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    Blog Image

    Tools For Effective Inventory Management Analysis

    • Inventory management system tracks stock levels, orders, sales and deliveries and is also used to generate work orders, receipts and bills of materials.
    • Modern inventory management tools integrate AI, big data, predictive analytics and IoT to manage and track the products and get real-time visibility to maintain optimum stocks.
    • Best-of-breed inventory and warehouse management technology ensures real-time supply chain visibility, optimize warehouse operations and boost overall efficiency and resilience.

    August 02, 2022 | Inventory Management Software

    In a world where disruptions are a norm, having a resilient and robust supply chain is critical for a business to be relevant and successful. This is because inventory management, a subset of supply chain management, is directly affected by supply chain disruptions resulting in the business being negatively impacted.

    What is an Inventory Management System? 

    An inventory management system tracks the various inventory management processes of a business, such as inventory levels, orders, sales and deliveries. They are also used to generate work orders, receipts and bills of materials, amongst others, for the smooth and efficient operation of the business.

    Helpful Tools to Manage Inventory 

    Modern inventory management tools integrate the latest technologies, such as AI, big data,  predictive analytics and IoT (Internet of Things) to manage and track the products and to get real-time visibility to pre-empt any problems in maintaining an optimum inventory level.

    The following is a list of tools used in inventory management:

    ●  Barcode data collection 

    Data collected through automation, such as using barcodes, help in accurate data capture, and speed up various warehousing activities, thus completing transactions faster than they would otherwise be through manual interventions.

    ●  Cycle counting 

    Efficient and effective inventory control is vital for an enterprise to plan, manage and grow its business. For this to happen, accurate inventory levels and turnover of various stocks are necessary. Cycle counting happens automatically whenever fulfilment or replenishment occurs, providing the essential accuracy and replacing the extremely error-prone physical count.  

    ●  Integrated planning and execution 

    Inventory management systems offer integrated inventory planning and execution to enable businesses to maintain control over their inventory. These systems provide real-time information to predict demand, and help trace and manage inventory levels, purchase orders and sales & operations planning (S&OP) and deliveries. 

    ●  Tracking and traceability 

    Product recalls, tracking a product through the value chain, monitoring the product’s performance through its lifecycle and reviewing the authenticity of the products, businesses around the world are adopting a process called “Track & Trace,” meaning to serialise item-level products across the supply chain.

    ●  Inventory reports 

    Reports provide insights into a particular activity or process that a business leader may use to make critical decisions to add value to the business. Inventory reports offer insights to optimize inventory, give information on the stock level and reordering to prevent stockouts, check for inventory in transit, reduce storage costs and shorten lead times. It also provides sales history and purchase reports and ensures accountability.

    ●  System integrations 

    It seamlessly integrates an inventory management software solution with other software systems—for example, accounting software, EDI integration, CRM or an ERP system. Software integration ensures the unification of multiple functions, reducing errors and replication while enhancing end-to-end visibility, traceability and the overall efficiency of operations.

    Advantages of inventory management tools 

    The most significant advantage of best-of-breed inventory and warehouse management technology is that once a system is set up, it can run unsupervised with minimal maintenance.

    ●  Better understanding of analytics and trends 

    In addition to tracking and counting inventory, such a software can also analyse data to forecast demand, automating stock replenishment, optimising inventory usage, and adjust production schedules according to demand — a crucial function for efficient inventory management. Advanced analytics and machine learning  algorithms help businesses find better sourcing options cost-effectively.

    ●  Perfect records 

    Accurate inventory records such as inventory count, ordered quantity, delivered quantity, overstock, under stock, dead stock, and sales are vital to the successful business operations of an enterprise. Any errors in the records result in poor decision-making leading to heavy financial losses.

    ●  Increased productivity 

    Another essential role software plays in inventory management is improving productivity by automating the manual and repetitive aspects of the supply chain professional’s work. Thus, supply chain teams can focus their energies on strategic work, such as creating innovative ideas to improve the existing processes and systems, resulting in customer satisfaction and business growth. 

    ●  Better decision-making 

    An advantage of inventory management tools is the ability to provide real-time data and insights that help leaders make relevant decisions for efficient inventory management, enhancing growth and reputation. Advanced technologies forecast accurate demand, help businesses select warehouses and the right vendors, and improve the overall S&OP.

    ●  Warehouse and inventory management tools 

    Businesses can use various tracking methods to locate materials, check when shipments come in, and when the final products are shipped across multiple locations.

    Warehouse management tools also help maintain inventory, reorder when an item falls below a threshold or per demand forecasted and help avoid overstocking or stockouts. 

    Choosing The Best Inventory Management Software For Your Business 

    Here are some features that software being purchased must have:

    • Be able to categorise products by class, type or SKU (stock keeping units)
    • Be able to track items – their location, replenishment, or being shipped out across multiple warehouses and distribution centres.
    • Be able to send out a restocking alert for an item when the stock falls below a particular threshold set
    • Be able to analyse real-time data and provide information for effective decision-making
    • Be cloud-based, providing real-time visibility to track inventory and can be accessed from any device, anywhere, and anytime
    • Be able to integrate with any system – existing or new seamlessly
    • It must be user-friendly and intuitive with flexible custom reporting tools
    • It must have in-built security and back-up for data protection
    • Must be built for scalability (expansion when required)

    Conclusion 

    A strategic business plan must incorporate a feasible inventory and management policy. It is critical to ensure real-time supply chain visibility, optimize warehouse operations, boost overall efficiency and resilience, and improve profit margins and customer satisfaction.

    Also Read: A Definitive Inventory & Warehouse Management Guide

    FAQ -

    1. Which is an essential inventory management tool?

    Analysing data to forecast demand, which can automate stock replenishment, optimize inventory usage, and adjust production schedules according to demand, is one of the most critical tools for efficient inventory management.

    2. What are the 4 types of inventory management?

    There are four different types of inventories that an enterprise manages – raw materials,
    semi-finished goods, finished goods and items for MRO (maintenance, repair and overhaul).

    3. How to pick the best inventory management tool?

    Before investing, businesses should review the inventory management software and see whether it can handle their specific requirements and meet their goals. Ensure the software is from a global supply chain and procurement leader with vast knowledge and experience, like GEP.
     

     

    Tags: Inventory management tools , Inventory Management Software , inventory management

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