meet your requirements.
Perpetual IMS: It is the most efficient IMS used by the majority of businesses. This IMS tracks the inventory in real-time and let you know the exact status of any product or service in seconds. It is suitable for every business type and helps in increasing the revenue chart. With a real picture of your inventory, you can plan your next step more efficiently. There is a various example of this kind of IMS such as IMS software, retail integrated solutions and more.
Why Do Businesses Need an Inventory Management System?
Every business is unique in its own way and has different needs when it comes to a smart inventory management system. Every retailer business needs an IMS that serves the purpose of keeping tabs on things in real-time to drive up sales figures. Your business may have different needs and may need some custom software solution to manage your inventory efficiently. The current market of IMS development and the current trends dictates that the market is growing exponentially. It has numerous opportunities. In terms of revenue valuation, the market of IMS is projected to cross the value of 3.82 billion US dollars, and it is expected to grow at a rate of 6.12 percent CAGR during the period 2021-2028.
The market scenario of IMS genre seems quite promising; if you are a business and wants to develop a smart inventory management system, then this may be the right time as more and more business is finding it useful. The reason is quite clear; it saves the business from unwanted loss of products and money. There are various factors that need to be kept in control in order to gain profit from the current business process, and an integrated inventory management system helps you with the same. These factors include:
Understocking:
When your business has continuous orders from the customers and is able to deliver the products at the agreed time frame, it hampers the trust of the customer with the brand. Another scenario that can arise from the undertaking is losing market credibility. An IMS helps you in managing the stocks as per the current orders and prevents your business from facing any kind of understocking.
Overstocking:
Every business faces a time when they misjudge the current market trends and increase their production rate. When the trend changes, these businesses face the problem of overstocking. With inventory management software, your business will keep an eye on the production rate and inform you about any product, which will not only save you money and time involved in the production.
Most Popular Inventory Management Systems
The IT industry works on innovation and comes with a various integrated solution that suits various parts of any business. In terms of inventory management solutions, the market has various top applications that are most preferred by users. Here are some of the best inventory management solutions.
1. Orderhive
Orderhive is web-based software for managing inventory efficiently. It delivers feasibility to meet the needs of businesses and supports the functions of every enterprise regardless of their size. Its main feature includes a number of stock-keeping units and integrations that are feature-rich. Since it is a web-based tool and works on all major browsers, like any other company, it also recommended its users to use Firefox and Chrome for a unique experience.
Benefits:
- Free for Shopify users
- 15-day free trial, no credit card required
- Real-time multi-channel inventory updates
2. inFlow
inFlow delivers a central inventory database and B2B showrooms which allow clients to view and shop the products of your business. It has unmatchable reporting capabilities that make it the most effective in the retail sector. The inFlow software offers a cloud version and a computer-based version, along with an app that works on both Android and iOS. It follows the FIFO, moving average, and last-in, first-out (LIFO) methods for efficiently managing the inventories.
Benefits:
- 14-day free trial, no credit card
- Two to six hours setup support
- More than 30 reports
3. Lightspeed Retail
Lightspeed Retail is a perfect solution for a physical retail store. It is also a web-based tool for managing inventory. Lightspeed Retail can be best described as a combination point of sale (POS) and smart inventory management software that suits the operations of small retail shops with stock tracking tools and various e-commerce options.
Benefits:
- 14-day free trial, no credit card required
- Integrates with applications in more than 29 categories
4. Upserve
Upserve can be described as a set of automatic tools that track various ingredients and costs of a business along with detailed customer reporting. It assures the users that it will deliver more than a thirty percent increase in revenue and a significant time drop in time to manage the orders. As per the functionalities offered by this tool, it is best suitable for restaurants in managing the backend of the business that comprises inventory management. It helps in tracking each ingredient used in the process along with other result-oriented features. It also offers a mobile application with a barcode scanner. The apps are available on both Android and iOS.
Benefits:
- In-app barcode scanner
- Recipe Costing
- Real-time ingredient inventory deductions
5. Megaventory
Megaventory is a suitable tool for manufacturing-based units as it easily manages the material-based inventory. It can be considered as an operation management software that helps in keeping track of the bundling or assembly processes. Megaventory is suitable for small to medium-size manufacturing units. It is best known for its cloud-based operations and runs on any browser or any operating system, including Linux.
Benefits:
- 15-day free trial
- Easy to use
- Handles up to 20 locations
Benefits of an ERP Inventory Management System
Any smart inventory management system’s first priority is to manage the stocks efficiently and reduce the cost and time being invested in the operation. Ultimately this job is all about meeting the end consumer’s demands. Along with real-time tracking and status of the stock, there are tons of benefits that you get with any inventory management solution. Here are some of the top advantages of using an IMS.
Better ROI
Retail business is a little bit tricky; you need to invest wisely and try to make the most out of every investment. You only need to buy the products or raw material up to an amount that will suffice the current sales rate of the business. But retail business is not that easy; despite all the efforts, there are times when your stock just sits on the shelf waiting to be cleared. With an inventory management solution, you will get accurate reports that will help in finalizing the strategies to increase sales and reduce losses. It delivers you reports with intelligent insights and helps in identifying the slow-moving goods. Once you have identified the problem, you can take that piece of stock down to free up the space and cost and invest in better marketing techniques to increase the sale rate.
Insightful Reports
When doing business with products that are supposed to be considered waste after a certain period of time, getting insightful reports about the real-time status of the goods becomes a necessity. These reports help you in analyzing the product’s maintenance cost, time, and further strategies to deal with such problems. Any kind of overstocking and understocking directly hits the financials of the business; hence, real-time reports help you in keeping the boat afloat. Sometimes, managing a specific type of stock that has lost its value or is out of trend becomes extremely difficult to sell, and that directly reflects on your balance sheets and other financial records. With inventory management systems, you get a pre-designed report that highlights the problem with each stock that has been sitting idle for a long time. These reports help you in getting enough insights to plan ahead.
Minimizes the Number of Missed Sales
In any type of business, when you don’t keep any record of the inventory. It is most likely to be the situation that you will miss a sale. Without proper inventory management, it is extremely difficult to manage sales. If you are using the periodic inventory management system, you are most likely trusting your memory for the calculation of stocks in your warehouse. Humans make mistakes, and as per statistics majority of them are related to memory. Hence, it would be wise to use an inventory management solution for your business to reduce the number of missed sales instead of relying on your mind for an exact count of the inventory.
With a smart IMS, you will quickly get the reports about the products that are out of stock and needs restocking, compare each type of product to get their sale performance, and reorder the stocks before you completely miss out on easy orders that could be easily fulfilled.
Efficiently Manage Warehouse Finances
Managing the warehouse of any business involves a ton of processes and costs. When your warehouse is managed efficiently, there is less chance of losses related to costs, time, and resources. Integrating an inventory management solution in your business helps you in keeping exact records of the items sitting in your warehouse. Item in inventory needs proper maintenance, which involves lots of factors that cost your business. Inventory management solutions help you in notifying exactly when the products are needed to move and be purchased. With these systems, you are well aware of the surrounding of the business and are able to keep track of the out-of-stock items that ultimately save you and your business a lot of money and time that can be invested somewhere else.
Advanced Inventory Management Techniques
Now that you know about the significant benefits that come along with a smart inventory management system, here are some of the effective techniques that help in streamlining your business.
Inventory Valuation Methods
There are three main inventory valuation methods that help you in keeping counts of the stocks and manage your business’s warehouse efficiently. These three methods are average cost, the last in-last out, first in-first out. Remember which inventory management method you chose leaves a significant impact on your business. At Matellio, we deliver inventory management solutions that fit like a glove with your business needs.
Cycle Counts
Cycle counting is a method that has been praised by various reputed businesses. This efficient inventory management technique involves diving the overall products into suitable categories and keeping a count on the same. It totally depends on your business and the type of products you deal with; categorize them on the basis of priority, product type, product vendor, and warehouse (in case you operate with multiple warehouses.). Mainly there are two types of counts involved in this method; high-risk count and high-value count.
Avoid Dead Stock
Deadstock can be described as the goods or products that you have ordered to sell and invested in maintaining them, but they were never used or never sold. Consider removing these types of stock from the inventory as soon as possible. These stocks are like mites in wood; they consume your resources and affect your financials.
It is better to remove them by organizing a sale at a discounted rate or simply donating them. When you organize a sale to sell your dead stock, it creates an impression among your customers and increases the trust value between you and your customers. In case of donating the items, your business will earn a goodwill gesture that can be beneficial for the image of the business.
Manage Safety Stock
The term safety stock can be defined as the stock any business keep to avoid the situation of understocking. There are times when certain factors affect the sale of certain products, such as peak season, emergencies, and much more. Safety stock helps in keeping your business afloat in these times. But it’s always a risk; you never know when these stocks turn into deadstock. Hence, manage your safety stock efficiently. With smart inventory management techniques, you will get an exact idea about how much quantity of safety stock your business needs. The typical formula of keeping the safety stock is 1.65 multiplied by the square root of the highest demand.
Efficient Planning
Whether you are in the retail sector, IT sector, or any other sector, your business growth depends on the number of sales you make, and the number of sales depends on your customers. Hence, getting to know your customers is important. With effective planning, you can overcome any obstacle with your business, including managing inventory. The mind of customers is fragile; they are the ones that give birth to a trend; you have to keep a keen eye on the customer’s mindset and the type of products they like the most. A smart inventory management solution helps you in keeping an eye on these changing trends by analyzing the selling patterns and various other factors.
Ready to Develop Your Inventory Management System?
When you are in business, inventory is your most important part; managing it efficiently will lead to many rewards, which include a lot of savings on cost, time, and labor. The global market suggests that competition is going to rise exponentially, and to cope up with the same, you need to think ahead. With an efficient inventory management solution, your business can keep a tight grasp on the overall business process, which ultimately gives you an edge over your competitors.
Matellio has been developing intelligent software solutions for businesses for more than a decade. With our extreme dedication to delivering flawless quality products and services, we have earned a reputation in the market. Our team of highly qualified engineers is well versed with the current scenario of the market and is ready to develop a smart inventory management solution for your business that will fit perfectly with your needs. With us, you get flexible hiring models, no-obligation quotes, and expert advice. Discuss your idea in detail with our experts over free consultation of 30-minutes, and we can get started right away. Fill the form now!
