All about inventory management system in one guide: challenges, advantages, and features

What is the significance of inventory management?

Inventory management is critical to a business's success. It ensures that there are never too many or too few goods on hand, reducing the danger of stockouts and erroneous records.

Inventory Management's Advantages

Inventory management has two key advantages: it assures that you can fulfill incoming or open orders and increase earnings. Inventory control also includes:

• Saves Money: Knowing stock trends allows you to know how much and where you have something in stock, allowing you to better use what you have. This also allows you to hold less stock at each location (store, warehouse), as you can fulfill orders from anywhere – all of this lowers inventory costs and reduces the quantity of product that goes unsold before it becomes obsolete.
• Improves Cash Flow: Proper inventory management allows you to spend money on inventory that sells, allowing cash to flow freely throughout the company.
• Customers are satisfied: One aspect of cultivating loyal customers is ensuring that they quickly receive the things they want.

Inventory Management Challenges

The primary challenges of inventory management have too much inventory and not being able to sell it, not having enough inventory to fulfill orders, and not understanding what items you have in inventory and where they’re located. Other obstacles include:

• Obtaining Accurate Stock Information:
  There's no way to determine when to refill stock or which stock sells well if you don't have precise stock information.
• Poor Methodologies:
  Working with outdated or manual processes might lead to errors and slow down operations.
• Customer Demand is Changing:
  Customer preferences and requirements are constantly changing. How will you know when and why their preferences change if your system can't track trends?
• Making Good Use of Warehouse Space:
  If similar products are difficult to find, staff wastes time. This problem can be solved by mastering inventory management.

Features Your Inventory Management System Must Have

By now, it should be clear how important the correct inventory tracking solution is to your business. But how can you know which one is best for you? That depends on your industry, target audience, and various other things. 

If you're looking for a software solution, there are a few key aspects. The following is a list of some of the most helpful:

1. Scanning of barcodes

Inventory management requires knowing your stock levels and where goods are located. The best software solutions work in tandem with your warehouse's barcode scanners. As a result, your system reflects the actual situation on the ground.

2. Inventory Updates in Real-Time

Real-time updates are made regarding stock levels and inventory movement. Your system keeps track of changes as soon as an order is placed or delivered. Even when things are sold in bundles or as part of a more extensive package, this is true.

3. Comprehensive Reporting

Inventory management can also assist businesses in learning more about their overall operations. Sales statistics, reorder levels, and other data are intelligently reported, providing priceless insight. Companies can use this information to improve order speeds and track their most popular products.

4. Inventory Control Across Multiple Warehouses

Inventory management becomes more difficult if you have multiple warehouses or storage facilities. The finest inventory management system will cover several locations and provide information on stock location and volume. It will also make moving stock from one location to another much more effortless. Not to mention the real-time recording of all movements.

5. Inventory Demand Forecasting and Planning

Superior inventory management is concerned with both the now and the future. Built-in demand planning and forecasting features in the top inventory management systems allow this. Seasonality, consumer trends, and other factors are used to produce precise estimates of future client demand. As a result, you'll be able to invest in the right merchandise at the right moment.

Related: 3 Key Technological Developments in Demand Forecasting

6. Accurate Bookkeeping

Inventory value and how it fluctuates are crucial to business operations. Integrated accounting is required in an inventory management system. That's how you get accurate, real-time financial tracking.

7. Tracking of raw materials and assembly processes

8. Inter-organizational Collaboration

Inventory management is essential, but it is not a commercial island. It's only a small component of your overall business activities. A good inventory management system works in tandem with other departments. As a result, your entire firm will always pull in the same direction.

9. POS

For retailers who have both physical and online storefronts, integrated POS software is essential. All purchase and stock details from in-store transactions are synced with the retailer's larger automated inventory system using this software. As a result, inventory is updated instantly across online and physical channels.

You ask if I have a small business, how do I need to choose inventory management software?

The following factors can assist you in determining the appropriate inventory management tool for your company:

• Inventory size: Small firms have smaller inventories than giant corporations. As a result, a basic inventory management solution would suffice for a small business owner. On the other hand, a large company requires comprehensive inventory management software that includes multi-location stock tracking, data visualization, and other premium features.

• If you sell through more than one channel, you'll need a system that allows you to handle several sales channels.

• Mobile compatibility: You should purchase a mobile-friendly tool. It will allow you to keep track of your inventory and place orders from anywhere.

• Scalability: As your firm grows, so does your inventory. As a result, you'll need a scalable platform to manage your expanding inventory.

• Upgrade costs: Free inventory management software may not have all the functionality you require. Consider the price of a plan update to keep track of your budget.

Conclusion: how an inventory management system can help in achieving goals

Retail is about having the correct goods to sell at the right time. The only way to ensure accuracy and efficiency in inventory management is to take a systematic approach. To keep control of your supply chain, you'll need to use an inventory management system. You'll avoid the dangerous twin risks of overstocking and understocking.

There are a few options to consider when it comes to inventory monitoring solutions. Manual methods or simple spreadsheets are also viable options. However, you might consider using a current software solution for better results.

These software programs include a variety of functions that automate and improve inventory management. An inventory management system can transform your organization from barcode scanning to real-time accounting. They're the automated inventory system that may make or break your business.

AI-powered solution for building an efficient system of inventory management

Explore the LEAFIO

We propose the Leafio platform. It is software for the retail supply-chain processes automation and optimization: inventory, merchandising, and promotion management. The business value we create:

• higher sales;
• improved turnover;
• eliminating financial losses;
• efficient execution;
• optimized replenishment;
• trade promotion forecasting;
• merchandising management.

We provide full-cycle services for retail companies, including business process consulting, software integration, personnel training, piloting, and dedicated customer success at the best price on the market.

Let's talk about the best option for you. Contact us right away.