Auto parts distributors, for example, might carry thousands of different bearings.

Lots of products and categories – Some businesses hold inventory that is hard to categorize or differentiate. Unlike stores that sell non-perishable items, grocery stores must be proactive about removing so-called “dead” goods once they near their expiration date. They become harder to sell the longer they sit on the shelf. Milk and produce, for example, have short shelf lives. Perishable goods – Grocery and other stores that offer perishable goods face unique challenges when it comes to inventory management. When inventory management starts to get complex From choosing manufacturers to managing inventory, there are always areas for improvement. However, one way to improve costs is to analyze your supply chain. In fact, most start by outsourcing manufacturing or sourcing to third parties. Very few businesses have complete control of or visibility into their supply chain. So in the iPhone’s example, Apple’s inventory management system deals with shipping the phones from factories in China to warehouses and finally to Apple stores and homes across the world. Inventory management is the part of supply chain that deals with finished products. Apple sources parts and materials from California, Korea, Japan and China before the phone is assembled in China. The iPhone, for example, has an immensely complex supply chain. A company’s supply chain encompasses all of the steps needed to turn a raw material into a product available for consumers. Inventory management is a key component of supply chain management. What’s the difference between inventory management and supply chain management? While most businesses start by managing inventory in an Excel spreadsheet (or in the CEO’s head), software usually takes its place as the supply chain grows in complexity. In each case, a clear look at the products coming in and going out helps the people in charge make strategic decisions. And that is very different from a bakery selling perishable goods or a distributor selling sheet metal. Real estate investors carrying property as inventory are very different than a tech company selling smartphones in 10 countries. You’ll know what products your customers love and which suppliers are slow to deliver.Ĭhoosing the right inventory management system depends on your business. The most efficient way to manage inventory is to automate it.īudget and forecast: Real-time data helps you make decisions about purchasing and sales. This results in costly audits and lost time. lost inventory-results from administrative and paperwork errors. You’ll know when you’re running low on a product, so you’ll never keep customers waiting on their orders.Ĭut costs: According to the 2016 National Retail Security Survey, 16.5% of inventory “shrinkage”-i.e.

Save time: Instead of spending hours auditing and tracking inventory on a periodic basis, you have a dynamic look at your inventory levels. Improving your inventory management might not be at the top of your list, but there’s compelling evidence that it should be.Ī good inventory management system can help your business in three key ways:

When you think about growing a business, you might first think about offering new products or finding new marketing channels. Perhaps most importantly, it’s a tool that helps you keep a finger on the pulse of your cash flow. It monitors your supply in real-time and helps you plan purchases from wholesalers and manufacturers. It’s a software application that automatically updates your inventory levels as sales are made and items are shipped. So what exactly is an inventory management system? Inventory management systems are designed to handle most of the administrative work, making it easy to put an important part of your business on autopilot. Tracking inventory can be tedious work, but it’s vital to running a business.

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