Businesses at any level deal with the same challenges. They need to attract customers, produce or stock goods, market themselves to new clients. Thankfully, today there are more tools than ever for businesses of all sizes to help them navigate some of the daily tasks they need to accomplish.
If you are a business owner or operator, you may have heard someone mention inventory management software before. Maybe someone recommended that you look into using some inventory management software for your own business. But what is inventory management software, and why do you need it?
Inventory management: back to basics
When it comes to running your own retail business, the basic laws of economics still hold true. Supply and demand dictate your overall success. All the other tools of modern business - traditional marketing, digital marketing, advertising on social media, partnering with influencers, etc. - are all designed to influence the basic supply and demand rules.
How does inventory management factor in?
Inventory management aims to track supply and demand, keeping business owners informed of exactly what they have at any particular point in time. The idea is nothing new; businesses have been doing it since ancient times; the abacus was invented somewhere in the ancient Near East for just that purpose, to count grain and other food stores.
What is different about inventory management systems today, of course, is the technology. Even as recently as a few decades ago, inventory management relied on physically taking inventory of current stock on a regular basis and recording the results with pencil and paper. It required extensive manpower and significant time, and even accessing the results required significant time.
The widespread use of computers in the workplace changed that process significantly, and database software and Excel spreadsheets began to replace ledger sheets. An especially significant development occurred in the early 1970s, when the Universal Product Code standardized barcodes and barcode readers. Together with more sophisticated Point-of-Sale (POS) systems, retailers finally had a system to track inventory digitally.
However, the process still required physically checking the inventory on the shelves, although now it could be scanned with a handheld barcode reader. The information on the reader still needed to be entered into Excel or some other inventory system.
After the turn of the millennium, barcode scanners could communicate wirelessly with computers; the inventory would automatically update itself as someone scanned barcodes during a stock check.
Inventory Management Software
Inventory management system software takes the whole process one step further. It’s not about simply tracking what’s left in the warehouse - now, retailers can track the entire warehouse inventory. The right software package will even let you track products as they are ordered from the supplier, meaning the stock is instantly part of your inventory from the moment you order it.
Even pending and future orders can be done through inventory management software. Almost the entire lifecycle of a given product becomes traceable with inventory software, giving retailers absolutely unprecedented control over their supply chains.
With that increased control comes even more opportunities for retailers to track other aspects of their businesses. If you can track your current inventory down to the minute, you can predict when you’ll need more stock. If you can predict the stock you’ll need, you can schedule orders in advance to meet increased supply.
As more and more of the supply chain comes under the realm of inventory management, the software built to manage inventory has expanded to also include other common business tasks.
IMS
Today’s software for inventory management isn’t simply about what you have and don’t have on stock. If you can track stock and place orders through the same software, then it makes more and more sense to add some form of financial capability to the software. Orders cost money, of course, so having software that can also double as accounting software adds to the package.
Increasingly, today’s inventory management systems packages offer far more than the ability to count stock. These aren’t glorified abacuses; they’re Swiss army knives that provide up-to-the-minute inventory tracking, billing, and accounting information.
Inventory management software-as-a-service
Inventory management software today comes in an almost bewildering array of forms, most of them delivered in the Software-as-a-Service format (SaaS). With SaaS, programs are Internet and cloud-based, not housed on-site on servers or computers. SaaS programs can be updated remotely, and any necessary troubleshooting can be done by the software designers from anywhere in the world.
SaaS are frequently offered on a subscription basis, allowing companies greater flexibility to change which particular software they use based on their given needs. Not every inventory management system is equally good at every task; some are better at tracking financial aspects of inventory management, while others are better at predicting and filling orders.
Benefits of inventory management software
Now that you know what inventory management system software is, what can inventory management software do for you? Specifically, what benefits can you expect?
Accurate knowledge of current inventory
With cloud-based apps and integrated POS systems, many inventory management systems allow you to track what has sold and what you have left in real-time. No worries about missing stock, or about a misplaced order.
Supply chain management
Inventory management and supply chain management are very closely related. If you know what you have in stock, you’ll know what you need, which leads naturally to the rest of your supply chain. Before the widespread use of inventory management systems, controlling or even monitoring the larger supply chain was beyond the scope of most small businesses.
Financial accounting
Time and products both cost money. If you can track them accurately, you have everything you need to track your costs more accurately and manage them more efficiently. This is why many management systems integrate accounting software into their options, and why some software that is primarily accounting-focused has added inventory management.
Enterprise resource planning
ERP is the next step in inventory and supply chain management, moving from managing current and short-term stock and orders into the realm of long-term planning. ERP allows companies to track current resources and position themselves for future growth.
What to look for in inventory management software
Given the importance of the right inventory management software for your business, and given the variety of the programs out there, what should you be looking for in your inventory management software? How do you know what will be a good fit?
Here are some of the general characteristics of good inventory management software that you should be looking for:
Compatibility
With the SaaS business model, compatibility is much less of an issue than with traditional programs that needed to meet extensive hardware requirements. Most inventory management systems today are designed to run on nearly any computer, or even on mobile devices in some cases.
It is always worth double-checking the system requirements before you buy, however. And if mobile access or a particular computer system is a deal-breaker for you, you can use that requirement to narrow the list of suitable choices.
Ease of use
Particularly for small businesses, you want your inventory management software to be accessible. You don’t want to waste valuable time mastering a complicated system, nor do you want to be caught out if you need to train up someone new in a hurry.
Beyond that, ease of use often equals simplicity, and the simpler and more streamlined your inventory management system is, the more likely you will be to get maximum use out of it.
Industry-specific
There are inventory management programs for restaurants, for retail shops, and for warehouses, among a host of others. Before jumping on the first one that appears on Google, do you research to find the best industry-specific choices. These systems aren’t necessarily one-size-fits-all. Industry-specific tools will likely have more resources and be easier for you to use.
Room for growth
Choose an inventory management system that will expand with you. It is likely that a good inventory management system will open up new opportunities for growth for your business. If that is the case, then you want the program itself to be easily expandable, with features that can be added as needed.
Pricing
Part of adding features as you grow your business will come down to pricing; some programs may have different levels, with different features available depending on the price point. Choose a program that fits your current budget, but that gives you room to expand as needed.
Beyond those general points, look for these specific features:
Real-time updating
Select a system that gives you a current glance at your entire inventory status. The more often your system updates, the better-prepared you will be to make decisions about ordering, sales, or special offers.
Data transfer
Importing data from on-site devices, portable inventory scanners, or mobile phones, or exporting to CRM software or an Excel sheet; you want a system that allows you to easily transfer data. Don’t settle for a program that involves a ten-step procedure to process a monthly report.
Statistics and analysis
Speaking of monthly reports, choose a system that does more than simply count boxes. Go with one that gives you sales reports, order frequency, sales points, and the whole array of modern statistical reports. Inventory management isn’t just about knowing when to reorder; it’s about being able to see where your business has been, and where it will go.
Orders and forecasting
Last but not least, choose a system that lets you set basic reorder points. When you stock hits a certain level, the system can automatically place a new order, ensuring that you never reach a critically low level or go out of stock and miss out on potential sales. Not only does this prevent lost sales, it can also automate much of the ordering process, reducing the load on you as the business owner.
Small business
The right inventory management system can make or break a small business, but small businesses might have different requirements than a large corporation.
Cloud-based system
It’s handy for any business, but absolutely crucial for small businesses to use a cloud-based inventory management system. By using the cloud, you’ll be able to access your inventory from anywhere in the world, keep your software constantly updated, and have quick access to any customer service assistance you may need.
POS integration
Most inventory management systems will have some form of POS integration, but don’t be afraid to choose one based solely on how well it handles that integration. Most small businesses don’t have the large margins of giant corporations; even a handful of missing or unaccounted stock can make a big difference to your bottom-line.
Mobile access
This one isn’t an absolute necessity, but most small business owners appreciate the ability to access their stock and view reports whenever they want to, from their mobile phones. Mobile compatibility for your inventory management system will give you better access to better information in order to run a better business.
IMS, CRM, and you: navigating SaaS
Inventory management, enterprise resource planning, customer relations management - the sheer variety of SaaS programs out there can be bewildering. With all those options come a huge array of questions - do you need one of each? Can they be integrated? If you can only choose one, which one?
The good news is that all of these systems are designed to help you, not to make your life an information overload. If you struggle to manage workflow and deal with clients, a CRM package might be ideal; if you’re managing multiple retail stores in different locations with dozens of products, then an inventory management system will be a better use of your time and money.
Do you need any of these inventory management systems? Perhaps not, if all you want to do is maintain your business at its current level. But if you want to expand your business and find new opportunities, then it might be time to take advantage of the vast array of tools available.
You can find more resources on inventory management software here - Link