Brick and mortar retailers and ecommerce retailers alike lean on inventory management processes to manage fulfillment, orders, and supply chain management. The demand for accurate inventory counts is ever-tightening — an inaccurate and inefficient inventory management process can end up affecting the entire business, from accounting to sales.
In a matter of time, poor inventory management can and will affect customer experience. For example, a customer is on your site and decides to purchase an item. Despite being readily available in the online marketplace, the item is actually out of stock. One of two things has to happen: you need to spend extra resources, time, and money in order to fulfill that order or you have to disappoint the customer with a long wait time, risking your customer relationship and your reputation.
The risks involved with poor inventory management have only heightened during the global pandemic. A change in dramatic consumerism has caused many challenges including imbalance, scarcity, shortages, and overstocking. According to a study by the IHL Group, the estimated value of out-of-stock items in 2020 was $1.14 trillion.
An automated inventory system, or the use of software that tracks current inventory levels without manual intervention can help your business scale while saving money. An automated inventory management system represents an end-to-end improvement in business functions. Not only can automation help you streamline workflows, it can generate actionable documentation and analytics, and streamline supply chain operations. Here are some other ways your automated inventory management can benefit your business:
Inventory is constantly shifting. Just minutes after a manual inventory count, a sale comes in, and inventory numbers shift – leaving your inventory spreadsheet inaccurate. With automated management, as soon as a sale comes in, real-time counts of active inventory update, even while the item is still in the warehouse. Once the item has shipped, the numbers are updated again to reflect the current on-hand inventory.
With new stock orders, inventory is added to your availability as soon as it arrives. This not only reduces the need for manual inventory checks, it minimizes the time between order and customer availability, ultimately saving you time and money. This visibility is crucial and decreases the risk of over-selling or under-selling your products.
Decrease Human Error
In manual inventory management, there is always the potential for human error. When updating spreadsheets, mistakes can be made and data can be distorted. There are a number of ways human error can have a negative effect on inventory management. One, counting errors can occur if an employee misses a product or mistakenly counts a product twice. Fatigue can also set in and mistakes can happen while writing and recording data. Finally, human error can cause workers to forget to save valuable data, distorting information for many users
A decrease in human error has trickle-down effects for the whole order process. According to EasyPost, an integrated order processing system can increase productivity by 25% and lead to a 30% improvement in stock use efficiency. Wireless barcode technologies are an easy and cost-effective way to improve accuracy, rather than error-prone counting by hand. Barcodes create an intuitive way to use numbers and letters to transmit inventory data in real-time.
Organize Processes & Integrate Disparate Systems
As a business leader, you are always looking for ways to save time and reduce labor costs. Extra time spent manually counting inventory or pulling data from siloed systems and multiple locations is not a good use of time and does not contribute to the well-being of your employees or the business as a whole. An inventory management system can operate as a single hub for inventory and warehouse operations.
With one centralized hub, you can standardize systems from order processing to shipping procedures. A future-proof system will allow you to integrate existing systems to achieve an omnichannel sales and supply system. A unified system will allow you to not only have one source of truth for inventory and quantity, but also all of the data stored about each of the products in your inventory. Within the system, workers will be able to find valuable info about the products, including SKU, weight, dimensions, supplier information, add-ons and alternatives, and more.
Features to Look for in an Inventory Management System
When it comes to inventory management systems, the market offers a few different types. What system is best for your business depends on who it is for. Two of the most common types are standalone inventory management software and an inventory management system within an ERP system.
Standalone IMS is sold as specialized software. This software can have advanced features that typically suit huge enterprises such as a wide array of warehouse options and cycle counts. Despite some integration ability, these systems can be siloed and not integrate properly with other factions of your business such as Accounting and Sales. Because the systems are inherently disconnected, there can also be a lag in real-time analytics. Finally, these systems are more expensive and therefore suited for complex and specific needs.
Integrated IMS is a solution included in your existing ERP. Because of the existing integration, the inventory management function shares the same database as all your orders, accounting, CRM, and reporting. This centralized data will empower your teams with the same real-time data, accuracy, and consistency. Your workflows will also be simplified because of their ability to all live in the same system. Finally, your overall technology spend will be lower compared to purchasing, implementing, and onboarding multiple systems.
Wrapping it Up
Inefficient and ineffective inventory management strategies could be costing your business valuable time, resources, and money. An automated inventory management could improve the workflow of your team and reduce the propensity for human error. The aACE Inventory module seamlessly integrates with other core business functions like accounting and CRM. To learn more about aACE's inventory management engine, check out our success story on Restylers' Choice.