Inventory Management Software : Technology's Role in Solving Inventory-Related Issues

Every firm has some interaction with inventories. But if you manage a real estate office, a legal business or a nursery, for example, you probably don't have any trouble counting your office supplies, lightbulbs or furniture, and you don't require a complicated inventory management solution to keep track of things and assist with the ordering process.

However, if your business is a part of the supply chain, whether you work in manufacturing, warehouse management, or retail management, you're probably familiar with issues like time-consuming inventory counts, running out of stock due to delayed reordering, or shortages caused by incorrect demand planning.
What is inventory control?

Inventory management is a set of procedures for keeping track of stock and preserving ideal stock levels. In order to have the proper quantity of stock in the proper location at the proper time, it includes control over the complete flow of goods from purchase to sale.

Despite the fact that these terms seem similar and are sometimes used interchangeably, inventory management and inventory control are distinct from one another. Inventory management is a more general phrase that encompasses strategic planning, demand forecasting, and stock replenishment activities. Inventory control deals with stock that is already in your warehouse or storage facility.

For a variety of supply chain participants, including

Manufacturers, storage facilities, wholesalers, retailers, and online stores.

All of these businesses have to keep meticulous records of their inventory since they deal with placing orders for supplies, keeping products, and completing orders. They deal with a variety of inventory categories, though. Let's review the principal ones.

Primary categories of inventory

There are numerous varieties of inventory, however they are commonly divided into four groups.

• Raw materials :

Any objects required for the production of completed products are considered raw materials (including components). Fabric, thread, and sewing supplies, for instance, would be the raw materials you would buy and employ in the production process if you manufactured clothing.

• Work In Progress:

Inventory refers to things that are partially completed but not yet marketable. Shirts that are complete in the clothing production process but still need their buttons put on are referred to as WIPs.

• Maintenance :

Items that support the manufacturing process but are not included in the finished product are known as maintenance, repair, and operations (MRO) commodities. Keeping with the example of the clothing sector, it could be scissors, needles, or designs.

• Finished goods

These are manufactured items that are offered for sale.

Inventory management stages

As we previously stated, inventory management entails keeping track of products as they are manufactured, stored, and sold. Therefore, this procedure can be divided into five steps.

• Purchasing (reordering) is the act of purchasing finished goods that are destined for sale or raw materials required for manufacturing.
• The process of transforming raw resources into finished products or putting items together for sale is called production.
• Stock is held in storage, for example, unfinished goods until they are sold or raw resources before they are used.
• Transferring things to clients is sales.
• Reporting involves keeping track of how much a company sells and how much money it makes.

Software for inventory management

A software programme called an inventory management system (IMS) is used to manage orders, sales, returns, reports, and inventory. It aids in automating formerly manual procedures and boosts operational efficiency, accuracy, and speed.

IMSs mostly come in two varieties:

Real-time inventory management is handled by a perpetual system, while updates are delivered periodically by a periodic system that does random stock counts.

The benefits and drawbacks are plain to see. While perpetual systems demand greater investments, are more sophisticated, and allow real-time visibility and control, periodic systems are more affordable, simpler, and have more limited capabilities. However, different organisations call for various approaches and solutions, so your choice will depend on your own requirements.

An IMS can be used as a stand-alone solution or in conjunction with your enterprise resource planning (ERP), supply chain management platform, warehouse management system (WMS), or other company management platforms.

Characteristics of an inventory management software programme

1. Inventory tracking:

Automatic inventory tracking saves a tonne of time. The exact quantity of each item you have on hand, as well as its location and status (on order, in transit, in stock, etc.), are all kept track of by the IMS. Although you don't have to stop stock counting activities to match physical stock with your records and prevent discrepancies, inventory levels are automatically updated in real time when purchased or returned items arrive and sales through multiple channels take place.

Real-time data sharing gives you access to your inventory, speeds up the process of finding what you need, and helps you stay away from disruptions, theft, and overselling.

2. Cycle counting and stock counting

These still need to be followed in every supply chain facility. These procedures take less time and are more accurate when done with barcode and RFID scanners that automatically update inventory levels in the system. Instead of physically counting goods and filling up spreadsheets, you just need to check the data you already have.

3. Improving layouts

This is crucial for large warehouses in particular. The layout can be estimated, the necessary staff and equipment quantities can be determined and optimised, goods traffic flows can be analysed, and many other tasks may be accomplished with the aid of software. Check out the video below for an illustration of these talents.

4. Reordering automatically

For many supply managers, this is undoubtedly the most cherished and stress-relieving function. The IMS can be configured to automatically construct and submit purchase orders for the required items, including those supplied in packages or kits, when low stock levels are detected. As you run low on some things, you can also set up personalised alerts to notify you when it's time to place another order.

5. Management of purchase orders

It streamlines the process of creating and monitoring purchase orders. By extracting all the supplier information from the database, adding things by just scanning the barcode, adding other documents effortlessly, and emailing the order directly from the system to the supplier, manual entry is minimised.

6. Predicting demand

Manufacturers also require it because not all product lines are the same and production volumes must be carefully planned in accordance with projected demand. It is obviously essential for wholesalers and retailers. According to recent research by Bain & Company, 56 percent of supply chain organisations want to increase their investment in demand forecasting as a result of the COVID-10 pandemic's effects.