Many organizations have automated their inventory management system for increased performance. Below, you will learn 4 reasons why you need automated inventory management and reporting. 2020 was a terrible year for businesses. We witnessed supply chains break, reduced ordering volumes, and difficulty in moving goods which negatively affected the operations of companies. However, organizations with automated inventory systems did not suffer a lot because it was easy to manage stock, forecast demand, and establish strategies to combat any market changes. For that reason, they operated smoothly, unlike others that depended on traditional inventory management methodologies.
What Is Inventory Control?
Inventory control is common practice for product-based companies. Companies are slowly moving away from traditional ways of managing inventory to gain a competitive advantage in the market. Nonetheless, they are leveraging automated inventory systems and reporting to make rewarding decisions within a short time.
Therefore, inventory control is a series of processes that an organization utilizes to organize storage facilities. As a constituent of supply chain management, inventory control helps track the flow of goods from the point of origin, warehouses, and sales point.
Practices involved in inventory management include ordering, stocking, and utilizing the materials. Placing inventory on top of the list helps an organization know what it needs to maintain the production flow to meet the needs of consumers.
What Are the Different Types of Inventory?
Before diving deeper to understand why you should integrate an automated inventory management system and reporting in the business, let us first look at the types of inventory. Here are the categories of inventories that organizations use in their production to meet various market demands.
Raw materials are inventory converted to create different products. This inventory is directly involved in the production of goods and services.
Work in Progress:
These are goods that have changed to usable forms. However, they are not ready to hit the shelves for consumption.
As the name suggests, these are items that are ready to be sold and used. Finished products are kept in the warehouse as they await shipping or selling.
Goods in transit:
In-transit goods are no longer in the warehouse and are yet to reach the designated destinations. In simple words, they are items still on the way to their final destination.
These are products moved to an organization from manufacturers. However, they are sold to the final consumer a few days or weeks upon arrival at the business premises.
The market demand for products is ever-changing. For that reason, organizations create extra goods to avoid running out of stock. Therefore, anticipatory inventory is the excess products produced to meet the changing demand, specifically when sales surge.
Maintenance Repair and Operating (MRO) are goods directly involved in producing goods and services. However, they do not form the final look of the item. MRO includes electricity and oil, which majorly support the production. Let us now look at the reasons why you need automated inventory management and reporting in your organization.
Automated Inventory Management Saves Time
Time is an important aspect for product-based companies. To achieve timely production and transportation to the market, organizations are ditching traditional inventory management systems for automated systems. Manually analyzing data obtained from various locations may limit the efficiency of the organization. With the increasing demand, manual systems can easily break, leaving many operations pending.
This translates to losing the competitive advantage and dissatisfaction of customers. However, with automated inventory management systems, you can efficiently scale the business and utilize time in the best way. Automated inventory systems and reporting save more hours you might have used in manual entry. Nevertheless, these systems can help you make viable decisions that add value to the business.
Reduces Human Error
Human errors mostly arise when using manual inventory management systems. Traditional spreadsheet templates can open windows for human errors that result in overselling or underselling. Data on these spreadsheets will need to be edited in most cases, and the changes might go unsaved. This lowers accuracy in product reporting while heightening errors and buying problems.
Manual–entry reduces inventory in real-time. This can result in missed sales opportunities and frustrations to customers. To cool down the angry customers, your customer service team might need more time to give out discounts. With automated inventory systems and reporting, you can retain happy customers and the right flow of inventory.
Helps Maximize Scalability
Scaling the business depends on the systems that run business operations. We all understand using spreadsheets limits chances of scaling the business. Nonetheless, emailing and calling employees to determine the quantity of inventory the organization has at hand might not help scale the business.
While manually entering inventory in the spreadsheet is still a top choice for many organizations, it comes with limitations that may not allow you to scale the business. Therefore, the most important thing you can do to maximize scalability is shifting automated inventory management systems. These systems will allow you to collect more information quickly for better decision-making.
Makes it Possible to Operate Multiple Stores
People start businesses to grow. Among the priorities for people with business is opening another store to serve a wider market. For that reason, there might be a need to employ automated inventory systems to help run all the stores remotely. As your businesses grow, you may need timely reports, initiate stock transfers, and manage your franchises.
While this can be possible with manual systems, advanced automated systems can do the job in a better way. Integrating automated inventory management systems allows you to enjoy various features, including automatic product reordering, e-commerce Integrations, multiple store reporting, and dispatch Notifications. While all these features may benefit everyone, they can easily set the pace for expanding the business.
The Bottom Line
Automated inventory management systems are vital for merchants that seek to expand their business. While some businesses are yet to decide whether to integrate this system or not, its importance is worth any merchant’s attention. Carefully go through the above 4 reasons why you need automated inventory management systems and reporting as an eye-opener for your business growth.