Today, we will discuss the benefits of using inventory management system in 2024, but before we dive deep into the proven benefits of using an inventory management system, let's first understand what an inventory management system is.
An inventory management system is a software application or set of tools that help a business manage its inventory.
It typically includes features for tracking stock levels, monitoring inventory changes, generating reports, and alerting users when it is time to reorder.
In the last 12 months, 81% of the global shoppers have faced an out of stock situation while globally, retailers have recorded losses of over $1.75 trillion because of mismanaged inventory.
Inventory management and supply chain problems are global and are faced by businesses of all scale and sizes.
If you are one of these companies that are still using excel sheets to manage the inventory or ones which are not managing it at all, it’s time to change that.
In this article, we are going to talk about the benefits of inventory management software for business, highlighting how it solves the issues pertaining to mismanaged inventories.
An inventory management system in 2024 is a critical component of the supply chain, and it can help businesses to:
Optimize inventory levels: An IMS can help businesses keep the right inventory. This can help reduce inventory costs and the risk of stockouts and excess inventory.
Increase visibility: IMS can give businesses real-time visibility into their inventory levels. This can help them identify potential problems, such as stockouts or excess inventory before they become a significant issue.
Improve efficiency: An inventory management system can help businesses automate inventory management tasks, such as tracking stock levels, generating purchase orders, and processing shipments. This can free up employees to focus on other tasks.
Types of Inventory Management Systems in 2024
There are three main types of inventory management systems:
- Manual: Manual inventory management systems are the simplest and least expensive type of IMS. However, they can be time-consuming and error-prone.
- Periodic: Periodic inventory management systems take physical inventory of all stock at regular intervals. This can be more accurate than manual systems and disrupt business operations.
- Perpetual: Perpetual inventory management systems track inventory levels on an ongoing basis. This is the most accurate type of IMS but it can also be expensive.
Features of an Inventory Management System:
An IMS typically includes the following features:
- Inventory tracking: Tracking inventory levels, including location, quantity, and cost.
- Purchase order management: You can use it to generate and track purchase orders.
- Receiving: It tracks incoming shipments and updates inventory levels accordingly.
- Shipping: This will allow you to track outgoing shipments and update inventory levels accordingly.
- Reporting: The ability to generate reports on inventory levels, purchase orders, shipments, and other inventory-related data.
Benefits of an Inventory Management System in 2024
There are many benefits to using an IMS. These benefits include:
Reduced inventory costs: It can help businesses to reduce the cost of carrying inventory by optimizing inventory levels.
Improved customer satisfaction: An inventory management system helps businesses improve customer satisfaction by ensuring they have the products they want in stock.
Increased efficiency: You can use an inventory management system to help your businesses automate inventory management tasks, freeing employees to focus on other tasks.
Improved decision-making: An IMS can give businesses real-time visibility into their inventory levels, which can help them make better decisions about inventory management.
Why You Need an Inventory Management System?
As we’ve mentioned, an inventory management system will streamline the entire back-end process for you.
So, rather than manually updating each sales channel with your stock levels, you can easily sync them all together and let the inventory management software do all the work for you.
For example, when a customer buys an item from one of the channels you sell on (like Amazon or eBay), then those items will automatically be deducted from your stock levels across all platforms.
This means that you never have to worry about overselling again, and it also frees up your time so you can focus on other areas of your business.
How to Choose an Inventory Management System in 2024?
Many different IMSs are available, so choosing one right for your business is crucial. When choosing an inventory management system, you should consider the following factors:
- Your business size and type: The size and type of your business will affect the features you need in an IMS. For example, a small business may need a simpler IMS than a large enterprise.
- Your budget: IMSs range in price from a few hundred to several thousand dollars. It is essential to choose an IMS that is affordable for your business.
- Your integration needs: If you use other business software, such as an accounting system or a customer relationship management (CRM) system, you must choose an IMS that can integrate with these systems.
As a business owner, you probably have everything you need, like your employees, products, customers, vendors, and more. A good handle on your inventory is part of your success.
Nothing is more important than inventory control, especially for eCommerce businesses, but more importantly, why do you need an inventory management system?
An IMS can be a valuable tool for businesses of all sizes. By optimizing inventory levels, improving efficiency, and increasing visibility, an IMS can help businesses save money, improve customer satisfaction, and make better decisions.
This article will help you understand the top benefits of using an inventory management system.
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Before we dive into a deep analysis of the benefits of using an inventory management system, here we have listed the top benefits of using an automated inventory management system:
Eliminating Human Error – Manual stock management in online retailing takes a long time but is also tricky. Software for work eliminates human mistakes and saves time, effort, power, and money.
Saving Time with Automation – You can easily update online inventories with the selling and delivery process with the help of an automated inventory management system.
In addition, the software will inform and offer options to refill or end the product whenever the stocks get exhausted, depending upon the request and manufacturing.
Get Live Updates – Live updates let retailers get the latest information about the inventory and plan the timing to bring in new goods.
It would be highly advantageous as sellers won’t be required to log into various systems countless times daily to ensure stock steadiness.
Automatically Update Once a Sale has Been Made – Inventory management software can sync stocks under diverse sales channels for active sellers on two or three eCommerce platforms.
In addition, the inventory on all the platforms will automatically update once a sale has been made.
Understanding Sales Figures – Not everybody is a mathematical mastermind; it is challenging to comprehend statistics and changeable demands.
However, you can feed inventory management software with rules and programs that automatically derive these estimations from sales and purchases.
The inventory management system is a crucial business process that helps efficiently manage inventories.
This process needs to be conducted properly to reap the desired results. Effective inventory management is an essential part of a store’s business strategy, whether small or large.
It is the foundation on which the success and profitability of businesses rest. What are the real benefits of inventory management?
Inventory management also has several other benefits and our detailed article will discuss the top benefits of using an inventory management system in 2024.
IMS Can Increase Efficiency
Using an inventory management system can significantly increase the efficiency of a business's inventory management. With an inventory management system, you can:
Automate Processes:
A robust inventory management system can streamline tasks like stock tracking, report generation, and reorder alerts, saving time and minimizing errors, thus enhancing overall efficiency and effectiveness.
Streamline Data Entry:
With an inventory management system, you can quickly enter and update data related to your inventory, such as product descriptions, prices, and quantities.
It will help to ensure that your inventory data is accurate and up-to-date.
Quickly Access and Analyze Data:
An inventory management system provides real-time data and insights into your inventory, which can help you make informed decisions about your business.
You can easily access and analyze this data to identify trends and patterns and make data-driven decisions.
Enhance Collaboration:
Multiple users can use an inventory management system, making it easier for team members to cooperate and exchange inventory information.
It can help to improve communication and coordination within the team.
Better Forecasting
Forecasting refers to the process of predicting future demand for a product or service.
An inventory management system can help a business forecast future product demand, allowing it to make informed decisions about how much to produce or order.
Some of the ways that an inventory management system can help with better forecasting include:
Historical Data:
You may predict future markets by using data about historical sales and product demand that is easily stored in an inventory management system.
For example, a product is expected to continue selling well if it has been selling well over the previous year.
Trend Analysis:
An inventory management system can provide data and insights about trends and product demand patterns, such as seasonality or changes in customer behavior.
It can help a business anticipate market changes and adjust its production or order accordingly.
Integration with Other Systems:
You can easily integrate an inventory management system with other methods, such as customer relationship management (CRM) or enterprise resource planning (ERP).
It can provide a more comprehensive business view and help forecast demand.
High Inventory Turnover Brings Revenues
Applying Inventory planning to any business can serve as a bridge to bring in higher revenues.
A company can increase its profitability through proper Inventory management and control.
If a business overlooks the benefits of inventory management in its trade, sales, and production, it is possible to hamper the maximization of its operational efficiency.
Intrinsically, the inventory’s purchase and production cost substantially affects gross profit.
Using lessened cost of production, a business raises its gross profit. That is why proper inventory planning is required.
With all accounts placed as equal, such a company would record superior revenues, consequently leading to more profits, again substantiating the importance of inventory management.
Reduced Inventory Costs
By maintaining proper inventory levels an inventory management system can help a business maintain accurate inventory levels in several ways:
Real-Time Data:
Real-time stock-level data from an inventory management system enables a company to promptly detect and resolve any problems or inconsistencies.
You won't have to worry about understocking or overstocking, which might result in unnecessary inventory expenses.
Reorder Points:
Using an inventory management system, a company may establish reorder points—the stock levels at which a product should be reordered.
A company may ensure adequate inventory to fulfill demand without overstocking by establishing reorder points based on historical sales and demand statistics.
Stock-Taking:
A good quality inventory management system can automate the process of stock-taking, which is the process of physically counting and verifying the quantity of inventory on hand.
It may assist in ensuring that inventory data is correct and up to date and identify any inconsistencies or concerns you must resolve.
Improved Customer Service
You also should not forget that an inventory management system can help a business improve customer service by providing accurate and up-to-date information about product availability.
Some of the ways that an inventory management system can help with customer service include:
Accurate Data:
The IMS provides real-time data about stock levels and availability, which allows a business to quickly and accurately respond to customer inquiries about product availability.
Order Tracking:
This can provide customers with real-time updates on the status of their orders, including information on shipping and delivery.
It can help to improve transparency and customer satisfaction.
Customized Alerts:
It can be configured to send alerts when certain events occur, such as when a product becomes available or an order is shipped.
It can help to improve communication and keep customers informed.
Improved Customer Experience
An organized and accurate inventory system can help improve the customer experience.
Companies can fill customers' orders quickly and accurately, which increases customer satisfaction.
This level of customer service can increase customer trust and loyalty, solidifying the relationship between the business and its customers.
This helps create a more positive brand image and increase profits as more customers use your products.
Enhanced Security
With an inventory management system, you can enhance security by providing tools and controls to help prevent theft or loss of inventory.
Some of the ways that an inventory management system can improve security include:
Access Controls:
These may include access controls, such as user roles and permissions, which can help to prevent unauthorized access to inventory data or actions.
For example, you may be able to restrict certain users from viewing or modifying specific data or from performing certain activities, such as placing orders or issuing refunds.
Auditing and Accountability:
This may include auditing and accountability features, such as logging changes made to data or tracking who made those changes.
It will help to improve transparency and accountability within a team and reduce the risk of theft or loss.
Physical Security:
An inventory management system may include features for tracking an inventory's physical location, such as barcodes or RFID tags. It can help to prevent theft or loss and improve the accuracy of inventory data.
Data Security:
Data protection techniques like encryption, authentication, backup, and recovery should all be included in an inventory management system to prevent unwanted access or manipulation.
Ensuring the security and confidentiality of inventory data can be facilitated by it.
Compliance With Regulations and Industry Standards
Specific industries, such as pharmaceutical or food industries, have strict inventory management regulations to ensure product safety, traceability, and quality.
Good inventory management allows you to comply with industry standards and regulations.
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Greater Visibility
Inventory management systems provide greater visibility into inventory by providing real-time data and insights, which can help a business make informed decisions about its operations.
Some of the ways that an inventory management system can offer greater visibility include the following:
Dashboards and Reports:
Stock levels, sales patterns, and reorder points are just a few high-level inventory overviews that can be obtained with an inventory management system's dashboards and reports.
These can assist you in making data-driven decisions and promptly identifying any problems or possibilities.
Search and Filtering:
An inventory management system may include features for searching and filtering data, which can help you quickly find the information you need.
For example, you may be able to search for specific products or filter data by location, supplier, or category.
Customized Alerts:
You can easily configure the inventory management system to provide notifications when specific events occur, such as stock levels reaching a particular threshold or an overdue order. It can help you stay informed and take action when necessary.
Examples of Inventory Management Systems:
There are many different IMS software applications available. Some popular options include:
- QuickBooks Commerce: QuickBooks Commerce is a cloud-based IMS software application designed for small businesses.
- NetSuite: NetSuite is a cloud-based ERP software application that includes an IMS module.
- SAP Business One: SAP Business One is an on-premises ERP software application that includes an IMS module.
- Oracle Inventory Management Cloud: Oracle Inventory Management Cloud is a cloud-based IMS software application that is designed for large enterprises.
What are the Advantages and Disadvantages of Having Excess Inventories?
Advantages:
- With excess inventory in the warehouse, you can set up wholesale pricing to sell.
- You meet customer demands at all times.
- Timely order fulfillment.
Disadvantages:
- Higher storage costs.
- Higher chances of inventory loss and damage.
- Stuck capital.
Conclusion on Benefits of Using Inventory Management System in 2024:
With the many benefits that a inventory management system provides, you may be wondering how to choose one so you can start enjoying these advantages.
The answer depends on factors like the size and quantity of your warehouse facilities, current software that you want to integrate with, budget, and more.
By using an IMS, businesses can avoid stockouts, reduce carrying costs, improve customer satisfaction, and increase profits.
In addition to the benefits listed above, IMS software can also help businesses to:
- Identify slow-moving items: An inventory management system can help businesses identify them so they can be discounted or sold off.
- Track expiration dates: With the help of IMS, you can help your businesses track expiration dates to avoid selling expired products.
- Optimize warehouse space: By tracking the location of inventory, an IMS may assist firms in making the most of their warehouse space.
- Improve forecasting: An IMS can help businesses improve forecasting by analyzing historical sales data.
With the help of an inventory management system, your employees can use the intuitive interface to easily update inventory levels, including new and old items, and quickly identify where stock is running low.
The system also allows you to view everything in a single inventory view to see every item instantly.
We hope you enjoyed our article about the top benefits of the inventory management system.
