This article will tackle the advantages and disadvantage of using an inventory management software for businesses. Also, it will discuss what an inventory management software is about.
Inventory management is the process of preparing the procurement, storage, and distribution of products—whether it is raw materials, parts, or finished goods—to guarantee that the appropriate type and quantity of stock is available without keeping surplus stock and thereby tying up cash. If the inventory management is appropriately executed, it will save businesses a lot of money.
An inventory management's prime objective is to guarantee that there are adequate products or resources to fulfill demand without over-inventory.
Advantages of Inventory Management Software
Precise inventory management is essential to a profitable product company. Daily monitoring of stocks could help prevent stock losses and other issues. The advantages of using a good inventory management software are as follows:
Improved inventory management:
Having good inventory management will help you monitor what is in stock and order only the needed quantity of goods to satisfy the demand.
Lower incidence of overselling:
Inventory management will help monitor what is in the stock and what is on back-order; thus, you would not oversell products.
Cost-efficient:
Stock means dead money until it is sold. Carrying costs involve the management of storage and transport charges, insurance, and employees' wages. The inventory is also in danger of fraud, loss from natural calamities, or obsolescence.
Prevent the shortage of stocks and excessive stocks:
Good planning and management allow a company to prevent the possibilities that a product is out of stock and avoid storing too much supply.
Knowledge and insight:
Inventory management and stock management will allow you to easily spot sales patterns or track products with defects or expiry dates.
Better agreements with distributors and suppliers:
Inventory management also offers visibility into which goods are sold and in what amount—using this information as leverage to obtain better deals and conditions with suppliers.
Better productivity:
Effective inventory management systems would allow you to save time, which can be spent on other tasks.
Improved income:
More in-depth knowledge of both supply and demand will improve inventory turnover, which corresponds to higher revenues.
Improved client experience:
Consumers who get what they purchase on time are more loyal and may build a strong relationship with them.
Why Inventory Management Software Should Be ERP Integrated
Inventory management methods will enable you to save funds and keep the stock count correct. However, you could see more advantages by incorporating an ERP system with inventory management capabilities. With this kind of system in place, you will be:
Knowledgeable about inventory levels:
ERP systems could have an end-to-end view of transactions across all divisions, from sales to accounting to shipping. Centralized procurement eliminates redundancy as stock is replenished, and you can buy in volume to save money. More advantages abound as you incorporate your inventory software into accounting and back-office systems.
Simplify manual tasks:
Barcode and RFID scanning will speed up inventory, receipt, and completion. Using software eliminates mistakes in manual entries and relieves workers from routine activities.
Better access to real-time data:
The appropriate inventory management software can provide you access to real-time data on all SKUs in all facilities. It will send this information to all devices, regardless of your location.
Better forecasting:
Software that manages the collection of data and analytics could have insight into patterns. And if you understand patterns, you could boost your stock forecast.
Helps better decision making based on data:
Exploit the analytical capabilities of inventory management tools to make data-driven stock decisions. Save money by cutting inventory and loading costs.
Enable consistent production:
By estimating both demand and lead time, you could guarantee that production will never encounter a scarcity.
Organized numerous inventory locations:
Get a summary of the stock levels in all of your warehouses, procurement centers, and retail outlets and distributors.
Maximize all inventory:
A comprehensive inventory management software system allows you to ensure the correct balance of stock and quantity at the best possible cost. This will help you make sure you will not have excess or shortage of products.
Scale inventory as your company expands:
It could be hard for you to monitor 1,000 SKUs manually in 15 facilities. Inventory management software will do this job for you to make it fast and more effortless.
Compliance with Generally Accepted Accounting Principles (GAAP):
The correct valuation of stocks is essential to financial accountability. Inventory management software ensures the consistency required by GAAP.
Increase product visibility in recalls:
Automated systems enable managers to use batch or serial number records to track goods by date and location.
Disadvantages of Inventory Management Software
The drawbacks of inventory management systems are the same as those of other applications. Alternatives could be costly, difficult to understand, and could be hacked.
Costly for small businesses:
The inventory management software expenses may seem overwhelming to small businesses, but the investment also pays for itself through higher revenue and enhanced customer loyalty. In addition, cloud-based technologies also made software that used to be available only for large companies open to smaller enterprises.
Difficult to use:
Business software is often challenging to learn. However, managers could assist by engaging in online training to get users to learn fast and easy.
Possibility of device crashes:
There is a big possibility that the software will crash. However, you can minimize the likelihood of data loss and efficiency loss by using cloud-based services.
Malicious hacks:
malicious hacks are a danger to all companies. The Internet of Things (IoT) brings even more nuance to this. Cloud-based software usually provides more protection than a single entity would deliver on its own because of the possibility of an infringement on the vendor.
Minimized physical audits:
When you automate some of your warehouse activities, it could be easy to miss a physical inventory review. Solve this by setting up daily audits.
Adequately managing inventory could make or break a company, and getting an insight into your stock at any given time is crucial to success. With the right resources in place, decision-makers could handle their inventory efficiently and reduce their costs.
