March 02, 2021 By Angelina Eillott Category: Inventory Management

 

Inventory Management involves ordering, maintaining stocks, and using a product or material that belongs to a particular business. Inventories are of various types, such as raw materials, cycle inventory, and MRO goods. Prioritizing the list of your business is critically important as it helps you understand what products are out of stock and supposed to be ordered or manufactured rapidly and continuously to efficiently respond to customers’ demands.

Inventory management is all about tracking and controlling your business’ inventory as the products and items in the list are bought, manufactured, stored, and consumed. It manages the entire flow of the products you trade in- from their purchase to distributing and selling them. The inventory management process ensures for your business that you always have the adequate quantity of the required items and products in the right location and at the right time. Inventory is the backup of the goods a company manages or stocks for selling. It may be the raw material that you would transform into a new product, or it might be the colossal product that would be broken down into different components to sell separately. It can also be non-physical items like software. Every business develops an inventory to manage the sale, purchase of goods and products they deal in, and for that, an inventory management system is used to be developed. Inventory management is an integral part of every business. It affects business profitability, but small companies usually don’t practice or establish useful inventory management tools for an effective Inventory management process, due to which they end up leaving customer expectations dissatisfied. In this article, we will discuss all Inventory management.

Types of Inventory Management

Inventories have different types and which type you are having depends entirely upon what you sell. Some of the essential types are:

  • Finished Goods/ For-sale Goods

    This involves the products stored typically in a warehouse before they are sold or shipped.</.li>

  • Raw Material

    The inventory involves or stores the unprocessed material used to prepare the goods you sell.

  • In-transit Goods

    Inventory for the goods/products that are no longer stored in the warehouse and are out for transportation to the destination they are supposed to reach.

  • MRO Goods

    MRO is short for Maintenance, Repair, and Operating. This type of inventory is developed to support the manufacturing process in a business.

  • Safety-Stock

    This is a surplus stock you maintain for dealing with the shortage from suppliers or surges in demand.

This classification can help you to know your way of inventory management and helps you in managing accordingly. Inventory management is not just a concept but a whole process that involves tracking and controlling stock as the material travels from your supplier to the warehouse and then to your customer. It takes five stages for completing the process, which are:

  • Purchasing

    This involves buying either raw materials to manufacture your product or buying ready products to sell on with no assembly needed.

  • Production

    Manufacturing your finished product by assembling its various constituent parts. Every company is not involved in manufacturing — wholesalers, for example, might skip this entire step.

  • Holding Stock

    Stocking your raw material until it turns into a well-manufactured product (if needed) or your manufactured or readymade goods until they are sold.

  • Sales

    Delivering the stock to the customers and receiving payment against.

  • Reporting

    Companies require the details about how much stock is sold or under sales and how much profit it is drawing on each sale.

Following these steps can help you manage your inventory efficiently and appropriately. Some inventory management techniques are being followed by various businesses. These techniques include:

  • Economic Order Quantity

    It is a formula for the ideal order quality on the measures like costs of production, demand rate, and other factors. The objective of this formula is to minimize the related fees.

  • Minimum Order Quantity

    It is the smallest stock amount a supplier wishes to sell. The sale of MOQ depends upon the purchasing capacity of the retailer.

  • ABC Analysis

    This is about categorizing the products into different categories based on the overall inventory cost.

  • Just-in-time Inventory Management

    It is a technique that helps you arranging raw material orders from suppliers directly connecting with production schedules.

  • Safety Stock

    It is about ordering extra inventory beyond the expected demand of the products. This aims to avoid shortage due to stock-outs caused by changes in customer demand.

  • Reorder Point Formula

    This technique is based on a business’s purchase and sales cycle that differs with per-product basis. A reorder point is generally more than a safety stock number.

This is not the exhaustive list, and there are more inventory management techniques such as LIFO-FIFO, Batch Tracking, Consignment Inventory, Drop-shipping, Six Sigma, and many more.

Inventory Management Software

Inventory management is one of the crucial targets of companies worldwide. Every time an order remains unfulfilled or gets delayed, it affects the brand’s trust. Human errors caused due to manual stock management leverage huge damages and affected a business’s profits to a large extent. A software solution that is capable of automating this complicated process and provides effective inventory management services can solve all these issues for your sales business. Adopting the best inventory management software enhances the profitability of a business much more than it costs. Inventory management software is a set of several tools to assist the company in automating and streamlining inventory management. It optimizes inventory, saves time, enhances efficiency, reduces the scope of human error, maximizes team productivity, and reduces costs of the whole process.
Inventory software leverages the ability to automate easy updates and tracking of inventory, maintaining levels of stock, enhancing efficiency and productivity, and grows business profits. Inventory management software also releases insights, forecasting, analytics, and reporting tools for a better way of developing business intelligence. If you want to automate inventory management for your business through software, there are multiple options available in the market. Examples of useful inventory management software are- Orderhive, Dear Systems; Multi orders; Asset panda; OpenBoxes; and many others. Let’s discuss some of the best in the industry inventory management software:

[Recommended Reading: Building an Online Auto Parts Store: An Overview of Essential Features]

  • Orderhive

    Orderhive is an eCommerce Automation Software that enables the management of the Inventory, Orders, Shipping, and all other operations in an eCommerce business in an automated way. It comes with a commitment to raise the bar for all eCommerce processes and procedures with the help of an ultra-modern design, sophisticated and straightforward interface, robust features, and the ability of seamless integrations with marketplaces, shopping carts, carriers, and accounting software in an all in one business tool. It streamlines and automates back-end processes and maintains a real-time inventory tracking system.

  • Dear Systems

    This system helps you evolving, managing, analyzing, and automating every aspect of your business through a centralized online platform and enterprise-level tools. This software will help you leverage the power of a multi-module inventory management system to raise the bar of your business.

  • Multi orders

    This inventory management software can help you in integrating all your sales channels and manages your orders with a multichannel inventory management mechanism and shipping management system. It is a perfectly optimized workflow managing solution for your business. It would help you connect all your shipping carrier channels and print labels with just one click and help you manage pricing and stock levels at all sale channels in a more efficient way from one location only.

  • Asset Panda

    Asset Panda is a top flexible inventory tracking and management system that works the way you like to give easy and immediate access to the people in your company to the information they need about your company’s assets—ultimately enabling you to work in a way smarter than ever. Besides asset management, it also maximizes and streamlines every aspect of your business process, from auditing to facilitation management, calibration tracking, and so much more.

  • OpenBoxes

    OpenBoxes presents an open-source, web-based management solution developed by supply chain professionals actively working in the field of resource-scarce settings. OpenBoxes’s already existing functionality involves effective working in the form of inventory tracking, tracking lot and expiry of the products/stock, stock movement and shipment status tracking, purchase orders records, stock requisitions and shortages, and fulfillment, along with the ability to create built-in and customizable reports on inventory.

  • Order MS

    Order MS is one among the most easily accessible and modern-day order management systems that facilitate automation of the critical aspects of your sales orders and helps you get all the relevant business information and business intelligence you need to scale your business as required. Built as a generation Z platform, this software can help you in improving sales performance, facilitating communication with your teams and co-workers, suppliers, and various stakeholders, along with the competency to stay ahead in the competition.

Order MS develops the ability to manage the entire lifecycle of sales orders in an increasingly effective manner. With all the automated modules integrated into this single tool and order information, which can be accessed easily from anywhere. Also, this enables you to process customers’ orders in real-time. It also leverages crucial features for inventory management, like the instant creation of barcodes for different goods or items, constant monitoring of various inventory levels through real-time notifications, and managing automated inventory updates based on the sales orders received. The order management system (Order MS) also enables you to implement a smarter and more convenient way of making purchases. It helps you in effective decision-making related to your business about which vendors or suppliers are right to buy products from and allows you are appropriately sharing information and company-related documents with stakeholders and business partners.

To draw the benefits of Inventory Management Software for your business, you can hire an Inventory management software development company that would develop a suitable system for your business. Using such a software solution would help you enhancing productivity and reducing inventory management costs in your business process.

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