If you are looking for an inventory management system, you are most likely aware of the pitfalls that come with navigating a stack of different software for each step in your production process. You may even rely on Excel for everything or hire someone to manage each step. With a quality inventory management system, you wouldn’t need to anymore.
For starters, it is important to clarify that an inventory management system’s job is NOT isolated to the activity of checking a store or warehouse’s stock or inventory alone. Anyone that manages inventory understands that the flow of inventory is very much tied to production, sales, fulfillment, profit, and ultimately, growth.
An inventory management system not only touches each of these areas of the business, an effective inventory management system also can be a significant contributor to the scalability of your business.
When you have an inventory management system that controls inventory in a highly effective way, this allows you to streamline the workflow in each step of the production process. Better yet, an inventory management system should take on the bulk of the work to streamline the whole production process, assisting you in your collaborations with suppliers, optimizes inventory levels for profitability, increases your cash flow, provides much more accurate forecasting, and frees up significant time so you can focus on other areas of growing your business.
Below are 5 Top Best Practices that your inventory management system must be able to do if you want to scale your business.
Streamline Your Purchase Orders
When scaling, many businesses try to enter new markets and diversify their product lines. Planning inventory can feel more like an experiment because of the lack of current data to make accurate and informed decisions. Plus, there are multiple scenarios you have to consider. For example, you plan for potential hard times, especially if you sell or manufacture seasonal products. You can streamline the process, especially purchase orders, to make it feel like less of an experiment and create a well-oiled machine.
When considering an inventory management system, whether it is cloud-based (which is ideal for many reasons,) or hosted in-house, you’ll want to make sure your system can easily and even automatically create and send purchase orders to your vendors. With automated trigger settings for your inventory turn levels and inventory out-of-stock (OOS) patterns, you can create automation rules that make sure you automatically create and send purchase orders to your vendors to get the items or supplies you need, in the quantities you need, and at the right time, you need them. This saves you time and helps optimize your inventory levels, which improves your use of capital and cash flow.
Real-Time Inventory Tracking Improves Sales
A high-performing inventory management system should be able to keep track of your inventory levels at all times and in real-time. Real-time updates through a cloud-based platform gives your sales team a full and accurate view of the inventory when they need it the most. This means they can better react to customers’ needs by offering alternatives to products they originally wanted, which is also a great opportunity to upsell. An advanced inventory management system should also have the ability to instantly provide your sales team with a list of products that have been sitting in inventory for a while, allowing them to offer additional discounts to customers in order to sweeten the deal and secure the sale. Effective inventory management software automates most of the work, saving you and your team the precious time needed to scale the business and solidify your competitive edge.
Increases Margins and Bottom-Line Profits
Higher sales are often tied to higher operational costs. This decreases bottom-line profits. Since the bottom-line is a product of gross revenue minus operating costs, the best way to increase revenue is to temper down operating costs. An effective way of doing this is to reduce the manhours it takes to get the same output. This is where your inventory management system comes into play. Your system’s software can help your inventory management team, your sales team, and your fulfillment team communicate more efficiently and obtain critical information faster, shaving off time between lead to sale or purchase to fulfillment. Along with decreased manpower needs, you are likely to also improve your customers’ experience by making a streamlined process for returning and replacing items.
Simplifies Omnichannel Order Fulfillment
Twenty-nine percent of retailers struggle to fulfill multi-channel orders because they don’t have a consolidated dashboard that shows inventory levels across stores, vendors, and warehouses. This is a major issue because they lose potential sales and negatively impact their customers’ experience. With an inventory management system, the software’s central portal allows business owners the ability to locate in-stock products in different locations and schedule automatic order placements before items are out-of-stock. Companies that use an inventory management system to manage both their in-store and online sales will be able to boost omnichannel sales by locating in-store surplus to help fulfill online orders more quickly or vice versa.
Trims Unnecessary Business Costs
What used to be core business expenses are unnecessary today. This is all thanks to savvy inventory management systems that connect with your favorite tools so you can streamline your workflows. For example, an inventory management system that integrates with Quickbooks could save you thousands in exorbitant accountant fees and balance your books faster each month. Ideally, your inventory management system will take you from inventory purchase orders to sales to fulfillment, to customer support, and then to billing.
In summary, make sure you consider these 5 top best practices your inventory management system must include if you’re serious about scaling your business. And we know you are! It quite literally could be the difference between scalability and increased profits, vs declining productivity and profitability.
