After learning about inventory management basics, you’ve recognized just how important it is for your business, how we will help you develop a process to track and control your stock. In this guideline, we will be helping you to choose an inventory management system that is perfectly tailored for your company.
Inventory management is the brain of any business. It is the place where everything is stored, which makes its management a top priority for businesses. With this article, we will be showing you how Ricemill can help you get the most from your inventory.
What an inventory management system is?
An inventory management system or an inventory system is the tool for tracking your inventory all through your supply chain. This process begins at purchase, down to storage and production, then to the end sale. Your inventory management system governs how you approach the inventory management for your businesses, allowing you adequate control of your resources and how they are used.
Every company has its unique brand and requirements, which means each company will manage its stocks in its way. That is also influenced by the size and nature of the business. However, companies need a stencil or already developed inventory method to see the best method for their businesses. After studying the inventory management systems in this article, companies or businesses can then use the most suitable method with slight variations.
Inventory management systems example
Let’s imagine that Dan is a promising businessman and he sells food hampers. He buys food in bulk from several suppliers, but after buying, he must split and repackage some of his inventory. In order not to mix things up, Dan creates an Excel Spreadsheet, and he updates it upon every new order, assembling the hampers and completing sales.
His excel spreadsheet becomes his inventory management system. He depends on the figures in it to determine how much stock is currently available when the current stock might expire, how many hampers he can sell, and more.
Should you get an inventory system?
The simple answer is YES, and here’s why. Any business that handles stock will need a system to accurately track and control its inventory. Without a system to tell you what you have and what you’ve used, you would be working on an entirely ad-hoc basis. As a result, you will quickly run into situations where your business is overstocked or understock.
Thanks to an inventory system, business owners or store managers can know the number of components or ingredients needed to create or assemble the final product in a production line. Without this vital information, companies may start production and have to halt production halfway due to a shortage of resources. In such situations, resources are wasted, and there are no final goods to be sold. Other side effects of not having an inventory system include:
· Eroding your bottom line
· Insufficient stock to meet custom demands
· Excess stock
Knowing you need an inventory system is the first step; however, you need to know which inventory system you should employ. With a system like the one provided by Ricemill, you are assured that your inventory is in the right hands.
How can I manage my inventory
There are two primary ways in which companies can manage their inventory, and they are
· The periodic systems
· The perpetual systems
Let’s discuss these two systems and understand their differences as well as advantages.
What is the periodic inventory?
Periodic inventory is a mode of inventory management that relies entirely on taking stocks. Businesses that run this inventory management system have to count their stocks regularly. This can occur every 3 to 6 months. They do this to verify the stock accuracy, to check whether the stocks match up the sales figure.
What is a perpetual inventory?
Perpetual inventory is a system that tracks the stock levels as goods are received, produced, sold, or returned to the store. This form of inventory update occurs round the clock or at least once each day. Because of its nature, a perpetual inventory system tends to deliver the most up to date inventory figures with less dependency on stock tajes for accuracy.
Types of Perpetual Inventory Management Software
Using a spreadsheet is an excellent way to manage inventory. Just like Dan, many businesses can start their inventory management systems by using spreadsheets. On a basic scale, this offers not only the cheapest but also an accurate reading of inventory. However, using this system has a few downsides. For example, there is the factor of human error. It is common for human inputs to be inaccurate, which results in errors that can be very difficult to rectify.
Basic inventory management software
Many cloud-based inventory management apps come with adequate inventory management functionality. These tools are loved because there is no need to find and install a new solution and the convenience of being cloud-based. These tools are just a step ahead of the spreadsheet method of inventory control. However, their downside is that it is often difficult to get these tools to match your specific needs.
Dedicated inventory management software
Dedicated inventory management software is software developed to specifically help you track and control your stock. Some of these applications can also sync with the cloud, giving you connectivity to several other apps that help manage your inventory. That also allows you to access your data anywhere and anytime. Dedicated inventory management software is a powerful solution that is fully flexible and designed specifically to take care of your inventory needs. The downside with this method is that it requires proper setup to function at its best.
Warehouse management system
Managing your warehouse can be hugely beneficial to your inventory control; however, it shouldn’t be confused with inventory management systems. Warehouse management systems are about empowering your warehouse staff to function as effectively as possible.
When should I upgrade my Inventory Management System?
Moving to a dedicated inventory solution can expose your business to massive benefits, but it is a very step change. If you think it’s time to make that change, here are some signs you should look out for:
Requires a more flexible inventory management tool
With spreadsheets or cloud tools, there are features you require that they can’t provide. If you see that you need to add extra sheets to your solution or that your teams have started finding it difficult to get real-time data, then it might be time to make that change.
Need for accurate records becomes critical
Has it become difficult to track how much of a particular item you have in stock? By taking the next step, you will be able to get up to date information on your inventory at your convenience.
Inventory costs becomes too high
Holding costs undermine your bottom line when you lack control. The key to minimizing this is to store only as much as you need. Having an efficient inventory management system gives you the control you need.
Begins to experience slowing growth
Using a dedicated inventory system smooths the communication process. Thus, different teams can work in sync without the need to travel to different sections of the company to find out what is available for sale.
Ricemill is the inventory management company designed for Aussie retailers by providing specific Ecommerce management tools that cater to your needs. With our understanding of your inventory’s effects on your company, we recognize that it is one area of businesses that requires the most attention. With us by your side, you have more time to focus on other aspects of your business as we take up the task of managing your inventory. Contact us today.