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To maintain production, complete customer orders, and keep an eye on available inventory, warehouses, manufacturing facilities, and retail locations depend on precise inventory management. Electronic inventory management systems provide many advantages over manual inventory control, despite the latter being a common choice.
They often assist better productivity and organisation and are also straightforward and simple to use. We define an inventory management system and go through 10 advantages of utilising one in this article.
What is an inventory management system?
Software that assists in tracking a company’s inventory and sales is known as an inventory management system. By giving precise inventory counts and maintaining product organisation, it aids staff. This assists a business in managing its inventory, completing orders, and monitoring overall output or sales. Inventory management can be more effective by using an electronic system, which requires little training.
Benefits of using an inventory management system
For small enterprises as well as major retail or warehouse operations, using an inventory management system offers many advantages, including:
More accurate inventory
Systems for inventory management assist organisations in tracking goods and fulfilling orders. These systems keep an eye on every item that comes into and leaves the business during production, storage, and sales. Many point-of-sale systems, which can handle payments and sales and can also interact with other point-of-sale systems, are also inventory management systems.
Businesses with more precise inventory may spend less on internal inventory management while building stronger ties with clients and partners.
Systems for managing inventory help businesses cut expenses by avoiding overstocking. A business can guarantee sales orders for customers and avoid backorders when it has an accurate inventory count.
Overstocking can result in unforeseen costs for businesses since they frequently store their inventory in rented or leased storage space. The cost of the storage space increases if it takes months or weeks to get rid of the extra stock. With an inventory management system, you might also cut back on the following expenditures of stocking inventory:
Employee wages: Employees must store and manage excess inventory, increasing labor costs for the business.
Insurance: Renting or leasing a warehouse typically requires an insurance policy to protect the property and its assets, increasing company costs.
Transportation: Storing excess inventory can increase transportation costs for moving it to and from warehouses.
When companies employ software to automate specific activities, automation occurs. Businesses can automate the procedure to lower errors, lower labour expenses, and provide more precise stock counts by using inventory management software. Automation lessens a business’ reliance on human labour and, over time, improves the effectiveness of the inventory management process.
Utilizing inventory management software helps increase production rates for businesses. Businesses can concentrate on generating higher-quality products at a faster rate since there are fewer inventory errors to deal with. The company can then reallocate employee hours to other duties in order to enhance operations and boost output.
By employing inventory management software, a corporation, for instance, might lower its payroll of three inventory management employees while saving money on labour. The possibility of moving one or more of those workers in inventory management to another department of the company is also a possibility. This guarantees that businesses are making the most of their staff.
Systems for managing inventory also assist companies in developing more effective inventory organisational structures. Employees are free to group things according to their size, shape, names, or any other helpful criteria. An organised inventory will make it easier and faster for the company to fulfil orders and keep track of its products.
An inventory management system, for instance, can assist a vehicle manufacturer in classifying each piece of equipment by name and batch number. In addition to making it easier for the material handling staff to locate the right materials more quickly, it also enables the business to trace each component from the delivery truck to the finished product. Due to the trackability of every material and item in the system, this can also lower liability in the event of a recall.
Improved customer experience
An organised and precise inventory management system can enhance the client experience. Customers are happier when orders are filled by businesses swiftly and accurately. This degree of customer care can strengthen the bond between the company and its clients by fostering more customer loyalty and trust. As more people utilise your items, this contributes to the development of a more positive brand image and may result in higher earnings.
Improved business relationships
A better business network can be developed by organisations with the use of an inventory management system. Order fulfilment that is swift and precise can strengthen the existing business relationship and contribute to an increase in confidence between the two organisations.
For instance, a bakery might rely on a flour mill to supply the components it need to make its products. An inventory management system can support the dependency chain that is created as a result. The staff of the flour mill can correctly track each batch of flour and complete the orders from the bakery if they utilise an inventory management system.
Improved data security
Users of contemporary inventory management systems can control who has access to a company’s inventory. The potential costs of a data breach are reduced thanks to these rights. The confidentiality of a company’s internal activities from suppliers and service employees is further ensured by inventory management systems. This concentration of knowledge can act as a defence against cyberattacks and improve the effectiveness of mistake troubleshooting.
Improved data visibility
Data security is improved by inventory management systems, but data visibility for the company’s leadership team is also increased. Leaders may make more educated company decisions with fewer mistakes that could waste time or money when there is greater data visibility. To detect any disparities in inventory counts, a warehouse manager, for instance, can monitor what merchandise enters and exits the warehouse.
Improved coordination between locations
There will be more inventory to manage if there are several warehouses or retail outlets. The coordination between various facilities can be improved and organised with the use of an inventory management system. Greater collaboration between sites can reduce expenses, enhance the sales process, and strengthen the brand’s reputation and draw in new clients.
For instance, a chain of bookstores may need to order extra books from another location if one of its locations is running low on a particular title. The number of items in the system, their pricing, and which locations currently have the book can all be displayed to store employees using an inventory management system. The system will automatically update the inventory count at each location after they make an order.