Inventory management enables the tracking of inventory and related elements throughout the sales process. You should know what’s happening when you order a product from your supplier and have full transparency when it arrives at your customer’s doorstep.
Inventory management aspects include:
- Automatically replenish products when inventory falls below a set threshold.
- Maintaining an accurate, up-to-date inventory count plays a vital role in managing stock levels effectively.
- Project sales and future demand to adapt accordingly.
What are the different types of inventory management systems?
You’ll find four main types of inventory management systems. Each of them will serve different business needs, and they also have varying elements of technological input. The system that you choose will depend on numerous factors, such as your company size and current budget. You should also consider how many items you have in your inventory catalog.
Below are the four primary types of inventory management systems that you need to be aware of:
- Manual Systems: Here, you’ll manually update spreadsheets and count items in person. This is most commonly used by small businesses with small stock numbers and not too many tools in their inventory.
- Barcode Systems: With this kind of inventory management system, you track your inventory by scanning a barcode. You may see this kind of inventory management used within grocery stores.
- Radio-Frequency Identification Systems: Also known as RFID systems. Tracking statistics are provided in real-time via radio waves. This option may be suitable for larger brands with higher budgets and time constraints.
- Cloud-Based Systems: Track items via the internet. This is an option if you have an online business or sell your items via dropshipping.
What is the difference between periodic and perpetual inventory systems?
When learning about inventory management, it’s important to understand the difference between perpetual and periodic systems. Periodic systems are as the name suggests; they track inventory at regular phases. For example, a company might check their stock each week.
Periodic inventory systems involve physically counting your products.
On the other hand, you should utilize perpetual inventory systems if you manage large stock volumes. Whereas periodic systems use intervals, perpetual inventory systems will update inventory volume around the clock.
There’s no right or wrong answer for which one you choose. You’ll need to think about your business’s unique needs. If real-time updates and the utmost reporting accuracy are important to you, go for perpetual inventory systems. However, if you don’t have a big budget and don’t have a huge inventory, periodic systems may work better for you.
How do I choose the right Inventory management system for my business?
Your inventory management system choices will be influenced by multiple aspects. First and foremost, think about the size of your inventory. Do you need to track dozens of products and therefore require something more technical?
Choosing something within your budget is also crucial. You can upgrade later if needed, but you should start small if you’re still in the bootstrapping phase. It’s also a good idea to consider any integrations you may require and the types of items in your inventory.
Also essential to consider are the needs that you have and any technology you require to reach your goals. Think about all of these in significant detail before making your choice.
What factors should I consider when choosing a system?
Beyond the elements we’ve already discussed, you need to go deeper when choosing your inventory management system. Aspects to think about are:
- Ease of Use: You need to choose a product with a minimal learning curve and that’s easy enough for you to use frequently.
- Vendor Support: Consider the level of support available (e.g. live chat and email); choose something that fits your preferences.
- Cross-Device Accessibility: Choose something you can use on desktop and mobile.
- Reporting Tools: Look for a system with the reporting parameters that you need for your business.
- Security: Choose a system with comprehensive security features, and preferably, one you can customize in this respect.
What are some examples of popular inventory management systems?
There are several inventory management systems that cover the different aspects discussed earlier. Zoho Inventory and inFlow Inventory are two options. Prices will vary from service to service, and the level of features available also differs.
What are some common challenges of inventory management?
In addition to the advantages of inventory management, it’s also important to think about some issues you may encounter. Some of these include:
- Data Accuracy: You need to ensure that your data is accurate.
- Overstocking and Stockouts: Make sure that you have the right level of stock.
- Forecasting: Be sure to choose a tool that has accurate forecasting; this is vital for managing inventory.
- Visibility: Choose a tool with clear transparency.
What are the future trends in inventory management?
It’s hard to tell exactly where inventory management will go, but we can make some predictions nonetheless. Technological trends, such as blockchain and artificial intelligence (AI), will likely have significant impacts on inventory management and the tools used to track inventory.
Sustainability is also a key talking point; you’ll need to think about your carbon footprint. Make sure that you read the latest news in your industry and for business in general.
Conclusion
For managing your e-commerce store inventory management systems are important for ensuring that you know what your stock levels are like. You need a system with accurate reporting and that meets your business size/needs. It’s also vital to consider scalability if you plan to grow in the future.
Take the time to consider the different types of inventory management. You should also think about your budget and other features (e.g. security tools).
