“SOLD OUT”, OUT-OF-STOCK” are the common terms that normally customers come through when they go shopping for their required product online or in-store.
Inventory Management is the most simplified term used to cover major aspects of the supply chain under one umbrella. This may include a sales forecast, supply chain management, warehousing, product order management and fulfilment solution. In short, we can say it as roots that make business stand or fall. If managed properly, it can grow the business further, if not then a business owner should get ready for great disasters.
Proper inventory management may bring numerous benefits to the business which will be discussed later in this article. Smart retailers make use of an efficient centralized inventory management system which helps them keep things aligned. Good software can track, plan and keep notified the user regarding all inventory matters.
The inventory management process begins with receiving an order which keeps on updating related systems meanwhile till the order is shipped. Updating at every step is highly necessary for a good system. In the case of specialized inventory software, it updates the user about sales forecast and informs timely about low stock or out of stock products. In this way, the system helps reduce complaints related to out of stock products.
This type of inventory management system plays with starting and ending numbers of products available. It keeps track of the physical count of inventory which keeps on updating at regular intervals. By deducting ending inventory from starting inventory it helps to check the cost of goods sold (COGS).
Most e-commerce businesses tend to use barcode inventory management systems. This is far more reliable than any other because each product and its type has a unique identifier which is known as the barcode of that product. Inventory is managed based on those barcodes. Barcodes can embed information related to the supplier, product dimensions, weight etc. in the form of a specialized code.
Radio Frequency Identification (RFID) is another very effective way of inventory management through which the movement of each product with its complete information can be tracked and timely notified. Products in this type of inventory management are given a unique serial number which provides complete product info when tracked down. RFID increases overall visibility with automatic inventory visibility.
The aforementioned are types of inventory management but do you know why it is important to manage inventory?
Stronger roots grow firm plants. Inventory acts the same. These are the roots. If these are managed with care, the plant will grow more firm. Managing inventory properly is important for the following reasons:
The fast-growing e-commerce industry cannot afford to lack within the system. To bring in the competitive ability within a market inventory is needed to be managed properly. Inventory management allows merchants to keep track of their inventory.
Managing inventory up to the required level lends merchant time to bring about the most optimized strategies for a better service level. Once improved, it can bring in more business opportunities at home.
Maintaining an adequate level of inventory optimizes the storage capacity of the warehouses or retail stores. This becomes more efficient when inventory management software is used. Optimized storage leads to storage of more sellable products than overfilled stuff.
Referred to the previously mentioned point, proper inventory management helps businesses keep in more sellable goods which bring in higher profits. Non-sellable products are no more than waste for an overall business. So, filling the right inventory is far better to earn higher revenue than filling shelves with non-sellable items. Keeping products which is more in demand helps fight out-of-stock situation as well.
Generating the right type of product consumes exactly the right resources. This reduces wastage and hence contributes to cost control as well. For example, if companies produce injectable supplements more than oral supplements. And demand enforces more oral supplements than the utilized resources will get wasted.
Proper inventory management provides clarity on demand and supply chains management as well. Once a business owner is aware of the product flow metrics, they can optimize demand and supply levels as well. This is highly necessary for FMCG companies.
Once the merchant is aware of the demand for the product they can produce the right amount of that product. This brings consistency in product manufacture and supply.
Consistency in the production of the product which is more in demand builds brand loyalty and encourages customer satisfaction, as well as the product, can be delivered timely depending upon its availability. Regular supply brings in customers’ confidence. This level can only be achieved with proper inventory management.
Higher productivity of products demands more manpower and resources. However if the brand is aware of the exact product their customers need, production becomes more specific reducing extra manpower hence reduction in overall manufacturing cost.
Inventory management keeps merchants focused on the right product manufacturing. This lends time to enhance the product quality welcoming further brand loyalty.
Tech has benefited inventory management in different ways. Some of the major techniques of inventory management are mentioned below:
Ginkgo Retail provides a centralized inventory management system that connects retail with online. It helps boost productivity and profit. It helps save time wastage on meaningless tasks like inventory updates one by one across all channels. It is a multi-channel inventory manager which works smoothly even if inventory grows. With Ginkgo, you do not have to use a dedicated warehouse. It let every store become a warehouse bringing efficiency and accuracy to inventory management.
Ginkgo can be integrated with other ERPs like Microsoft Dynamics, Retail Pro, Oracle, Candela, POS GTECH and much more. It automates all processes whether it is online or brick and mortar stores reducing the in-store transfer of stock.
Let Gingko take your pain of managing inventory for you.