Assume it’s the start of a new year, and we’re looking at a small clothing wholesale and retail company. New fashions have been predicted, and definitive trends are emerging. Now, what if our small clothing retail company has an inventory filled with last year’s stock of outdated designs and doesn’t have any new items to sell? It is pretty easy to guess that it’ll leave the company with losses and unsatisfied customers. The customers might even go so far as to not order from this business, even in the future.
For a small and medium wholesale, retail, or manufacturing company, one of the most important responsibilities is keeping track of and optimizing inventory.
Controlling and maintaining inventory ensures that the business consistently has the correct items on hand at the right time. SMBs that rely significantly on inventory management systems can improve the sight of their inventory. In today’s competitive business environment, small enterprises have difficulty surviving and thriving. Similarly, there are other elements to consider for start-ups trying to get off to a fast start.
A lot of SMEs rely on spreadsheets for inventory management. But spreadsheets are obsolete and incapable of meeting today’s inventory management expectations. They are inconvenient and time-consuming. Managing a spreadsheet’s inventory stock requires significant human labor. Furthermore, manual data entry is more prone to human mistakes and can’t be scaled.
Additionally, spreadsheets don’t connect well with other systems, and version control is usually an issue. They will not be able to adapt and grow with your company. Instead, they will stifle your progress and do more harm than good.
What Is an Inventory Management System, and How Does It Work?
As the name implies, an inventory management system monitors and optimizes inventory across the supply chain, from sourcing to shipping to order fulfillment.
A sound inventory management system will allow management to guarantee that the best-selling items are available at all times, project demand using historical data and current trends, and place new orders as needed. Inventory management and control are intertwined, and their primary goal is to guarantee that firms understand where their items are in inventory and when/how to buy new ones.
Inventory Management System Features
- Demand Forecasting: An ideal inventory management system should be able to anticipate and predict product demand, ensuring inventory is never out of stock.
- Barcoding and scanning: The modern and technologically sophisticated inventory management system should be able to barcode and scan items so that they may be appropriately classified and labeled.
- Advanced Analysis: The system should be able to tell the user where items are in the warehouse, their ordering history, and whether or not fresh orders should be placed.
- Customizations: The inventory management system should adapt to the business’s demands and requirements. If the SKU format needs to be changed, for example, the end-user should be able to do so promptly and without needing external assistance.
- Cloud Operations: There are both standalone inventory management systems and cloud-based inventory management systems available. Because the cloud lowers IT costs and makes a system universally available through any device, the inventory management system should be cloud-based, making it even more powerful and adaptable for SMBs.
The playing field for small and medium firms has finally been leveled in inventory management solutions. Small firms used to be shunted to the periphery as their larger, wealthier competitors invested in costly, sophisticated onsite software solutions that provided them a competitive advantage. But the smaller or cloud-based systems provide similar benefits to the SMBs.
Improved Inventory Accuracy: With good inventory management, it’s easy to track what’s in stock and order what is needed to satisfy demand. Inventory management allows for monitoring what’s in store and on backorder.
Savings: Stocks are expensive until they are sold. Storage, handling, and shipping expenses, as well as insurance and personnel pay, are all part of the carrying costs. Inventory is also vulnerable to theft, natural catastrophe loss, and obsolescence. Effective inventory management helps in improving costs.
Improved cash flow: Cash flow is critical for every organization, especially start-ups and small to medium-sized enterprises. Any action that hinders the free flow of working capital, especially at the start of a company’s growth, can be disastrous.
Avoiding Stockouts and Excess Inventory: Better planning and management may assist a company in reducing stockouts or excess inventory.
If you are looking for great Collaborative TMS solutions that integrate easily, Turvo is the right partner. Turvo provides the world’s leading Collaborative TMS application designed for the supply chain. Turvo connects people and organizations, allowing shippers, logistics providers, and carriers to unite their supply chains, deliver outstanding customer experiences, collaborate in real-time, and accelerate growth. The technology unifies all systems, internal and external, providing one end-to-end solution to execute all operations and analytics while eliminating redundant manual tasks and automating business processes. Turvo’s customers include some of the world’s most considerable Fortune 500 logistics service providers, shippers, and freight brokers. Turvo is based in the San Francisco Bay Area with offices in Dallas, Texas, and Hyderabad, India.