New tech has made inventory management significantly easier but has created another problem of sorts — information overload.
To be fair, this particular issue is not reserved for inventory management alone; there seem to be too many options wherever one looks.
It is, therefore, crucial to decide which software solutions a business needs before engaging in a thorough search for alternatives.
Trade companies, in particular, are in need of procedure streamlining and overall alignment. However, the processes need to simplify the steps instead of overloading employees.
Let’s take a look at the steps to include in the agenda.
Keeping Track of Every Unit in the Inventory
The larger the scope of a trade business, the more units in the inventory. Large businesses — especially those trading internationally — simply have to master this step to simplify the shipping process, which can be rather unpredictable.
Inventory tracking should, therefore, be the first functionality to look for in a software solution.
There are several methods to perform inventory tracking, many of which are often combined. Manual tracking and spreadsheets are getting obsolete as new tech has come to the rescue. Kanban is still used here and there, but this method only helps with limiting excess stock.
Some businesses rely on third parties to do the job. Third-party logistics (3PLs) providers do their job online. In simple words, businesses pay a third party who has already paid for a professional inventory tracking software solution.
Choosing the Right Inventory Tracking Software Solution
As for software to manage your inventory , there are a couple of choices, as follows:
- Open source inventory tracking software — a cheap alternative to more complex digital inventory tracking tools. They typically provide an interface with a basic dashboard and limited tracking features. Not suitable for businesses looking to integrate operational processes. On the upside, they are cheaper than the tools with advanced features.
- Software-as-a-Service (SaaS) with inventory tracking — SaaS solutions that feature inventory tracking may be suitable for businesses not looking to break the bank. However, for large businesses, investing into an advanced software solution is recommended.
- Cloud-based inventory tracking software — the majority of software solutions are cloud-based nowadays, and inventory tracking isn’t an exception. They allow multiple users to access data from different devices, which is a huge benefit.
- Accounting systems with inventory management — software solutions that integrate accounting and inventory management help businesses keep track of all units, support customers, and provide an insight into company finances.
- Inventory management systems — these software solutions support inventory management as a whole, not just inventory tracking. They come with a variety of features and the finest of them can be integrated with accounting- and payment systems. Some of the functionalities to consider include automated reordering, eCommerce integrations, inventory catalogs, and point-of-sale (POS) system integration.
Large Businesses Should Consider a Warehouse Management System
A warehouse management system (WMS) streamlines all warehouse operations, including inventory, storage, receiving, packing, put-away, and shipping. With all these functionalities, it’s no wonder that a WMS boosts warehouse efficiency considerably.
However, WMS can be rather expensive and, truth be told, not all businesses need them. Small businesses may make do with inventory management alone.
Functionalities to Look for in an Inventory Management System
Every business has its unique needs. However, when it comes to inventory management, certain features can benefit all of them.
We’ll hereby mention the most important ones.
Product Cost Analysis
Product cost analysis (PCA) tracks both raw materials and finished goods and keep track of all types of production costs, as follows:
- fixed cost
- variable cost
- average cost
- marginal cost
- total costs
In addition, a PCA re-orders any component that has hit a minimum level. More sophisticated software solutions provide bills for all materials and products and break down all associated costs.
eCommerce Integration
eCommerce has become a standard for businesses large and small for reasons pretty much everyone is aware of, so we won’t elaborate.
With cross-promotions and social media sales hitting record highs, it is only natural for businesses to look for inventory management software solutions that offer eCommerce integration.
POS System Integration
POS inventory management allows businesses to keep track of the inventory in all sales locations from a central location. A POS system automates tracking, which makes it easier for businesses to encounter potential difficulties before they even occur (human error, for example).
Demand Forecasting
Lastly, demand forecasting helps businesses analyze historical production and sales data, predicting future trends.
Software solutions with this functionality typically determine optimal re-orders, which would otherwise need to be done manually.
Look for Future Inventory Management Trends
In conclusion, although there are multiple complex factors to keep in mind, businesses should not forget that digitalization is stepping up all organizational processes.
It wouldn’t be surprising to discover that new integration solutions are in the making, so it is essential to keep track of trading trends. After all, eCommerce is developing at such a rapid pace that new approaches are only to be expected.
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