EGA Futura Business Encyclopedia
Businesses that were quick to invest in inventory management software enjoyed enormous competitive advantage compared to those that were hesitant to modernize. Today, investment in reliable, innovative inventory management software is key to the success of businesses everywhere.
For businesses that deal with tangible products, inventory management is a key element of that business’s success. Keeping tabs on where products are being stored, which vendors they come from, and how long they have been sitting on warehouse shelves are all key elements to successful asset management for businesses, no matter how small or large they might be.
Regardless of whether or not the products that one’s business sells are perishable, keeping a good sense of where they’re resting, how long they’ve been there, and how quickly they should be out the door is a crucial factor in maximizing productivity and keeping inventory upkeep, storage, and associated costs low.
If your business has an inventory, you should be concerned with the performance, efficacy, efficiency, and reliability of the inventory management software your business uses. If your business doesn’t use software to manage inventory – then you should be seriously concerned about losses in revenue and productivity that are probably affecting your business. Simply stated: almost every business needs some kind of inventory management software, no matter how big or small the firm might happen to be.
The specifics associated with a particular brand of inventory management software, or the implementation of a certain software package, can depend largely upon the kind of assets that are being managed. However, there are a few general rules of thumb regarding inventory management software capabilities. First, the software is key to helping businesses ensure that they are able to stick to an ideal balance between having an overstock of inventory, and having too little inventory to fulfill demands.
Second, businesses with multiple locations and / or particularly large warehousing facilities depend upon a unified inventory management system in order to allow staff and management at remote locations to determine where supplies or assets they require are located, and to manage the transfer for assets between one point to the next. This makes acquisition of necessary items within the firm more streamlined, and also helps prohibit the loss of inventory as a result of graft.
In addition, most warehouse and receiving dock managers find that inventory management software that can handle rapid entry of new assets being received is a key element to maintaining efficiency. Further, in modern warehouse environments, inventory management software and systems play an essential role in managing the rate at which items are picked, packed, and shipped.
More sophisticated inventory management systems will automatically optimize picking, packing, and shipping, in order to ensure that fulfillment obligations are met on-time, or even ahead of schedule. The software also handles tracking product sales and inventory levels, and in many cases, integrates information from front – of – house inventory and sales (such as items sitting on shelves in a store, or on the floor of a showroom) with back – of – house inventory and sales (such as items stored in warehouses, and are shipped directly to customers; good inventory management software will even automatically arrange for items to be shifted between warehouse and showroom inventories based on pre-defined rules concerning how much of each item should be available on the showroom floor at any given time.
In large retail chains, managers will often depend on automated reports from inventory management software that automatically recommends how much of each product should be ordered, and where it ought to be sourced from.
Inventory management is also absolutely essential – especially for large companies – when it comes to avoiding issues such as items in the warehouse becoming obsolete. In the case of perishable products, it also helps schedule acquisition of goods and receipt of items in order to ensure that products are sold when they are at their peak freshness, and to ensure that overstocked inventory is avoided whenever possible.
Service providers and manufacturers also find that inventory management software is essential to manage the resources that they need in order to provide services or to create products. Whether a business sells a service or makes and retails a product, the good that is sold requires certain raw materials in order to be produced. For instance, though they hardly seem alike, a lawn care and maintenance company and an auto parts manufacturer have more in common than one might think. Each must manage the intake and usage of certain assets in order to produce a sellable good. In the former case, a firm might need to manage the receipt and use of fertilizers and pesticide concentrates. In the latter case, a firm might need to manage the receipt and use of sheet metal and steel ball bearings. Though the assets being managed are quite different, the business processes involved with each are essentially the same.
Each company has an interest in acquiring enough materials to provide the service or good they will market to consumers, and even though the lawn care company might not need an inventory management system in order to keep track of the primary good that it sells (after all, lawn care services are largely intangible, and rendered in the form of labor), it does need to keep track of when it will receive the next shipment of fertilizer, how much of that fertilizer is loaded onto each of the sprayer trucks in its fleet, and how much fertilizer volume is expended on various jobs. Though inventory management software can’t do much concerning the act of spraying fertilizer, in the hands of a savvy manager, it can help optimize the use of, and save costs on, the use of raw materials.