Inventory management systems are essential for your business. They help track the ins and outs of your stock with precision.
However, not all inventory systems are built the same. Some inventory systems might work well for your business, while others won’t. So it’s up to you to evaluate your current inventory management solution and see if it suits your business well.
But first, here’s a list of some essential functions a good inventory management solution should do:
- Accurately forecast stock demand and sales
- Highlight high-selling and profitable products
- Manage stock levels, orders, purchases, etc.
- Prevent overstock and stockout situations
So when will you know that your current inventory management solution isn’t working for you? The following four critical signs will tell you when you’ll need to look for a new inventory management solution.
An inventory system should manage your stock optimally without wasting any time or expense. If yours isn’t doing it, chances are you need a new one. But why is this necessary?
Having real-time information about your stock is crucial in inventory management. In other words, if your inventory system isn’t tracking your inventory levels right, you’ll end up wasting resources. So, your expenses will go up, and profits will come down as your sales take a hit.
Once your business grows, you’ll have to store your inventory across multiple warehouses. It’s going to happen eventually once your business operations expand.
But what happens when you find out that your inventory management system does not have multi-warehouse support? It’ll become extremely hard to move all your data to another management system.
Therefore, you need an inventory solution that supports multi-warehouse management capabilities and lets you have a bird’s-eye view of all your inventory in one system. It will eventually save you a lot of time and hassle. So make sure that your inventory management solution supports this feature.
Two of the biggest inventory issues are stockout and overstocking. Stockout happens when your inventory system fails to notify you to reorder products. Overstocking happens when your inventory system doesn’t accurately report your inventory stock levels.
Both scenarios can lead to serious issues and revenue loss if they aren’t detected on time. Here’s how a good inventory management system forecasts the requirements of your stock:
- Analyzing past data
- Assessing current trends
- Predicting future outcomes
- Tracking the number of items available
Forecasting allows you to plan your product sourcing and manage inventory accordingly. It prevents you from experiencing stockout or overstocking.
If you run out of stock and cannot fulfill orders, you’ll lose customers, revenue, and reputation. And if you have more products, you’ll have to bear the expenses of keeping and maintaining the extra inventory. This inventory can turn into dead stock if kept for longer.
If an inventory system does not report and forecast correctly, you may face these problems frequently. A proper inventory system can prevent these issues and help you:
- Build brand loyalty
- Increase revenue
- Reduce costs
- Retain customers
Supply chain refers to the entire flow of a product, from the manufacturer to the consumer. If you’re unable to monitor the supply chain through your inventory system, you won’t be able to track your product.
The following happens when your inventory system does not monitor your supply chain properly:
- Productivity loss
- Customer loss
- Revenue loss
A good inventory management solution should streamline your supply chain management by:
- Tracking your stock from the manufacturer to your warehouse
- Providing an estimate about how quickly or long it can take for your stock to be available
A business’s inventory management solution should be tailored to its needs. If it does not work for you, check out another one. Keep exploring until you find the one that fulfills all of your inventory management needs.