Incorrect calculations of stock levels are often the downfall of retailers trying to meet orders. Tracking inventories from the manufacturer to the warehouse and outlets is often a mind-boggling process.
However, this is not the time for despair as it's becoming clear that the future of retail will not be about manual processes but about technology. The global smart retail market is expected to grow at a CAGR of 29.1% by 2030. Increasingly, retailers are using AI-based software to make the most effective business decisions and have an edge over competitors by meeting customers' expectations and controlling inventories.
Key Takeaways
Modern inventory systems must deliver visibility, automation, and analytics.
Real-time stock dashboards.
Automated reorder triggers.
Demand forecasting modules.
Integration with POS & suppliers.
Alerts for low/high stock levels.
Inventory Management Software is a Strategic Choice
Stock management software, put simply, enables you to manage stocks, manage and execute purchase orders, monitor warehouses, and optimize omnichannel sales. The inventory software reduces the time required for the company's employees and owners to review inventory levels, identify bottlenecks, and solve them efficiently, boosting the overall performance.
When searching for an inventory management system, you’ll encounter many options, some of which may not suit your business needs. It’s important to choose software tailored to your industry since their features vary significantly.
Inventory Management or Inventory Control System
Keep in mind that inventory management is a broader concept than inventory control, as the latter only deals with the inventory you already have in your warehouse or storage. Inventory management, unlike inventory control, includes strategic inventory planning, demand forecasting, stock replenishment, and other aspects – each of which can be handled by inventory management software. That said, the concepts of inventory control and inventory management are often used interchangeably.
What Are the Major Specifications of Inventory Management Software
The merchandise determines the right stock management system. Product attributes such as including size, shape, value, price, quantity, etc., shape the decisions made by product owners, customers, and even suppliers.
Some, like identifiers and names, are static and help convey information about the nature of the product. Others like cost, price, and quantity, are dynamic and are in constant flux. Inventory management software is one of the most effective inventory control methods that helps organize all available inventory data, analyze dynamics, and find problem areas and growth points.
Most inventory management systems help to automate and control some or all of the following areas:
- Optimization of the inventory balance (maintaining an optimal mix and volume of goods);
- Inventory cost management;
- Inventory tracking between storage locations using barcodes, serial numbers, or IoT radio frequency identifiers (RFIDs)
- Procurement of latest stocks;
- Modern warehouse management;
- The relationship between retail sales (in-store or online) and stock levels;
- Prevention of defects and obsolescence of goods;
- Demand forecasting and planning;
- Supplier management;
- Accurate financial reporting.
To get the most straightforward tool for your business, decide which functional areas are essential to your business, and choose software with strong tools in these areas. Other business processes like sales, marketing, and service provision can be improved through inventory management systems as well.
TOP 9 Inventory Management Software Features to Consider
Here are the top nine most essential store management software features that retailers should look for when selecting an inventory management system.
#1 Demand planning
Demand planning is one of the key features of an inventory management system, which allows you to accurately calculate the future demand for each product and avoid lost sales.
To plan demand, the ML algorithm takes into account the complete sales history of SKUs, promotions, and other factors. In addition, the algorithm estimates the non-linear impact of each demand factor, filtering out extraneous variables that can reduce inventory accuracy. The system can even tell when customer demand might be higher than expected, such as during holidays or peak times.
#2 Automatic replenishment
The total losses that US and Canadian retailers incur in a year amount to over $349 billion due to out-of-stocks and overstocks according to IHL Group research. This problem can be solved by an automatic replenishment process, a comprehensive function that includes automation of the following processes:
- Сalculating the quantity requirement for an order;
- Formation of orders;
- Sending orders;
- Editing submitted orders based on feedback from the supplier;
- Control over order fulfillment.
For example, LEAFIO Replenishment software automatically generates orders daily based on the assortment matrix and schedules, right after demand calculation. This process occurs before managers start their workday.
Thanks to the order management system with automatic replenishment feature, the retailer receives the optimal level of stocks, minimizing the influence of the human factor, overstocks, and storage costs.
#3 Promotion management
The Promotions Planning feature helps businesses plan and execute promotions based on accurate forecasts and reconciliation of inventory with actual sales. This feature ensures optimal inventory levels across the entire store chain and provides comprehensive analytics that allows retailers to increase the promotion's effectiveness.
#4 Multi Echelon allocation
Multi-echelon allocation allows retailers to control inventory at all levels, at the entire supply chain. A sophisticated algorithm accurately estimates current and future demand for goods and also considers the lead time of an external supplier to the central warehouse concerning the supply schedule of a product to stores.
According to the results of LEAFIO projects, the use of LEAFIO AI software for multi-echelon inventory optimization (MEIO) and supply chain management leads to a potential reduction in inventory at the DC with an increase of in-store availability for up to 20%, an improvement in inventory turnover across the network of up to 30%, and a reduction in excess inventory at the DC of up to 30%.
#5 Dashboards
Easy-to-understand inventory management dashboards are essential to visualize your inventory data. It is a functional tool for inventory management that allows you to focus on the main thing and understand the available figures and inventory trends at a glance without in-depth analysis. Real time data analysis from the dashboard clearly demonstrates how efficiently the software is used, how much it helps the company, and what routine tasks it covers.
#6 BI Module
Business Intelligence inventory management software modules offer a set of reports for better inventory control and strategic planning. This is an effective diagnostic tool that uses in-depth analytics to check the health of your business. For example, LEAFIO BI solution produces over 40 inventory reports such as ABC(D) analysis, LFL Analysis, Analysis by SKU, and Lost sales reasons.
Inventory management systems report on the level of inventories, the effectiveness of this procurement strategy, production cycle, and sales performance. The user can grasp the situation through critical indicators, both within the operational trend and in long-term analytics, to make decisions.
#7 Seasonality & sales trends
The ML-based seasonality forecasting algorithms allow retailers to prepare for all types of seasonal sales peaks, such as holidays, weekdays, and weekends. The system dynamically adapts to seasonal changes in demand, ensuring optimal stock levels.
Owing to LEAFIO AI Multi-Scenario Seasonality Forecasting, for example, retailers see a faster turnover of up to 30%, a reduction in lost sales by up to 50%, increased profitability by up to 10%, and decreased surpluses after the season ends of up to 30%.
#8 Fresh inventory management
The most challenging product category to manage is fresh products with a short shelf life. This is especially relevant to the ultra-fresh category – maintaining 100% availability of such items inevitably leads to write-offs, and in times of high demand, which can vary throughout the day and week, to significant sales losses.
Specialized solutions such as LEAFIO AI Fresh Inventory Software allow you to optimize the management of fresh produce inventory and balance deliveries to prevent overstocking or empty shelves. The system takes into account supplier restrictions, product packaging type, product shelf life, fluctuations in demand during the week, and other factors to provide the most accurate order calculation.
#9 Inventory tracking
Companies always have to know precisely what percentage of stocks each item has, so inventory management systems include inventory tracking functions. Inventory tracking uses Inventory Units (SKUs) to see what goods are in your warehouse, where they're located, and how many each you've got. The flexibility to trace inventory in real time is essential for production teams, e-commerce companies, and companies with multiple warehouses.
How to Decide Which Inventory Management Software Key Features to Choose
Without proper planning, no software can maximize profitability. Here are five important aspects of choosing a retail store inventory management system:
- Adaptive Restock Algorithms;
- User-Friendly Interface;
- Flexible Business Customization;
- Transparent Analytics;
- Proactive Notifications.
To help you understand the topic in more detail, we have prepared a Retailer's Guide where dive into the crucial considerations for selecting the right system and explore its essential inventory management functions.
Is It Time to Upgrade Your Store Management Software?
Let’s take a look at the top critical signs that your business needs to transform its inventory management system:
- Poor inventory turnover – goods are kept in stock for too long.
- Your shelves are often empty – customers complain that their favorite products are constantly out of stock.
- You observe a large number of dead inventory.
- The deferred payment period is shorter than the sales period.
- Disappointing results of your promotional campaigns.
- Your employees spend a lot of time placing orders.
- The lack of reliable and in-depth analytics to analyze inventory control metrics.
- Unsatisfactory quality of interaction with suppliers.
If you've noticed any of these issues in your stores, it could mean that your inventory management system isn't meeting your needs. It is probably time to change your existing software. Learn more about the 8 signs that your retail business needs an inventory management transformation in this article.
How to Implement the New Inventory System Features?
No system is capable of bringing great changes by itself if the right operations and processes are not established both by the company and the software provider. It is important to ensure teamwork, train staff, and follow all the recommendations of the software provider to utilize the full potential of the new solution.
The main implementation stages are:
- Studying the company's inventory management processes, and integrating the LEAFIO AI solution with the current ERP (setting up data exchange with the accounting system).
- A trial in a limited number of SKUs/stores, testing the system's effectiveness.
- Training employees to work with the system for better inventory control.
- Scaling LEAFIO AI for a defined range of locations and SKUs and the automation of all the main assortment orders.
- Customer Success department support – the team helps to resolve any issues and allows a retailer to maximize the profit from using the solution.
Find the Best Inventory Management Software for Your Business
Choose a system that's flexible, scalable, and transparent. Your balances are not fixed but a living, subject to constant fluctuations. It's essential that your software responds to these changes, informs each user, and allows you to expand the overall infrastructure (new warehouses, employees, SKUs, and shops).
Learn more about LEAFIO Inventory Optimization – a cloud solution that will help you quickly and accurately identify the areas that need attention. It is a solution that can fine-tune the inventory planning and replenishment processes within the shortest possible time, which can cause the successful implementation of the company's future inventory strategy by reducing excess inventory, increasing sales, and releasing cash.
The LEAFIO Inventory Optimization system also minimizes the impact of the human factor on order creation by relying exclusively on accurate data from complex algorithmic calculations to identify the real need for individual SKUs at each storage location.
What are the features of an effective inventory management system?
An effective inventory management system accurately tracks inventory levels, predicts demand, minimizes holding costs, prevents stockouts, and provides real-time visibility. It may also automate tasks like reordering and integrate with other business systems.
What are the functions of inventory management software?
Inventory management software automates tasks such as tracking inventory levels, forecasting demand, managing purchase orders, and generating reports. It helps businesses optimize inventory levels, reduce costs, and improve efficiency.
What is the inventory manager feature?
"Inventory manager feature" is a broad term; it generally refers to the core functionalities within inventory management software that enable businesses to oversee and control their inventory. This can include features like tracking stock levels, managing orders, and optimizing inventory flow.
What are the 4 components of inventory management?
The four key components of inventory management are: demand forecasting, inventory control, inventory tracking, and replenishment. These components work together to ensure optimal inventory levels and efficient operations.
Have a question?
Have inquiries about retail automation or optimization? Talk to our expert for solutions!
Marc Ross
Retail Optimization Expert
