Managing inventory and supply chain issues is a universal challenge that affects businesses of all shapes and sizes. Whether you’re a small enterprise or a large corporation, relying on outdated techniques like manual Excel sheets or neglecting inventory management won’t cut it anymore. It’s time to embrace a change for the better.
Businesses worldwide are experiencing inventory management issues, with 81% of shoppers encountering out-of-stock products. Mismanaged inventory has resulted in global retail losses of over $1.75 trillion.
The Pitfalls of Inventory Optimization
Inventory management has numerous benefits, including optimized stock levels, cost savings, and increased supply chain efficiency.
Several notable challenges and limitations must be taken into account, as well.
1. Inaccurate tracking of inventory
Manual inventory tracking on spreadsheets can be redundant, error-prone, and time-consuming. A centralized inventory management software with accounting and tracking features is a viable solution, even for small businesses.
2. Fluctuations in demand
Customer needs and wants constantly evolve, making maintaining the right inventory balance difficult. Overstocking can result in obsolete inventory, while understocking can lead to unfulfilled orders. An effective order strategy can help predict and meet customer demands.
3. The complexity of the supply chain
Managing inventory in a global supply chain can be challenging, as distributors and manufacturers can dictate the timing and logistics. To address these issues, your inventory management system needs to be flexible and accommodate for unexpected lead times.
4. Inadequate order management
Two common problems with effective inventory management are overselling products and running out of inventory. Using seasonal and historical data to predict demand is helpful to avoid these issues, but a software-based inventory management approach is necessary for logistics.
Having covered the fundamentals, let’s explore the factors contributing to the increasing adoption of inventory management software.
Advantages of Using Inventory Management Software in Business
Implementing inventory management processes can help cut costs and ensure accurate stock levels, but incorporating inventory management software into your enterprise software development toolkit can take your inventory management to the next level. With this software, you’ll be able to:
1. Keep track of inventory
Inventory management software offers real-time inventory tracking by integrating with your ERP system. With each product tracked from production to sales, it reduces manual errors, improves inventory management, and strengthens partner and customer relationships.
2. Enable accurate reordering
Inventory management software offers businesses an accurate inventory record and a streamlined reordering process. With the help of sales and consumption data, businesses can make informed decisions about when to reorder products.
Inventory management software can also be configured to facilitate efficient ordering by ensuring that you only order the necessary amount of items, thus reducing the amount of dead stock that can accumulate over time.
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3. Eliminate Stock Overselling
eCommerce businesses face the challenge of overselling due to inaccurate inventory tracking, resulting in stockouts and an inability to meet customer demand. With inventory management software, businesses can monitor demand and restock at the right time and quantity to prevent overselling and marketplace suspension.
4. Minimize Business Costs
Inventory management software can help reduce business costs in several ways. By providing accurate inventory reports, businesses can know their stock levels and plan accordingly. This helps avoid last-minute rush orders, which can be more expensive.
Moreover, businesses can avoid ordering low-demand products, leading to overstocking and storage space costs. This is possible by clearly understanding the products’ demand and the right levels to keep.
The software can also help bring down business costs in other ways, including:
Increase in Labor Wages
When employees lack visibility into their inventory, they may store and manage more than necessary, increasing labor costs.
Holding onto excess inventory can lead to higher transportation expenses, as you may need to move products between warehouses more frequently.
Keeping excess inventory can result in increased insurance costs due to the need for additional coverage to protect the additional assets.
5. Additional Selling Channels
A key advantage of inventory management software is that it allows eCommerce businesses to expand to new sales channels or marketplaces easily. The software provides a centralized view of the inventory across all channels, simplifying the process of managing and fulfilling orders.
In addition, most e-commerce inventory management software includes real-time inventory synchronization and prediction functions, enabling you to maintain control over your inventory across multiple locations.
To sum up, we have discussed several advantages inventory management software can offer businesses. However, it’s important to note that these benefits can only be realized through customized inventory management software, which requires the assistance of experts. Therefore, it’s recommended to seek the help of professionals to implement such software in your business.