How to Choose the Right Inventory Management Software
There is no doubt that organizing your inventory can become herculean. An inventory management software will definitely suffice and help ease your struggles. You may imagine that using the troubles of navigating an inventory management software will make things a lot more complicated.
Here, you will find out how inaccurate those imaginations are. This brief guide details everything about the inventory management software, how it works, and how you can choose one to improve your business operations.
What is inventory management software?
An inventory management software is a tool for automating warehouse and inventory management, as well as tracking orders, deliveries and returns. It is also used to automatically update day-to-day accounting data.
Considering the relevance of inventory tracking to retail and wholesale businesses, choosing the right inventory management software is crucial.
The first step to picking the perfect IMS for you is understanding why you need one.
Why you need an inventory management software
The ultimate purpose of an inventory management software is to reduce or completely eliminate human error in your inventory management processes. However, there are other added perks that you will find beneficial to both you and your business when using an IMS.
Real-time inventory tracking
You can keep track of inventory changes as they happen. As orders are filled by customers and shipped, the inventory management software helps you keep track. Also, you can track the age of inventory and avoid deadstock by selling older stocks first.
Another common error in inventory management that IMS helps reduce is inventory shortage and overage. These could cause major distortion in accounting. Using inventory management software ensures that the accurate number of inventories in your warehouse are accounted for and recorded.
The best inventory management tools in the market allows you to integrate with your accounting software. This integration allows IMS to accurately track accounting parameters, including total sales, taxes, available inventory value, and many more. This way, your books are updated in real time as changes occur in the warehouse.
Reordering (or restocking)
It’s easy to forget that you are running out of stock and get caught off guard when customer demands roll in. The right inventory management software keeps you posted when stock drops to a certain level. Integrated with your accounting tool, you could automate reordering to ensure early arrival.
Cost and time saving
Choosing the right inventory management software saves you the enormous troubles of hiring and managing dozens of staff to track inventory. With IMS, inventories are reported in real time as opposed to the traditional end-of-day reporting.
Importantly, fewer staff will be needed to track inventories, saving store owners hundreds of thousands in annual salary. Also, available staff don’t have to work long hours reporting inventories.
Improving sales forecast
With advancements in technology and wide adoption of Artificial Intelligence, progressive inventory management software, like Freshservice, now collects and stores sales data to help store managers better forecast sales in the coming season. This is particularly essential to prevent inventory waste.
Defining your inventories for the software
The most important part of using an inventory management software is setting it up properly. As scary as this may seem to not-so-savvy entrepreneurs, it’s quite a simple fix. Some of the best IMS providers have elaborate guides to help you set up your inventory management tool appropriately.
After setting up, it’s crucial for you to categorize your customer demands into dependent and independent demands. This classification significantly affects your inventory needs and since most of it will be automated through the IMS, it’s best you add it to the set up.
Dependent demand includes supplies that are affected by the order of other products. For instance, when a customer orders an Apple iMac, one Magic Mouse, one Magic Keyboard, and a Type-C to Lightning cable have to be included in the package by default. Therefore, the order for an iMac will directly affect the number of Magic Mouses, keyboards, and charging cables.
Independent demand, on the other hand, is not affected by the sales of other products. A customer ordering a MacBook Air from Apple doesn’t affect the number of Magic Mouses in inventory, except s/he orders a Magic Mouse separately.
Defining these orders in your IMS makes it easy for it to work effectively.
How to choose the right inventory management software for your business
Now that you know how an inventory management software works, how do you choose from the myriad of options available in the market?
This checklist below is poised at helping vet the best IMS providers to find the most appropriate for your business needs.
Your company size and needs
When choosing an inventory management software, it’s essential to consider the size of your company, typical inventory size, and the needs of your business.
For instance, you might have a large inventory with sensitive customers and tracking the status of your shipments could be a pressing need.
To ensure that your choice of IMS handles your inventory needs, you have to define the needs as precisely as you can.
Staying on budget is an important part of running a business. It’s crucial to check the price of an inventory management tool before choosing to use it. Typically, inventory management software costs a business between $100 and $4,000 per month depending on the offering and uses.
If you are running a small business with a decent budget, you can opt in for low cost software. Bigger businesses with greater needs and much larger revenue can afford more expensive options.
Does inventory management in your business include reordering stocks at certain times? You may want to automate that too. The best inventory management software has the automated replenishment feature. This allows you to request supplies at certain times and “control points”. More of this order replenishment is discussed below.
Order management also includes tracking shipments and returns, among others. If you intend to track these aspects of your order management, it’s pertinent to look out for these features in any inventory management software.
Great software allows myriads of integration to improve ease of use. Also, these integrations help you keep all your activities in one place. With the several options available, it’s important to choose providers that integrate with other services that your business uses.
For instance, Oracle Netsuite integrates with a host of business productivity apps, including accounting and communication tools. With this, inventory changes are reflected in the books and important stakeholders are kept in the loop.
Ease of Use
There are IM tools that might require an understanding of rocket science to figure out. The best IM software eliminates the technicalities of setting up and managing your inventory through the app. Since most retail entrepreneurs have limited time and are not tech geniuses, choosing inventory management software, like Zoho, that is easy to set up and configure is a smart move.
Inventory management is a tricky responsibility. Handling it with technological tools may cause some bottlenecks. These bottlenecks may hinder business activities. When choosing an IM tool, you have to make sure that the provider has a responsive customer support team to help you navigate whatever challenges you might be facing.
Automated inventory replenishment systems
When choosing an inventory management software, you should consider the type of replenishment feature included in the tool. Some of the widely used inventory replenishment systems used by leading brands include:
The calendar method of replenishment:
This feature allows you to automatically reorder some stock on specific calendar days (e.g. every first Tuesday of the month) or at intervals (e.g. every 45 days). With this, you don’t have to manually reach out to suppliers every time.
This type of replenishment is triggered when the quantity of items inventory drops to a particular number, called the “control point”. It’s particularly important to make sure that items are never out of stock.
This replenishment command is triggered by customer demands. The frequency of reordering stock, as well as the quantity of each item, will depend on the demands of customers. This feature is one of every dropshipper’s favorites.
Using an inventory management software helps save the chunk of time spent on routinely tracking inventories. That way, you can spend more time building your business and ensuring everything is in order.
However, choosing the right software for this purpose requires careful consideration of the available options. We are confident that the information in this article simplifies the process of choosing.