An inventory management system guarantees a balance of raw materials or products in the company inventory. Whether it’s for selling or for manufacturing purposes, the system ensures that there is no glut or insufficiency of items in stock. Having a well-coordinated system keeps up with consumer or manufacturing demands while not compromising profits through excess procurement.
Businesses typically balance inventory management by implementing strategies such as the just-in-time (JIT) method and materials requirement planning (MRP) method. JIT veers away from the method of stocking more than enough at the advantage of reduced expenditures for the company.
As the name implies, the JIT method involves maintaining a low inventory of products or materials. On the other hand, MRP utilizes sales forecasts to project the number of goods to be procured.
For retail businesses, establishing the inventory management strategy, objectives, and procurement plan is important. Determining the storage location and capacity, which could be within the current business area or another facility, is also essential.
Part of the process involves the identification of an inventory labeling system with a product identification guide. Depending on the user, the guide should indicate individual product descriptions or categories, inventory numbers or codes, as well as the number of items in stock.
Used By Different Businesses
Inventory management helps different business sectors, not just wholesale product distribution and commercial retail stores, in maintaining and managing their product stocks. These entities include businesses involved in manufacturing, e-commerce, medical supplies, and other businesses that require storage of raw materials or finished goods.
Inventory Management Software
Today’s inventory management process involves utilizing advanced inventory management software to track activities such as shipping and delivery of goods on site. Some of the software available in the market today are hooked up to the cloud. This feature enables business owners to check the inventory, make orders, and contact customers through a smart device.
Real time tracking is important in determining future inventory stocks. By utilizing past inventory data, the software can be used to project procurement numbers. Modern inventory management software also allows data importation to create company reports.
Technology is expected to bring changes to inventory management in the near future, moving further into more automated territory. Some of these changes are now slowly being introduced in beta mode. Just recently, Amazon tested their latest innovation dubbed Amazon Go, a convenience store that adopts a grab and go approach. The technologically advanced retail store, which is planned to be launched this year, links purchases with customers’ Amazon accounts. In turn, the store’s inventory system has a feature that identifies the customer’s product purchase history and inventory location.
While technology brought advancements in inventory management across business sectors, this essential tool has several key basic components. Whether the system setup is for small or large businesses, inventory management ensures that consumer demands are met; products are sold at a great price point, and profits are generated.
ABOUT THE AUTHOR
Jessica Kane is a professional blogger who has worked in eCommerce for the last five years. She currently writes for Rakuten Super Logistics and recommends them for all your fulfillment center needs to further your success.