Every organization needs to manage and control their inventory. Whether the company manufactures a product or purchases it, they need to make sure that their stock is well-managed and up-to-date.
Keeping track of what products are sold and the current numbers in the warehouse can be tedious, especially for larger companies with large inventories full of expensive items. Inventory management software can be used to ease this process, saving the company a large amount of time and money in the long run.
Table of Contents
What is Inventory Management Software?
It’s a business application that tracks, analyzes, and organizes your sales, purchases, and other production processes. Companies did it with pencil and paper in the past, which is a challenge, especially when dealing with massive productions. Not only is it slow, but it’s also prone to various human errors.
Also, paper can be prone to damage. Nowadays, companies can use systems that utilize barcodes or radio-frequency identification (RFID) to see when and where the ships come in, the location of the raw materials they need for production, and the products shipped by the company. Using inventory management software will make all of your production fast and easy to track, reducing your overall production time and generating more sales.
How Is It Essential?
It’s not just essential; it’s crucial. Without accurate inventory management, a company will have a hard time tracking and locating materials for its production. And without inventory management software, a company won’t be able to meet demand in real-time. Also, inaccurate inventory recording creates a higher lead time, which means the company’s ability to respond to market changes, demand, and stock-outs will be too slow.
As a result, this can create customer dissatisfaction because their product isn’t on time. Of course, this margin of error in smaller businesses is much more acceptable because their demand isn’t too high. However, you should remember that with a faster and shorter lead time, you’ll have the advantage over your competitors.
Effect on Inventory Turnover Ratio
Inventory turnover is a key metric in businesses. It is the rate of the cost of goods that your business sells divided by the average stock you have on hand. If your turnover rate is too high or too low, you may be overstocking, or your production is too slow to meet the demand.
Either of these scenarios can cost you customers and money. A low turnover rate will lead your business to have duplicate orders or have your goods get stuck on shelves and deteriorate in value. A high turnover ratio can result in excess shipping costs and eventually uncompleted orders.
How can Inventory Management Software help with this?
Simple. By keeping track of your materials and goods accurately in real-time, you’ll be able to see the problems you’re having with your production. Also, since everything is mostly automated, you won’t be having a tough time adjusting to your current situation, whether you have a too high or too low turnover rate.
The key here is balance, and you can do that easily with the help of inventory management software, such as Fishbowl. With a more balanced turnover ratio, you will have a more efficient management system, built-in lead times, and a much faster overall production.
With inventory management software, you will be able to track what goods are popular during the season. This is a great advantage for manufacturers of seasonal goods like Christmas and Halloween decorations. With constant monitoring of your inventory, you’ll be able to focus more on investing resources on on-trend goods.
Easy Inventory Processing
With software, you can streamline your inventory processing by tracking your stock and merchandise and their associated costs will save you a lot of time. With clear visibility on your stock and goods, you can constantly monitor the status of your inventory and the goods that go in and out of your warehouses.
Also, with this software, you’ll have automated updates on your goods’ quantity and quality for quicker processing and selling. This can also help you with avoiding the costs of your goods overstocking and having them shelved for too long.
Better Customer Service
With a constant eye on your goods and what happens to them in and out of your warehouse, you’ll have the ability to give your customers better customer service by keeping them updated on what happened to their merchandise and giving them an estimated time on their delivery.
Also, this can help you find and track lost goods and give your customers a shorter wait time when it comes to their purchased items.
Any company that is serious enough to take the step forward should consider having inventory management software if they haven’t already. You may be hesitating because of the cost, but the investment return far surpasses the income you’ll generate. It’s a huge advantage in the long term. Also, you can pick from a variety of models and designs, whichever is suitable for your business.