Inventory Management Software: 7 Ways It Affects Your Business
Published: March 28, 2020 - Written By: Hassan 5 min read
Your inventory is the bread and butter of your service business because it consists of all the items, equipment, parts, or materials you need for serving your customers and earning profits. If you handle it poorly, you’ll end up incurring more costs or losing some significant amount of money.
Poor inventory management due to heavy reliance on manual systems has a negative impact on one’s financial and customer service performance. Are you making your customers happy if your field technicians are missing some important repair parts they need for their jobs on site? Obviously no.
Fortunately, if you're still using spreadsheets for inventory management, you have the opportunity to actually get out of that situation by adopting a modern and highly-automated inventory management software that comes in various types. Discover how such a type of system can change your business in 7 ways.
1. Complete Visibility of Inventory
There are different practices and techniques when it comes to handling inventory but all of them are being implemented by service businesses to achieve a single goal - to make sure that they are able to deliver the right inventory items to the right place or destination at the right time. To achieve this, they have to quickly find out if the items needed for the job are available on hand and if the current quantities of those items are sufficient. If the quantities are not enough, they should easily know whom to order new stock from.
However, this is easier said than done, especially if the service business doesn’t have the ability to efficiently track their inventory. An efficient inventory management software can give you flexible and scalable mechanisms to easily track your inventory, giving you complete inventory visibility.
Inventory management systems support the usage of product identifiers which include UPCs, SKUs, and serial numbers. Product identifiers are used to indicate how items in an inventory differ from each other. What’s great about this is that they are not written on papers or spreadsheets. Instead, they are all set up within the inventory management software. You can create your own data fields to accommodate all types of product identifiers your business is using. This means when you’re tracking specific inventory items or groups of items, you’ll be able to do that from a central place. Now, you no longer need to sort through multiple pages or spreadsheets.
2. Reliable Information for Better Decision-Making
An inventory management software changes the way you make crucial decisions. With this tool, you can access accurate and reliable information and details about your inventory and come up with better decisions. This capability addresses the drawbacks of using Excel spreadsheets for managing inventory. Excel spreadsheets require a lot of manual data entries and are prone to human errors.
Service businesses must not ignore Excel spreadsheet errors because they can turn into serious problems. For example, in March 2019, The Brooking Register published a news report online about how a spreadsheet error committed by a company caused it to submit a wrong amount of bid for a construction project at Mickelson Middle School. This mistake forced the school board to reject all the submitted bids and start the bidding over again, resulting in a delay in the project.
In an inventory management software, your inventory information is updated automatically in real-time, eliminating the need to enter or edit information by hand. You’ll be able to accurately verify which items in your inventory are moving fast and more profitable and adjust your replenishment strategies.
3. Prevent Overstocks & Out-of-Stocks
Having the best inventory management for small businesses is critical. With limited manpower and financial resources, small businesses have to be careful in handling their inventory. Otherwise, they might pay for unnecessary expenses due to overstocking or lose customers because of understocking. Inventory management systems are built to aid your service business in preventing overstock and out-of-stock situations.
One feature included in these systems is that they give you the capability to set reorder points for your inventory items. Thus, you can specify the minimum quantities of inventory items that should be in stock, such that when the current quantities go down to those minimum quantities, replenishment of the items is initiated.
However, there are certain factors you need to take into account as you set your reorder points, like identifying patterns in your sales or order cycles. Some inventory management systems can track such information automatically, enabling you to calculate your reorder points based on historical data. They can even help you predict future demand. Regardless of your organization’s size, you can use this tool to improve how to organize inventory for small business.
4. Mobility in The Cloud
Many types of inventory management systems are offered as SaaS or Software-as-a-Service. Since it runs on a cloud-based environment, you can access it from the Internet.
A cloud-based inventory management system enables you to monitor and handle your inventory from any location at any time. In fact, you can do this right straight within your mobile device. Your field technicians are also given the ability to check and update inventory using their mobile devices.
If they perform an action on an inventory item such as moving it from another location or returning it to the warehouse or storage location, it will reflect in the system, keeping you and your entire team updated all the time.
5. Protection of All Valuable Inventory
Inventory management tools help you ensure your inventory items are accessed and used by the right person in the right place and at the right time. It permits you to organize your inventory items into different storage locations or containers. Then, you’ll be able to specify which individuals or groups can access each storage location or container set up within the software. This prevents employees or staff from accessing and performing actions on inventory items that are not assigned to them.
An alerting system is also built within this software. For example, it notifies you whenever an inventory item is missing and allows you to trace how the item was used, including all the individuals who used it. Because of this, you can easily prevent fraudulent activities such as employee theft.
6. Seamless Vendor Relationship Management
When you leverage an inventory management software, handling your relationship with your vendor becomes simple. You can implement a process that lets you verify if the items or parts you’re receiving from your suppliers are consistent with those ones shown in your purchase orders. In case you receive damaged, low-quality, or wrong items, you can return them to your suppliers in a snap.
Since you can quickly access important information about your inventory, you can use that information to your advantage, like getting discounts for fast-moving items or parts in your inventory. Therefore, strategic relationships with suppliers can be formed if access to essential information is facilitated and enhanced. This way, suppliers and buying organizations will be able to exchange information with each other smoothly to improve their performances.
7. Connected Business Processes
Inventory management systems are designed to seamlessly work with other applications and tools such as those ones used for accounting, resource planning (ERP), customer relationship (CRM), collaboration, email marketing, and sales. This means inventory information is no longer restricted to one department or group.
They connect your business processes together so everyone can work better, eliminating data silos between teams. Meanwhile, inventory information, such as details about best-selling or fast-moving items, to the tools your marketing staff are using so they can leverage it to optimize their campaigns.
Broadening the horizons of service businesses
To optimize inventory management, a system must have mechanisms and capabilities that streamline decision-making. Modern inventory management systems have those. That’s their greatest impact on service-oriented businesses - broadening their horizons.