Managing the inventory is one of the biggest challenges in any business. As your order volumes increase and you begin to expand across different sales channels, managing your operations becomes nearly impossible.
This is the reason business organisations use an inventory management system. With the right system in place, it becomes more efficient for them to track everything going on in the company, from incoming supplies, produced items, damaged goods, products sold, and items shipped.
All the information gathered from an inventory management system is used to make more accurate production decisions and ultimately avoid stock inaccuracies.
There are many other benefits of using an inventory management system, and these include:
- Reduce the risk of going out-of-stock.
Going out-of-stock on items is one of the most common problems faced by almost every business owner. When you don’t keep track of your inventory, you lose sight of your bestselling items (and vice versa). Problems usually arise when you cannot keep up with customer demands just because your bestsellers have gone out of stock. Not only do you lose sales; you are also left with items that sell poorly.
With an inventory management system, you can easily monitor which of your products sell like hotcakes and which don’t. You can then reduce the risk of going out-of-stock by ordering supplies in advance.
- Doing the inventory becomes simpler.
Since inventory management systems are automated, they take the effort out of manually tracking orders, production, and stored products. Managers can then focus their attention on business operations, rather than answering customer complaints.
- Come up with accurate sales forecasts.
In terms of documentation, inventory management systems do more than just record transactions made on the products. They aggregate the data covering a period of time, and this can be translated into reports for analysis. This data helps company managers plan ahead and come up with accurate and evidence-based sales forecasts.
Being able to make sales forecasts gives the business more room to grow. It also helps the company sustain its operations for the long-term.
- Cost savings.
When a product is not yet sold, it costs money. It takes in costs for storage handling, transportation fees, insurance, and labour. Inventory also becomes at risk of theft or loss from natural disasters or products going obsolete.
- Avoid inventory shrinkage.
Shrinkage is when there are fewer items in stock than in the inventory list. This usually happens due to clerical error, or when the goods are damaged, lost, or stolen during the period between the point of manufacture and point of sale.
Shrinkage affects profit, and when not addressed properly, it incurs company losses. It can be mitigated, if not fully resolved, by having an inventory management system in place. With inventory management, the risk of clerical error is avoided. More importantly, lost, damaged, or stolen goods are documented and accounted for in the system. It would be easier for managers to deal with these issues since they are put on record.
- Better customer experience.
Most of all, using an inventory management system helps keep customers happy. Customers become happy when they receive the product that they have specifically ordered. They become happier when the item arrives on time. They become happy not just with the product itself, but with your service.
Customer satisfaction translates to repeat orders and eventual loyalty. Using an inventory management system to handle customer orders becomes your way of showing them that you value their happiness.