Inventory is a big asset for a business. And managing this asset effectively plays a big part in maintaining high levels of customer satisfaction and profitability.
Inventory management aims to ensure that businesses are consistently able to supply enough goods to meet the demand of their customers. Organizations need accurate data to be able to make the right decisions in this area. However, effective inventory management also means striking the right balance between enough and too much. Overstocking increases storage costs and if those goods don’t sell can lead to stock being written off.
What is automated inventory management?
An automated inventory management system tracks a business’ stock levels across sales channels and storage facilities from receipt to fulfilment. This insight provides businesses with the knowledge of which products need restocking and allows them to make better informed decisions about the performance of each of their sales channels. In addition to keeping track of stock levels, an automated inventory system can perform actions such as sending updates to other systems across the business to ensure data is consistent and automatically reordering products when stock is low.
Benefits of automated inventory management
Real-time visibility
The ability to view and track your inventory levels in real-time gives you greater visibility of exactly what is available and where it is currently located. This level of accuracy enables you to provide customers with real-time updates on the status of their order and avoid unfulfilled orders as you’ll know exactly what to reorder when increasing levels of customer satisfaction.
Increased efficiency
Traditional inventory management involves manually updating spreadsheets for each sales channel which is a time-consuming task. An automated system updates stock counts every time an item is received from a supplier or sold to or returned by a customer without any human intervention required. This makes the process a lot faster and frees your staff to focus on other tasks.
Fewer errors
Calculating inventory levels manually is prone to mistakes – mistakes that can cost your business. An automated inventory system provides a more accurate count and updates data as soon as stock is received from a supplier and shipped to a customer guaranteeing you’re always working with the right number.
Reduced costs
Having the right level of inventory to meet demand prevents excess holding costs such as those associated with warehouse storage and handling.
Protects revenue
Having an accurate view of how much inventory you have available prevents lost sales due to out-of-stock items. Being able to track inventory as it moves from warehouse to distributor and distributor to customer will also ensure that you don’t lose stock.
Aids forecasting
Avoid stockouts by using data held within your automated inventory system to predict how much stock is needed to meet the demand of each sales channel at certain time periods in the future. This insight also helps avoid overstocking which is particularly important when selling perishable or seasonal goods. If demand isn’t in line with supply, these often have to be sold at a discount which will seriously impact your bottom line.
Supports scaling
As your business grows, you’ll need to adapt your operations to keep up. Managing more sales and larger quantities of inventory requires the accuracy and efficiency that an automated inventory management system can provide.
How can Low-Code Process Automation improve inventory management?
The challenge that manufacturing and retail companies face is that whichever systems they use to manage inventory today, there are often gaps between systems and processes that lead to incorrect data, or worse, a total lack of visibility. It’s often manual processes and missed steps that lead to this. By automating processes and creating modern low-code apps, you can close these gaps. This enables you to reduce repetitive tasks, streamlining workforce productivity and integrating data between systems. All this contributes to more efficient operations, happier customers and a healthier balance sheet.
FAQs
With automation systems, businesses can monitor inventory at various locations, track incoming and outgoing shipments, and view stock levels across multiple channels in real-time. This visibility enables businesses to make data-driven decisions, optimize stock levels, and proactively manage supply and demand.
What are the 5 benefits of inventory management? ›
Benefits of inventory management
- Lower costs and saves money.
- Prevent overspending on warehouse storage.
- Minimize storage needs.
- Reduce losses to improve cash flow.
- Forecast sales trends.
- Satisfies customers with timely deliveries.
With automation systems, businesses can monitor inventory at various locations, track incoming and outgoing shipments, and view stock levels across multiple channels in real-time. This visibility enables businesses to make data-driven decisions, optimize stock levels, and proactively manage supply and demand.
What are the benefits of using a computerized inventory management system? ›
Also known as inventory management software, businesses can stay updated with inventory orders, counts and sales. A computerized inventory system can help you avoid costly mistakes, know what is and isn't moving, get your whole team on the same page, and help you keep track of inventory from anywhere.
What are some advantages of an automated inventory system over a manual system? ›
Here are seven key advantages of using an automated inventory tracking system.
- Automation of manual tasks. ...
- Accuracy with automation. ...
- Increased efficiency and productivity. ...
- Early problem detection. ...
- Real-time insights and tracking. ...
- Reduced overhead costs. ...
- Increased customer satisfaction.
Some of the advantages of using inventory management software include the following:
- Improves demand planning. ...
- Improves quality control. ...
- Helps reduce costs. ...
- Increases efficiency. ...
- Improves customer service.
The benefits of automated operations are higher productivity, reliability, availability, increased performance, and reduced operating costs. Moving to lights-out operations yields a good return on investment.
How does automation help supply chain management? ›
Supply chain automation enables companies to improve operations by delivering seamless workflows, modern apps and real-time reporting. Today most organizations have a patchwork of systems. The gaps between applications lead to inefficiencies and a lack of visibility when it comes to bottlenecks.
How does automation affect management? ›
One of the primary advantages of automation is its ability to streamline essential business processes, such as data entry and processing, inventory management, customer service and support, marketing and sales activities, and invoice and payroll management.
What are the benefits of having an automated stock ordering system? ›
7 advantages of inventory automation
- Increased accuracy. One of the biggest benefits of an automated inventory system is that it improves accuracy. ...
- Improved efficiency. ...
- Improved decision-making. ...
- Reduced costs. ...
- Improved customer satisfaction. ...
- Simplified scaling. ...
- Greater visibility.
Increased Efficiency and Accuracy
This automation reduces human errors and improves overall accuracy. By eliminating manual data entry and providing real-time updates, businesses can minimize discrepancies, ensure stock availability, and enhance operational efficiency.
What are inventory management advantages and disadvantages? ›
It also enables businesses to maintain the right amount of stock, avoid stock-outs, and notify when to restock. On the other hand, poor inventory management can lead to dissatisfied customers, slower sales, excess cash tied up in warehouses, and increased carrying costs.
What is automated inventory management? ›
Automated inventory management is how most modern retailers (both e-commerce and otherwise) track and organize stock, supplies, and sales. An automated system allows retailers to manage inventory in real-time, and make business-critical decisions in a timely fashion.
What is the three benefits of inventory control? ›
Why is Inventory Control Important? Inventory control is an essential part of inventory management to help you properly track your purchase orders, monitor your supply chain, and ensure your production keeps running and important items are not out-of-stock.
What is an advantage of an automated system? ›
Improved accuracy and quality: Automated systems are programmed to perform tasks with precision and consistency. This can lead to improved accuracy and quality of products or services. They can eliminate human errors and deviations, resulting in higher levels of customer satisfaction and reduced rework or defects.
What are the top three to five principles of inventory management? ›
There five key principles of inventory management:
- demand forecasting,
- warehouse flow,
- inventory turns/stock rotation,
- cycle counting and.
- process auditing.
Inventory management helps companies identify which and how much stock to order at what time. It tracks inventory from purchase to the sale of goods. The practice identifies and responds to trends to ensure there's always enough stock to fulfill customer orders and proper warning of a shortage.
What is the most important thing in inventory management? ›
One of the most critical aspects of inventory management is managing the flow of raw materials from their procurement to finished products. The goal is to minimize overstocks and improve efficiency so that projects can stay on time and within budget.
What are the four functions of inventory management? ›
Inventory management tries to efficiently streamline inventories to avoid both gluts and shortages. Four major inventory management methods include just-in-time management (JIT), materials requirement planning (MRP), economic order quantity (EOQ) , and days sales of inventory (DSI).
