7 Considerations When Evaluating Inventory Management Software Solutions
Inventory management software is computer-based system for tracking inventory levels, orders, sales and deliveries. It may be a type of software that you need for your business. If you are a business that maintains a lot of inventory, such as retail or grocery business, you can grow your business by at least 20% by maintaining an efficient inventory. The truth is, if you don’t have products in stock that customers want at the moment they walk in your business, you not only lose the business of those items at that moment, but you also send a message to the customer that you don’t always have what they need in stock all the time that could impact future visits from customers.
The fact is, you will do inventory management, even it is a manual process. If you carry a fairly large number of items in stock, trying to manage inventory manually is very time-consuming, error prone, and simply a waste of time, especially since the right inventory management software for your business is probably available. If done well, the cost of the software will be far less than the increase in revenue that you will gain.
So how does inventory management software help grow your business?
The right software for your business can help you grow because it can do a better job as compared to manual processes for placing the right orders, for the right products, at the right time. It is usually tied to your point-of-sales system so that it can track the current levels of inventory as they are purchased for every item you stock. It also tracks purchase rates for each stock item, and how long it takes to order and receive those items so that the order is placed at the right time to replenish stock before you run out.
That’s the primary goal of inventory management – to replenish stock in your business just before you run out. Better yet, it can order new inventory with the right replacement amount so that nothing sits on in your business too long, being able to calculate the rate of usage so that you don’t order too much, or too little. This is how you can increase your business growth.
To experience these benefits, you should consider certain factors about inventory management systems when you discuss your needs with a software reseller. As with most business software, you should consult an advisor who resells and services software for your business. As you work with your advisor, and since it is your money that you are spending, discuss some or all of the following 7 items about inventory management systems:
- Total Cost of Ownership
Understanding your costs are important. Like any business software, the license fees alone are not the only cost. You will need maintenance and support, updates and upgrades, and there are costs associated with training you and your staff. Ask your advisor about these costs.
- POS Integration
One of the most important factors in making a decision on which inventory management system to use will be how tightly integrated it is with your point-of-sales system. The tighter the better. Inventory management can only work if it can track inventory levels, and it gets this information by knowing what is purchased – that’s from your POS system.
- Managing Inventory
The old saying goes, “what goes in, is what comes out.” This couldn’t be more true about an inventory management system. The value of a system is almost priceless when it works well, but this can only happen if the system “thinks” it has a certain amount of inventory in your business, that matches “exactly” with what is on the shelves. Sometimes stock gets old, destroyed, or removed for reasons other than purchases, so reconciliation may be necessary upon occasion.
- Inventory Ordering
The saying also goes when you want to place inventory orders. Every item you stock may have its own unique order-to-delivery time, along with current sell rates. These need to be initially set up, and perhaps adjusted occasionally if they are off. Consider a system that has “predictive” capabilities and recommendations, rather than leaving everything up to you to manage.
Of course you will know if something special is going to go on in your business that may not follow the usually buying patterns. These events may require you to buy more or less of certain inventory. Make sure you have a system that allows you to override the automatic ordering levels, so that you can take advantage of these events.
- Learning & Predictive Analysis
A good inventory management system should be able to provide you with the ability to analyze how well it is managing your inventory. Trends and reports are important to see so that if necessary, you can make some adjustments to the overall configuration to optimize your inventory even more.
Software is supposed to make your job easier, faster, and better. A great inventory management system should not only track your current inventory levels, but also automatically place orders to replace inventory. You shouldn’t have to do anything, other than monitor the trends and reports, or occasionally override special orders.