Today, businesses are characterized by their growth. This is particularly common for Indian manufacturing SMEs. And to keep up with that, they need to have a good inventory management system. An inventory management system helps businesses streamline their operations and improve their work.
However, there are some key elements of an inventory management system that you need to be well-versed with. In this blog post, we will go through the features, requirements and modules of an inventory management system.
What is an Inventory Management System?
An inventory management system (IMS) is a tool that tracks, organizes, and manages a company's inventory. It is a central hub for storing, analyzing, and updating information related to stock levels, product details, and inventory movements.
In general, an inventory management system gives you real-time visibility into their inventory. This lets you make informed decisions about stock levels and order fulfilment.
The IMS works simply. You buy raw materials to make a product. You keep these items in your warehouse. When the final product is made and a customer buys an item, the IMS updates the count. It updates the item at every stage using bar codes, radio signals (RFID) etc.
Major Specifications of an Inventory Management System
To get into inventory management, you must understand the key specifications that make an Inventory Management System (IMS) useful for your manufacturing business.
Here are some of the major specifications that you should look for in an IMS:
- An intuitive interface
- Automated inventory management
- Scalability with business
- Multi-location support
- Remote or mobile access
- Accurate databases
- Real-time information
- Forecasting tools
- Easy monitoring and controlling
- Automated features
- Software Integration
Features of the Best Inventory Management Systems by Category
An inventory management system is defined by its unique features. They all streamline and enhance different aspects of inventory management. Here are the top features of the inventory management system by category:
1. Inventory Control
This feature is designed to maintain accurate inventory levels and make sure that stock management is efficient. It includes functionalities like stock tracking, stock adjustments, and stock transfers.
2. Inventory Management
Inventory management refers to various capabilities of software that make inventory management easy and smart. It includes keeping track if inventory is replenished promptly, customer orders are fulfilled efficiently, and supplier relationships are effectively managed.
3. Inventory Tracking
Inventory tracking allows manufacturing businesses to monitor the movement and location of inventory items throughout the supply chain. It happens with the use of barcode or radio frequency identification (RFID) technology.
4. Inventory Barcoding
Inventory barcoding involves the use of barcodes or QR codes to identify and track inventory items uniquely. This feature allows businesses to track every stage of production with barcodes. This makes sure that there is efficient data entry, inventory movement, and stocktaking.
5. Inventory Optimization
Inventory optimization uses advanced algorithms and analytics to optimize inventory levels based on factors like demand patterns, lead times, and carrying costs. It helps manufacturing businesses strike the right balance between maintaining sufficient stock and minimizing excess inventory.
6. Inventory Alerts
Inventory alert features provide automated notifications and alerts for inventory-related events. These alerts can be set up for low stock levels, stock expiration, reorder points, stock discrepancies etc.
Inventory Management Features to Consider
When choosing an inventory management system, it’s important to consider the features that can help with your inventory management processes. These features will streamline operations, provide valuable insights, improve efficiency, and reduce manual efforts. Here are some crucial features to consider:
1. Mobile Accessibility: An inventory management system should offer mobile accessibility through dedicated mobile apps or responsive web interfaces. This allows you to perform inventory tasks like stock counts or order management. This feature allows you to manage your inventory from anywhere, at any time, right from your mobile device.
2. User-Friendly Interface: Look for a simple and user-friendly interface that makes it easy for employees to do inventory-related tasks. It reduces training time and improves user adoption. It improves usage and can lead to productivity and easy user adoption.
3. Cloud Infrastructure: Cloud infrastructure uses a remote server for storing, accessing, and managing inventory data. It makes sure your data is secure and regularly backed up, reducing the risk of data loss. Moreover, cloud infrastructure offers scalability, allowing your system to grow with your business.
4. Digital Labeling: This feature uses digital identification technologies such as barcodes, QR codes, and RFID tags for inventory management. Barcodes and QR codes provide a unique identifier for each item, whereas RFID tags allow real-time tracking of inventory items throughout the supply chain.
5. Vendor Management: Vendor management is an important part of the inventory management system. It allows you to keep track of all your suppliers and their products. This makes sure you always have the stock you need on hand. It can also help improve your relationships with your suppliers.
6. Reporting & Analytics: Reporting and analytics features provide insights into your inventory. They help you to understand your stock levels, sales trends, and overall inventory performance. With this, you can find the areas for improvement and make data-driven decisions.
7. Real-Time Reporting: This feature provides real-time updates on your inventory status. It allows you to monitor stock levels, sales, returns, and other key metrics in real time. This helps you in quick decision-making and finding issues before they become problems.
Key Requirements of an Inventory Management System
An effective Inventory Management System (IMS) helps in maintaining inventory levels and streamlining operations. Here are some key requirements that an IMS should ideally have:
- The system should provide real-time updates on the stock levels from everywhere. This helps in preventing stock-outs and overstock situations.
- If the manufacturer has multiple locations, the IMS should be able to track inventory across all these locations.
- The system should provide detailed reports on inventory levels, sales, order history, etc. This data can be used for business decisions.
- The IMS should be able to integrate with other systems such as the production planning software, the materials requirement planning system, etc.
- The IMS has to scale as the business grows. It should handle increased data volume and as the business expands.
Key Features of Inventory Management System by Industry
Inventory management is an important aspect that can make or break the success of a business. Different industries have different needs and challenges. Let’s look at the specific features of inventory management systems and see how they enhance the efficiency of operations in each industry:
Manufacturing
This industry combines material-based inventory and warehouse management systems. Manufacturing inventory management systems include the following features:
- Measurement unit conversion
- Order Automation
- Planning raw materials
- Managing purchase orders
- Serializing the inventory
Wholesale Distributions
Wholesalers with online distribution channels manage bulk inventory. They deal with many suppliers and customers. Wholesale distributors benefit from the following features:
- Fulfilling sales orders
- Multiple warehouses
- Kitting
- LOT tracking
- Bin Management
Retail
Retailers use inventory management tools to track inventory, predict demand, and receive efficient inventory alerts. The top features of an inventory management system for retailers are:
- Handling partial inventory
- Managing back orders
- Demand Forecasting
- Cycle Counting
E-commerce
E-commerce inventory systems need to maintain accurate inventory controls and automated processes for uninterrupted product delivery. E-commerce inventory management systems include the following features:
- Handling Returns
- Automated Restocking
- multiple carriers
- Keeping track virtually
How to decide which inventory management features to consider
When deciding which inventory management system features to choose, looking at your business needs is important. First, you should understand the challenges that you are facing. This includes stockouts, overstocking, or poor demand forecasting. You should also consider factors like the type and volume of products you handle.
Finally, conduct thorough research, read customer reviews about the inventory features, and consult industry experts. Look for a tool that provides reasonable cost, ample support, and quick implementation. TranZact is one such solution that has been created with Indian manufacturing SMEs in mind. It provides customizable software that can be implemented in your business in 14 days. TranZact makes sure that you get the best of inventory management at the best price with no disturbance to your business.
FAQs
1. What is an inventory management system?
An inventory management system is a tool that helps businesses maintain their inventory accurately and efficiently. It tracks and manages inventory levels. It also provides valuable insights on when and how much to order.
2. What are the benefits of an inventory management system?
Implementing an inventory management system can come with many advantages. It improves inventory accuracy, demand forecasting, order management, and operational efficiency. It also helps reduce stockouts overstock and mismanagement.
3. What are the 4 main features of an inventory management system?
The main features of inventory management software are:
- Barcode and Scanning
- Cloud System
- Order Processing
- Sales Management
4. How does an inventory management system help with demand forecasting?
An inventory management system can provide insights to predict future demand. It looks at the past sales data and finds out trends. This helps businesses maintain inventory levels and avoid overstocking or understocking.
5. What is the main funciton of an inventory system?
An inventory system's main function is to monitor and manage all items in the inventory. This includes keeping track of the quantity of each item, its location, and its status.
6. What are the examples of inventory management systems?
The main examples of inventory management systems are periodic, manual, and perpetual inventory. Periodic systems update inventory levels at regular intervals, whereas manual systems require physical counts. The perpetual systems that continuously update inventory levels in real-time.
7. How does the modern inventory management system work?
Modern inventory management systems use advanced technologies. It includes Radio Frequency Identification (RFID), barcode management, cloud applications etc.
8. What are the 4 types of inventory management system?
Four main kinds of inventory management systems are:
- Just-In-Time Management
- Economic Order Quantity
- Days Sales of Inventory
- Material Requirement Planning
9. What is the main purpose of inventory management?
The main purpose of inventory management is to help businesses manage the ordering, stocking, storing, and using of inventory. This allows businesses to know what items are in stock, how many of them there are, and where they are located.
10. Why is inventory management required?
Inventory management is needed to reduce costs, avoid excess inventory, provide real-time inventory views, and make forecasts.
11. What are the requirements for effective inventory management?
Effective inventory management requires accurate data, efficient forecasting, planning, regular auditing, and supplier management.
