The inventory management process is an approach to controlling, storing, and tracking inventory items. Inventory management is essential to supply chain management since it governs all operations from when an item enters your shop until it is sold to the consumer.
Whether you're looking to speed up order processing or expand into new markets, having a reliable method for keeping track of stock is crucial. Simplifying your inventory management practices can free up resources that can be put toward expanding your company.
In this article, you will find out how Inventory management simplifies operations, better manages resources, and increases profits.
Inventory Management Vs. Inventory Control
Inventory control manages how items move in the warehouse. It keeps track of all goods, their quantities, and their conditions.
On the other hand, inventory management involves estimating demand, ordering, and managing inventories. This practice predicts what clients will wish to buy in the future and sets orders appropriately.
The process of inventory management and control both track and manage inventory. Inventory control is a component of inventory management that tracks daily trends for each item. Inventory management is influenced by larger patterns over longer periods.
Both techniques use mobile devices to scan barcodes and RFID (radio frequency identification) for exact, real-time updates.
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The 5-Step Inventory Management Process
Here are five critical steps in the inventory management process:
1. Receive and Inspect Products
The first step in inventory management is receiving your order from the supplier. This step must be completed correctly for the next steps to go as smoothly as possible. After receiving the order, the first thing to do is inspect the goods. You should check the quantity, product type, and serial codes. Check that the amount, product, and serial codes are all in place.
2. Sort and Stock Products
After inspection, the products must be properly stored in the warehouse and entered into your inventory management system. At this point, it is a good idea to be strategic about how things are stored. Shortening the distance between the most popular products is vital by putting them in the most convenient area.
3. Accept Customer Order
Accepting customer orders is the next step in the inventory management process. Orders are usually processed, and payments are accepted through a point-of-sale system (POS). In either case, warehouse personnel can look at order data thanks to the POS system's inventory management component.
4. Fulfill Package and Ship Order
After receiving consumer orders, the next step is to precisely and quickly pack and ship the goods. Searching for and selecting products in the warehouse should be pretty simple if the second stage in the process is optimized. When packing a product, it is critical to consider the consumer experience, durability, and sustainability. When mailing the merchandise, send a confirmation email to the customer with tracking information.
5. Reorder New Stock
When reordering fresh stock, verifying that the timing and quantity of goods are right is important. Using the reorder point method may reduce the danger of stockouts and deadstock, negatively influencing your bottom line. Certain inventory management systems automate reordering, saving time and preventing human error.
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Tips to Optimize Your Inventory Management
A few tips to optimize inventory management are as follows:
1. Coordinate With Suppliers
A strong relationship with suppliers can improve your inventory tracking. Regular updates on demand changes and product needs can keep you well-supplied. In order to reduce the costs associated with too much stock and too many vendors, businesses should periodically reduce an SKU (stock-keeping unit).
2. Hire an Inventory Control Manager
It's usually preferable to have a single individual take care of inventory rather than a team of people split up between several tasks. Hire a person better equipped than you to monitor supply difficulties and respond swiftly to changes. The primary focus of an inventory manager's compensation and job description is an internal audit of the inventory management process.
3. Track Product Lead Time
Knowing the expected lead time will help you time your product reorders more effectively. You may also anticipate and prevent problems with client demand by doing this.
4. Purchase Inventory Management Software
Keeping track of an ever-growing stockpile requires more time and effort by hand. You can reduce your workload and boost your profitability with the help of inventory management software.
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Top Inventory Management Software
Here is the top inventory management software you must know about:
1. Inventory Management Software
Inventory, sales, and shipments can all be tracked using Gecko or Skubana, and the two can integrate with comprehensive software packages like Zoho Inventory, Orderhive, and Brightpearl TradeOrders.
They serve as the glue that holds your supply chain together. With this method, you can track all the goods entering and leaving the warehouse anytime.
Ensure your chosen platform can communicate with your existing back-end systems like accounting and customer relationship management software.
2. Inventory Control Software
You can also pick up software that focuses entirely on inventory control within your warehouse and storage facilities.
Odoo Korber and Fishbowl, for example, can help you create effective stock processes. The objective is to maximize warehouse space while lowering expenses by reducing stock levels.
These warehouse-centric technologies also make adding smart barcodes and RFID (Radio Frequency Identification) tags simple for efficient stock management.
3. Omnichannel Stock Monitoring Software
There are tools specifically developed to help you manage stock across numerous platforms if you stock products across third-party marketplaces and retailer networks.
Tracking a product's search rankings and customer evaluations across all channels is also conceivable. It enables brands to understand the online visibility of their products, ensuring that they win the digital shelf.
Benefits of Inventory Management
Let us see some of the top benefits of inventory management:
1. Reduces Expenses
Understanding stock trends involves knowing how much and where you have something in stock so you can better use what you have. It also allows you to store less stock at each location because you can pull from anywhere to fulfill orders. All of this reduces inventory costs and the amount of product that goes unsold before it becomes outdated.
2. Helps with Cash Flow
With efficient stock management, capital is invested in items likely to be quickly turned into cash.
3. Customer Satisfaction
Customers are happy and more likely to return if their needs are met without unnecessary delays.
Improve Inventory Management With TranZact
Effective inventory management is crucial for businesses to maintain optimal stock levels, reduce costs, and meet customer demands. By implementing a reliable inventory management system, businesses can streamline their operations, minimize stockouts, and achieve greater efficiency in their supply chain processes.
TranZact helps you improve your inventory management process, optimize reorder points to have complete control, and eliminate stockouts with its inventory management software.
FAQs on Inventory Management Process
1. What is the inventory management system process flow?
The inventory management process flow chart includes demand forecasting, order placement, receiving and inspection, inventory tracking, stock storage and organization, order fulfillment, and inventory analysis.
2. How does inventory management affect the supply chain?
Managing inventory in the supply chain is important for balancing customer demands. Inventory management provides visibility into the supply chain so managers can coordinate delivery lead times with production timetables.
4. How Can Inventory Management Be Improved?
Your inventory management can be improved by keeping proper accounting records and performing regular physical stock counts. A system that gives your organization real-time visibility into inventory can help stakeholders make critical business decisions.
5. What Are Inventory Management Policies?
Inventory management policies are plans for using inventory to make customers happy and reduce costs. Stock management methods, for example, are outlined in policies.
6. What Is Poor Inventory Management?
The problem of poor inventory management occurs when too much stock is kept and too little is removed or sold. It can be difficult to balance goods and sales when demand changes. As a result, poor stock management increases costs, which in turn reduces profits.
