Any organization that carries an inventory of products has a need to maintain accurate information on the movements of all these items to better serve its customers and run a profitable business. Whether you need to manage one supply closet or a multi-facility warehouse operation, the goal is to cut down on manual data entry costs, minimize your inventory write-offs and overstocks and increase efficiencies in your supply chain.
A complete inventory management solution will consist of management software, mobile computers and label printers. These tools will enable your business to track inventory levels and movements in your warehouse or stock room by item, serial number, or lot number. With full visibility into your entire incoming and outbound inventory, you can make better decisions to maintain dynamic stock levels that meet the demands of your customers and usage.
What are the Key Benefits of an Inventory Management System?
A proper inventory management solution will streamline your business by significantly reducing costs and waste.
- Accuracy – Eliminate human error in inventory counting.
- Speed – Reduce man hours by using automated data capture.
- Accountability – Document shrinkage and loss to identify steps to reduce them.
- Mobility – Make adjustments or replace damaged/unreadable labels on-the-spot using mobile computers and printers.
What is Inventory Management?
Inventory management systems offer benefits to the operation of all types and sizes of businesses. An inventory management system decreases data entry errors, increases productivity and lowers operational costs. This is achieved by reducing or eliminating the hand-keying of data, manual physical inventories, backorders and lost sales due to inaccurate stock levels, inventory write-offs and shrinkage. With a properly set-up inventory system, you remove any ambiguity as to what is in your warehouse and where it is going.
Inventory management systems typically pay for themselves in less than one year. Most of the return on investment comes through saving on labor costs and reducing losses in sales due to lack of stock. Very few companies understand how inexpensive and simple it is to put an inventory management system in place. The first step in determining an inventory tracking system is to understand whether you are dealing with inventory or assets.
- Inventory refers to objects that are sold, distributed, or otherwise consumed by a company. These “temporary” objects include retail items and supplies. In this case, you may have 100 boxes of staples in inventory and when you use one box, the tracked quantity decreases by one. You are not concerned with which specific instance was sold but rather that 1 of 100 was removed. At the end of the day, you want to know how many you have in stock, where it went and when to order more. This detailed visibility into your inventory usage allows you to make adjustments to your ordering and management process to increase efficiency.
- Assets are “permanent” objects that a business uses internally, such as computers, tools, or educational material. Although employees may check the object in or out to for a given project, or even use at home, an asset ultimately belongs to the company and must be returned to the company. An asset is always tracked as a unique item. Even though you may have 10 of the same PC or tool, you are managing each instance as an individual item with its own unique barcode label or RFID tag. The main concern is to have accurate information on each specific item like location, condition, purchase date, value, custodian, last maintenance, etc.
Inventory management solutions are driven (and limited by) the software that is used. Basic inventory functions are covered by all software, but depending on your need to have real-time updates to your system, some applications will be a better fit than others. The real strength of any application is how easily and in-depth it provides visibility into your inventory usage. Features like setting a minimum and maximum stock level for each item allows you to run a simple report to see what needs to be re-ordered. Inventory usage reporting is key to keeping your stock levels relevant to what your customers or company is buying/using. Another software concern is support for the number of users you will have. Some applications are geared towards small business with limited user licensing while others are completely open-ended to fit any business size. To have an effective inventory tracking solution, you’ll need to make sure the inventory tracking software is the right fit for your business.
What Should You Address When Making an Inventory Management System?
When putting together an effective and suitable inventory management system, there are a few key questions to answer:
- What type of inventory are you tracking? Cases vs. individual items?
- Will you need to track batch, lot, or serial numbers? Expiration dates?
- Is the inventory already labeled? Will you create your own sku or part numbers?
- Do you need real-time updates or can batch collection be used?
- Do you have a wireless network in place already?
- What type of reporting will you need from the system?
- How many users will you have? Desktop and mobile.
- Will the inventory database need to sync with other software systems?
What are the Components of an Inventory Management System?
All inventory management systems consist of four core components:
- Inventory Tracking Software – The software you use will determine how you track your inventory. Support for real-time vs. batch updates and the depth of reporting will determine which application is most appropriate for your business.
- Mobile Computer – Inventory tracking requires users to be on the move throughout your facility making updates and changes. Depending on your environment and need for wireless communication a range of devices can serve your process.
- Wireless Infrastructure – Many businesses need inventory updates to occur in real-time and a wireless network is a required tool to do so. No matter the size of your facility, a network can be scaled to accommodate it.
- Barcode Printer – In order to track items quickly and easily, they need to be labeled with a barcode. Printing can be done at fixed units for high volume printing or on the move with mobile printers.