It is the dream of every manufacturer, that the stock room remains steady, and all the inventory floats smoothly in and out at precise times. It certainly is a blissful picture but not so easy to make it real.
Inventory management is a process of keeping track of all the goods that your company has. Effective inventory management benefits are clear as day because the cost of doing it poorly is very high. Therefore choosing the right inventory management system can take your business to the next level.
Types of Inventory Management tools
A lot of inventory systems are out there claiming to be the best fit for your business, but not all are good. Here are the few popular types of managing inventory,
Perpetual inventory is known for its accuracy. The system tracks all kinds of the inventory itself, and depending upon the production schedule, it reassigns everything. The perpetual system keeps track of inventory balances continuously and automatically makes updates whenever a product is received or sold.
Purchases and returns are also recorded automatically in the inventory account. It also updates the cost of goods sold continuously as each sale is made. Using a periodic inventory system, the balance gets adjusted automatically when the period set is reached. This results in a lot of errors. The main reason is that in periodic, and you don’t know what happens in between the period.
The perpetual inventory system will allow you to find any patterns of inventory theft or shrinkage and make necessary stock changes.
Consignment inventory means a manufacturer provides products or materials to the customer (retailer) who pays only when the goods have been sold to the consumer.
This is an excellent option for vendors who don’t like to take unnecessary risks, thinking whether the products will be sold or not. It gives the name enough opportunity to try out new products that have had no market before.
You also save a lot of money by sending the goods in just one big batch to a customer instead of making small deliveries often. If the product is not selling, the retailer can also return it a few months later.
Just in time inventory
Just in time, the inventory system, as the name suggests, is a way for manufacturers to precisely fill the demand. Products are manufactured only when orders come in and not before. This is done by careful planning. he aims of just in time inventory is to cut down the production costs. As a result, the highest quality products are prepared with the minimum price possible.
As in a supermarket where you have an unbelievable amount of choices but only a few of each item, once the item runs out, the manager orders more in the process and; thereby, avoids any wastage. All the inefficiencies are reduced as much as possible.
ABC inventory is a widely used method for categorizing your product into what sells best and what doesn’t. In this method, you consider 15% of your main products that account for 70% of your sales, and while 50% of your inventory would only account for 10% of your total sales.
Rest is the middle ground, the inventory that neither scolds very good or very bad.
These numbers are not exactly accurate, but they are designed to help you identify the different turnover rates your inventory has. Moving your product lifespan will let you know which stock will sell most and what is dead weight.
Top Features of Inventory Management System
Inventory tools come with many distinct features, depending on the type of business you are they can vary. However, there are certain must-have features that every inventory tool should have in place.
Barcoding and tagging
Scanning barcode provides fast and reliable solutions. It eliminates standard human errors that occur due to manual data collection. It saves your time of manual data entering and reduces employee training time as it just takes a few minutes to master. Barcode and tagging improve your control over inventory and helps to keep track of things such as pricing and product details precisely.
When you are having a business where inventory is vital, you have to keep track of many things like product status order shipment driver’s whereabouts and much more in real-time. Today, most inventory systems come with various reporting tools and features integrated that can carry out the reporting task smoothly.
As a business owner, you don’t want to disappoint your customers ever, so when one of the items is not in stock, you may lose a long time customer. So the excellent way to provide the best experience to them is to know which product is in stock and which will be out of stock soon. The inventory forecast comes handy. Here it will alert you when you need to restock your inventory. As a result, you can decide how much stock to buy and what to buy.
Demand for IoT driven inventory management is increasing day by day. RFID, coupled with IoT, can help the manufacturers eliminate many problems they face.
With the integration of IoT and the inventory system, the data fetched by RFID is put into meaningful insights. A combination of IoT and inventory systems will get you insights and keep you informed about the items’ locations, their live status, and so much more.
Cloud-Based Software for Real-Time Updates
A cloud-based inventory system can provide you access to inventory apps from any device. It gives you the ability to track real-time inventory from anywhere. This improves your coordination with staff and gives you insights about all the updates regarding your inventory.
In short, it is tough to manage the inventory efficiently with market conditions changing now and then. Using the right inventory management tool is of utmost importance. It gives the right features that your business precisely needs. When you select the right vendor that can provide you with the software, you need to check that the company is capable enough to provide you with the necessary after service.