When it comes to data and analytics, there’s no question that accurately tracking your inventory is essential for success. Inventory management systems play a key role in tracking inventory and sales.
When you track your products right, you can benefit in a lot of different ways. For example, if you’ve been tracking products, you likely know the sale volumes for your products. This is helpful when it comes to deciding which products to keep on your retail shelves or what’s needed for your online ecommerce store.
One of the best ways to track, predict and reorder products is by using an inventory management system. Now, inventory management systems can vary when it comes to features and capabilities. Furthermore, there’s a number of different systems that you can use to get the results you need.
First, let’s briefly go over what inventory management is.
What Are Inventory Management Systems?
Inventory management systems track goods through your entire supply chain or at least the segments your business operates in. That can cover a lot of different areas pertaining to your inventory, such as
- Production To Retail
- Warehousing And Shipping
- Stock Movements
Inventory managers focus on different parts of the supply chain. Most small businesses are focused on the end of the supply chain, which includes ordering and sales. With larger companies, the focus is on the whole supply chain.
In a nutshell, inventory management systems (IMS) allow business owners to see all the movements of their inventory. With real-time reports and data tracking from your inventory management system, it allows you to make important decisions that will have short-term and long-term impacts on your business.
4 Types Of Inventory
- Raw materials: This category is going to include both nonperishable materials, (wood, wool, sand, grains, raw fruits, vegetables, or meats used to make processed foods.)
- Work in progress: WIP refers to goods that are in progress but not yet ready to sell, (window frames, sheets of glass, fabrics or flour.)
- Finished goods: Finished goods are ready-to-sell items, (doors, windows, fences, or foods.) Finished goods may be either intermediate items headed for another manufacturer, such as fabrics to make clothes or dough to a pizza shop, as well as retailer consumer goods or direct-to-consumer (D2C) sale.
- Maintenance, repair and operations: MRO items are items production needs to keep things running, (tools, parts or consumables to get products to their destinations, like paint or packaging.
No company wants to tie up more cash in inventory that is necessary, this is especially true for inventory-intensive industries like manufacturing, retail, and food service. How can you make sure you’re successful? You use inventory models.
Importance Of Inventory Models In Managing Inventory
An inventory model is the system that businesses use to determine the best way to produce goods. The inventory model or models in use govern areas including;
- When to order raw materials
- Best ways to track and hold items that need production
- How to fill orders fast and accurately
There’s a lot a company has to consider when choosing an inventory model. Properly understanding inventory models can help you business maximize resources, manage costs effectively, and deliver quality goods to customers on time. This is an important first step to effective inventory management. Each inventory system has to be specific to help leaders determine how much stock to have on hand at anytime.
For example, just-in-time (JIT) and materials requirement planning (MRP) are great for those of you that have complex manufacturing and supply chain processes. Additional models that include economic order quantity (EOQ), economic production quantity (EPQ) and days sales of inventory (DSI) can also be extremely useful to management.
While smaller merchants typically track inventory manually using spreadsheets, larger companies and organizations benefit by using specialized enterprise resource planning (ERP) software or specialized inventory management applications to track their supply chain.
Once a company has settled on a model, it’s time to seek a competitive advantage. And that requires some out-of-the-box thinking, advanced planning and leveraging advances in technology and process.
Inventory Management System Features
Not all inventory management software is created equal. Before you choose an inventory management system for your business, you need to make sure you talk to an expert to understand everything that’s included with the software.
Furthermore, each industry has different needs, goals and focus points. Ecommerce inventory management is different than retail inventory management or warehouse inventory management.
Let’s take a look at the basic inventory management system features that are included with most software.
- Accounting Tools
- Reporting Tools
- Inventory Forecasting
- Inventory Alerts
Next, let’s take a look at manufacturing inventory management.
Manufacturing Inventory Management
The manufacturing process includes both bills of materials and work orders. The point of process in your inventory management at this stage is all about tying work orders and bills of materials together.
- Automatic Reordering
- Inventory Levels (Finishing Products And Parts)
- Materials Tracking
- ERP Integrations
- Maintenance Software
Having the ability to track the materials you need to complete orders and what you’re working on is vital to accuracy and efficiency. It’s near impossible to run a successful manufacturing businesses without an order management system. If you have a small business, it’s possible to track everything by hand. For larger companies, they can’t afford to not be efficient.
The big key question, what do you need to track?
Do you need an inventory management system to tie into your warehouse management? Do you need to add automation to your reordering? Do you need to track something else?
Warehouse Inventory Management
If you want to accurately and efficiently manage your warehouse, you need a warehouse inventory management system. With over 1 million cubic feet of warehouse, Thill can speak first hand to the importance of managing your warehouse inventory.
Warehouse inventory management systems usually include features such as;
- Advanced Barcodes
- Bin Tracking
- Order Picking
- Shelf Tracking
With your warehouse inventory management, you’ll be able to find products quicker and you’ll reduce human errors. You can optimize your warehouse for efficiency, strategically placing product so fulfillment is faster.
Warehouse management software is a vital tool that every business should invest in.
Retail Inventory Management
Retail inventory management software allows retailers to operate a profitable business.
The right inventory management system for retailers allows you to keep the right products ordered and those products stocked on your shelves.
Key features for retail inventory management software usually includes;
- Automatic Reordering
- Barcoding Support
- Inventory Forecasting
- Order Picking
Choosing The Right Inventory Management System
There’s a lot to consider when it comes to choosing the right inventory management system.
First and foremost, you need an IMS that is specialized around your specific needs and goals. Inventory management is crucial to operating a successful and profitable business of any kind. Proper inventory management is import to delivering a great customer experience.
The right system for inventory management can be a game changer for your company, it’s a decision you should never rush to answer.
If you want to speak with one of our inventory management experts at Thill, you can reach us at 1-920-967-9201 or you can use this contact form. We’re always here to answer your questions, so don’t hesitate to give us a call.