Where Can You Find Quality Tools for Inventory Management? In today’s business world, the price of your product is determined by dynamic market forces. As a small and medium-sized enterprise (SME), you are unlikely to have much control over the cost of raw materials or other inputs needed to produce finished goods. So, the task before you is usually to close the gap between the selling price and the procurement price. In addition, you have to consider the costs of operation, manufacturing costs, and other charges.
The Best Tech Ultimate Guide to Tools of Inventory Management
Managing your business effectively and setting your business up for growth can be a challenge. SME entrepreneurs will always remain optimistic and try to manage these increasing costs. However, one major drain that cannot avoid is inventory costs.
Why do we need inventory management?
Most manufacturing companies spend most of their time on quality control and production. On the other hand, their sales teams focus on getting orders at the most competitive prices. In this situation, inventory management is often neglected.
Order delays are often caused by inefficient inventory management. However, little attention is paid to adopting digital tools and inventory management techniques. Also, Businesses are becoming increasingly complex, making manual operations more difficult. As ERP software and systems become more advanced, the need to implement in-house inventory management software is becoming less and less likely.
Therefore, it is important to choose an inventory management software that is tailored to the industry you are in, meets your business and cost requirements, and can adapt to your work environment. More industries are now recognizing that the right inventory management software will truly transform their small and medium-sized enterprises (SMEs) manufacturing business. Let’s explore some of the top inventory management tools that can help you grow your business.
What is an inventory management system?
An inventory management system helps the organization to provide accurate location and eliminates the manual process of inventory management. It helps to manage the supply chain by tracking inventory and stock levels. An inventory management system monitors stock levels and alerts the responsible person when stock levels drop below a certain level. An automated inventory management solution prevents several types of stock management issues, such as overstock and out-of-stock issues.
An inventory management solution is designed to ensure that the correct amount of inventory is in the correct place at the right time in the correct quantity. The goal is to avoid overstock or any other issue so that there is no impact on the bottom line.
What are the top inventory management tools and techniques?
Understanding the right inventory management tool for your business is essential. Also, It will help you achieve your business goals and give you a competitive edge early on. Having the right inventory management strategy backed by a well-built, professional inventory management software will help you manage your inventory efficiently. Let’s take a look at the top 5 tools and techniques for inventory management.
ABC Analysis
An ABC analysis is an old but evergreen idea that has seen many changes over the years. It is based on the evaluation of the value of the materials consumed. It includes the concept of Vital, Essential, and Desirable (VED) risk factors as well as the consumption rate of your business. Also, a good inventory management system needs to consider all of these factors.
In a typical ABC analysis, A, B, and C present as three distinct inventory categories. For example, A is the highest value category, making up 20% of the materials and 80% of your costs. B and C are the lowest value categories, making up 15% to 5%. So, you pay close attention to managing your ‘A’ list and keeping the ‘B’ and ‘C’ categories at a safe level. From this value engineering analysis, you can derive significant savings and improvements.
Pricing of FIFO, LIFO, and Average
The most popular pricing techniques used in inventory management are FIFO (First In, First Out), LIFO (Last In, First Out), and average cost (average pricing). Different businesses use different pricing techniques depending on their basic needs. With proper pricing and costing strategies, you can make sure that your inventory is working at optimal levels, resulting in accurate inventory analysis and accounting.
Traceability
Traceability is an essential business requirement and benefit, especially for inventory management. Data traceability is closely related to resource planning and costs, and both small and large businesses have seen significant benefits from traceability tools. In many industries, traceability is now a must-have, as it reduces risk and increases customer satisfaction. Therefore, always select inventory software with an expert traceability function.
Inventory Cycle monitoring
Cycle monitoring is the process of monitoring inventory continuously. It tracks the movement of materials from when they issue until they arrive at the warehouse as final goods. This allows you to see if an expensive material has been held up in the queue for too long or if there is a bottleneck due to critical material not being available.
Critical “A” category materials will track at a higher frequency. Delays in their movement can have a greater effect on operations. By targeting different materials based on size and impact, you can make sure everything is moving clearly and consistently. Any anomalies identified early so root causes can better manage.
Inventory Tracking Technology
Barcode, Quick Response Code, RFID, NFC, etc. are all inventory tracking technologies that help you to know exactly where your inventory is located. This way, you can prevent theft, misplacement, etc. In large warehouses, many inventories keep, so when you need a specific inventory, you can easily find it using this software. When you have inventory tracking software, you know exactly how many inventories you have with availability. With inventory tracking technology, you can automate the process, reduce human errors, and improve accuracy.
Inventory Audit
The audit process is an important part of inventory tracking for organizations. It helps you to know how many inventories are available and the quality of the inventory. In some cases, the numbers are not the same in the software as they are in the real world.
Data identification with barcoding
Make the inventory process as error-free as possible by using an integrated information processing (IOP) system where all the raw materials are coded and can easily identify by the system. A barcode reader, for example, can be very useful for small and medium-sized enterprises (SMEs). It identifies the product while syncing data in your ERP system.
A status overview of all raw materials, semi-finished products, and finished goods is instantly available to your department managers with a single look. This saves time spent on manual data entry and prevents errors.
What are the advantages of efficient inventory management?
What Are the Benefits of Using Inventory Management Tools? The following benefits below are;
- Improved analytics & trends; Efficient inventory management software offers analytics that helps you avoid unnecessary overspending and out-of-stock issues. It also allows you to track trends that give you an additional advantage in your business.
- Increased productivity; When employees don’t have to waste time looking at a specific piece of inventory, productivity increases. When your data is accurate and error-free, productivity increases too.
- Precise records; When you have inaccurate inventory data, you risk a penalty during an audit and a wrong decision will make. However, when you have accurate records, your decision-making improves.
- Improved business decision-making; When you have accurate data and analytics, you don’t need to make decisions based on assumptions anymore.
- Full picture overview; This software gives you a full picture of where your inventory is located more or less, so you can.
Inventory management tools best practices
With the rapid growth of the small and medium-sized enterprises (SMEs) industry in India over the years, there has been a significant change in inventory management practices. What Are the Best Practices for Inventory Management? Let’s take a look at the top inventory management best practices in this industry.
Good monitoring
When you’re running a manufacturing line, packing goods, or transporting finished goods, all of these processes are very visible and easy to spot. However, when you see a pile of raw materials in your stockyard or a rack filled with expensive lubricants that aren’t being used, you may not be immediately suspicious.
However, when these situations repeat often, you’re likely to have a large portion of your money lying idle, resulting in unutilized working capital. It also leads to the over-stocking of materials, which can lead to loss or damage, and even obsolescence of materials. By monitoring your inventory using the right inventory management software, you can take full control of these factors and protect yourself from such losses.
Improving inventory to enable faster deliveries
One of the most important factors in maintaining customer loyalty is timely deliveries. Delays in production, raw material shortages, and unexpected interruptions can lead to order cancellations.
One way to protect your company’s reputation is to optimize inventories. By not holding too much or too little stock, you can manage the material flow without raising holding costs or losing orders. This improves order fulfillment processes and keeps your customers happy!
Measure everything
What can’t measure, can measure! Use this principle to establish standards and methods for measuring results, analyze collected data, and take action to improve.
- Measure variations in inventory
- Cost of holding inventory
- Age of non-moving stock
- Vendor performance
- Cycle time to see what materials are moving faster
Never be in a situation where you are running out of stock.
The material shortage is a scary word. Getting caught between customer demand and stock out is something you never want to find yourself in. Make sure you have enough stock and keep it at a minimum. Build a great inventory tracking system to make sure your business is running smoothly.
Be proactive.
An SME business is smart when it takes steps to mitigate problems. All improvements to an inventory management system don’t have to stem from post-crisis damage!
By working with all stakeholders in your business, you can predict what issues you may encounter in the future. Understand your company’s growth plans so that you can develop appropriate inventory management systems to ensure you’re well-prepared.
As we mentioned at the start, inventory is often the hidden cost that most businesses don’t realize until after a crisis. By that time, it’s too late to correct past mistakes. Proactive steps through good inventory management systems are your best defense against this trap.
FAQs
What inventory management software should I choose?
- Easy to use
- Cost-effective
- GST compliant
- Integrated with core business & accounting tools
- User-friendly
- Lifetime free plan
- Upgrade only when needed
- Offers advanced features over and above base modules
Importance of inventory management software for different types of industries
- Manufacturing
- E-commerce
- Logistics
- Healthcare
- Organizations that are inventory intensive
What is the most important inventory tracking system tool in all of the above tools?
Inventory tracking techniques tags are the most important because they provide exact location information in real-time, helping you to make important business decisions and improving the accuracy and efficiency of your inventory.
What is the Best Inventory Management Software for Small Businesses?
The best inventory software for small businesses is the one that is easy to use, user-friendly, and doesn’t require a lot of training. It should provide all functional features and be affordable and precise. It designs for small and medium-sized businesses, so all its features are tailored to meet the specific needs of SMEs.
What is the best inventory management software for manufacturers?
- GST compliance invoices
- Transaction tracking
- Accounting integration
- Inventories
- Production
- Materials resources planning
- Analytics
- The inventory module fulfills all these requirements
- It is impactful like SAP
- It is easy to use like Excel
- Real-time inventory overview
- Save operating costs
- Avoid last-minute stock shortage
Do I need to buy new software or hardware?
You don’t need to buy new hardware to use inventory management software. With a laptop and internet access, you can get started with the inventory tool on the cloud. Because it’s cloud software, you can use it anywhere, anytime.
