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More Inventory Content
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Table of Contents
More Inventory Content
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As the term indicates, an automated inventory management system automates your inventory management process. Automating inventory management allows businesses, retailers, distributors, and wholesalers to manage and optimize their inventory in real time. This simplifies workflows and saves you a lot of time. You no longer have to worry about managing your inventory since you know the automated systems will take care of the essential tasks.
With the right system, you can optimize your distribution process and automate almost every aspect of inventory management, including backorders, order invoicing, customer tagging, partial fulfillment, inventory counts, and more.
What is Automation's Role in a Retail Business?
Consumers in the digital era have high expectations, which, if not fulfilled, can prompt them to look for a better alternative. If e-commerce businesses wish to meet their customers’ demand and maintain a regular supply of products, they must have an overview of how much stock is on hand, how much to order, when to order the stock, and much more.
An automated inventory management system helps retailers with these and other complex processes and helps businesses stay true to their customers’ expectations. Furthermore, automating your inventory management process helps businesses get an oversight into their inventory levels and functions and helps them control their marketing budget.
For instance, retailers would be notified of products that have run out of stock so that they can stop the digital marketing for that particular product. Companies might often run out of stock during busy sales periods, including Black Friday, Cyber Monday, and the holiday season. Continuing to market your sold-out product would hurt your marketing budget, and the friction in the purchase journey would frustrate your customers.
Why Automate Managing Your Inventory?
The straightforward answer is that an e-commerce business needs to succeed and scale. An automated inventory management system delivers more coordination and efficiency of operations within your business and enhances customer satisfaction and the overall shopping experience. Your customers expect a frictionless shopping experience from e-commerce businesses. Automating inventory management enables e-commerce companies to deliver the ease and convenience of online shopping per their customers’ demands.
How Does Automated Inventory Management Work?
Automating your inventory management is a sophisticated process that grants businesses to explore new possibilities in the following areas:
- The way they process customer order deliveries
- Optimizing and managing real-time inventory data since it’s essential for warehouse operations
- Inventory demand fulfillment
- Performing tasks related to inventory tracking
- Lastly, comprising the entire warehouse management system
An automated management system enables modern retailers to monitor and optimize sales, inventory, and supplies. Since the automation of inventory management makes it easier to track and manage inventory in real-time, it enables firms to make more informed decisions after careful analysis and in an effective way.
Furthermore, an automated inventory management system should work with your firm’s other retail software, including point-of-sale (POS) or order management systems. You must have an insight into all sales taking place via multiple sales channels to achieve real-time accuracy and efficiency in inventory control and management.
Most automated inventory management software tracks multichannel sales, allowing businesses to connect all their in-store and online retail channels under one space. With an all-around automated inventory management software, you shall be able to determine which products are overselling or underselling, which products are performing well and which are not, how much profit each product generates, and more.
You can combine data from all these aspects with cash flow and demand forecasts, expected profit margins, and risk management for more accurate planning.
Inventory Types and How Inventory Control Systems Automate Them
Merchants must differentiate between primary inventory types and how the automation process differs for each inventory type.
- Raw materials as the primary components for the production of finished goods
- Finished products ready to be sold to customers
- Maintenance, repair, and operating supplies (MRO) do not directly form part of the finished products but support the production and manufacturing.
- Work-in-progress (WIP) inventory items are waiting for the production process to be completed to be classified as finished goods.
The process of inventory control is explained below:
- Track inventory data in real-time
- View sales trends and demand forecasts
- Identify and resolve any discrepancy instantly
- Prevents running out of inventory
- Saves time on the manual process of inventory management
There are two concepts of inventory control systems, periodic and perpetual inventory control. Perpetual control of inventory gives real-time updates on stock via barcodes and unique scanning equipment.
However, periodic inventory control refers to manually tallying inventory items and comparing numbers from the beginning to the term-end.
When a business uses a perpetual inventory control system to count MRO or raw materials, it requires special equipment. However, when a company uses a periodic inventory control system, it must consider counting errors and time constraints to offer the sales department correct information.
Inventory Management Automation Trends to Look Out for
Inventory management automation is keeping up with the evolving technology. Since more enterprises worldwide are turning to automate inventory management, automated systems are bringing in new updates for more accuracy and control. Here are a few trends every business must keep an open eye for in the coming years:
- Data is a precious resource for inventory management and other business aspects and operations. Accurate data gives your business the how, why, and what of all business aspects.
- You might have already come across automated guided vehicles (AGVs) or machinery in automated warehouses, changing how businesses approach inventory and warehouse management. Automated Guided Vehicles (AGVs) are expected to become more commonplace for helping companies to navigate and maneuver warehouse processes.
- 5G will revolutionize warehouse management in ways it has never been done before. Since 5G wireless technology is faster, remote warehouses will be able to maximize the efficiency of their automation. Furthermore, businesses will be able to collect data more effectively and quickly than ever before.
Benefits of Automated Inventory Management Systems
Here are some prominent advantages of automated inventory management systems:
- It saves a lot of time. With the automation of the inventory management process, all your inventory counts will be done automatically and precisely. Thus, it will leave you ample time to focus on what matters for your business: generating sales, revenue, and scalability.
- It helps you track inventory in real-time, including how much inventory you have in the warehouse, how much stock you need to pick up for the current demand, and how much inventory you need to procure to stock up enough for seamless ongoing sales.
- With manual calculations of inventory levels, businesses are highly likely to miscalculate. As the saying goes, ‘to err is human.’ Fortunately, automating the inventory management process eliminates the scope for manual errors and makes it extremely easy to manage inventory levels.
- When firms automate inventory management processes, the software will do all the data entry for you, including adding, deleting, forecasting, and restocking inventory in real-time.
- Lastly, automating the inventory management process can bring in a lot of potential for company scalability and growth. Furthermore, inventory management software saves time, is more accurate, and can handle thousands of daily transactions without error.
What are the Features of Automated Inventory Management?
Here are some points you should consider when selecting an automated inventory management system.
Automated stock reordering
One of the essential backend operations for every multichannel business is reordering. It ensures that your products are constantly available for purchase by your customers. Companies should avoid stock-out, particularly for their most popular products. And businesses can achieve that with automated reordering technologies.
Businesses should look for a retail operations platform with stock notifications, specific par levels, and vendor relationships. You wouldn’t have to worry anymore, knowing that you always have the right amount of stock on the shelves.
Automated stock transfer
Automatic stock transfers are an excellent feature for businesses with their inventory levels spread across multiple warehouses and locations. Furthermore, you must ensure that distributors find the right stock in the right place to fulfill customer orders at the right time.
Automated order management
When you automate the order dispatching process, you shall be able to resolve all warehouse inefficiencies quickly and effectively. Furthermore, the order dispatching process automation enables businesses to sort packages based on the location where they need to be delivered with features such as barcode scanning, delivery channel optimization, and label printing.
Reporting and monitoring
An automated inventory management system helps firms generate insightful reports after regularly monitoring sales and inventory. Your business can use these reports and data for demand forecasting, understanding sales trends, and more.
Multichannel inventory operations
You can keep track of your inventory levels in both your online and offline stores. Furthermore, your inventory management system allows companies to send customers shipping notifications.
Not only can an automated inventory management system track inventory across multiple sales channels, but it can also track inventory in all of its locations, such as your warehouse and store locations, and through numerous points in your supply chain.
You can review your inventory levels and then divide them down by location. You can set up alerts before inventory at a particular site runs out. Lastly, if you arrive at a low-stock threshold at one of your warehouses, you can automate stock transfers between them.
The barcode scanning tool enables store managers to quickly conduct an inventory count and manually add an item without manually entering all of the information. Furthermore, the inventory automation system can scan barcodes to obtain the SKU and other data for all items, speeding up the process.
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Here are some of the benefits of automating the inventory management process:
- 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
- Barcode data collection
- Cycle counting to improve accuracy
- ABC analysis for prioritization
- Integrated planning and execution
- Lot tracking and traceability
Most manufacturers use the three most common inventory management strategies: the pull strategy, the push strategy, and the just-in-time (JIT) strategy.
Economic Order Quantity (EOQ), ABC Analysis and Inventory Production Quantity are the three most central inventory control systems. Each model takes a unique approach to determine the number of goods a business should keep on hand.
- Potential system crashes
- Reduced physical audits