Managing your inventory efficiently can be a difficult task. As an SME business owner, you are likely to face challenges keeping track of inputs of raw materials and output of finished goods. It can create a big gap between your selling and procurement.
Inventory management tools are the key to efficiency, accuracy, and profitability in your SME business. They help you gain control over your inventory and meet customer demands with ease. In this blog post, we will learn about inventory management in detail. We will also go through some inventory best practices to understand better,
Why Inventory Management?
Effective inventory management software gives you an overview of your inventory and simplifies your manufacturing processes. It makes sure that the right amount of inventory is available at the right time. This prevents stockouts and delays. This improves cash flow as money is not tied up in excess inventory. It also helps manufacturers quickly respond to market changes. An inventory management software keeps your inventory in check and optimizes overall business.
Best Inventory Management Tools and Techniques
Inventory control tools support many inventory management techniques. You need to pick which inventory control tools and techniques work the best for your manufacturing business. Let us understand the 5 key Inventory control techniques:
1. ABC Analysis
ABC analysis is based on the value of materials. This analysis covers the “A” category as the highest value items, and "B" and "C" as moderate to low-value items. Now, you have to make sure that the “A" list is maintained at safe levels and so on.
2. FIFO, LIFO
First-In, First-Out (FIFO), Last-In, First-Out (LIFO) help to determine the cost of goods sold within inventory management. In FIFO, the first items in the inventory are sold first, whereas the items added most recently are sold first in LIFO.
3. Traceability
Data traceability helps you trace the location, age and quality of your items. The traceability feature is a great addition that helps you with customer fulfillment. It is the ability to track a product’s journey from its origin through its production and distribution process to its final destination.
4. Cycle Monitoring
Cycle monitoring is a way of monitoring inventory continuously. Through this method, the movement of materials is tracked, right from the time they are issued till they reach the warehouse as finished goods. This will alert you of its non-availability or backlog.
5. Identification
The tool also lets you use a barcode or RFID to find the product and sync the data in the system. The status of any raw material, semi-finished goods, or finished goods is available instantly to the department managers at one glance. This saves time consumed and reduces errors.
Inventory Management Best Practices
Here are the most effective inventory management practices in the manufacturing industry:
1. Effective monitoring
An inventory management tool keeps track of materials, goods being packed, or finished goods being dispatched. It pinpoints the raw materials lying around too. It helps you manage overcrowding of materials resulting in loss or damage.
2. Quicker deliveries
One of the biggest factors in retaining customers is timely deliveries. Unexpected delays in manufacturing, shortages of raw materials, and unplanned interruptions can cause order delays. It helps you hold neither too much stock nor too little without increasing holding costs or lost orders.
3. Measure Performance
You can also set standards and methods to measure results. You can analyze gathered data and take steps to improve. Measures can be set for variations in inventory, cost of holding inventory, age of non-moving stocks, vendor performance, cycle time etc.
4. Never out of stock
Getting stuck between customer demand and material stockout is a situation you must avoid at all costs. You should make sure to maintain a minimum inventory. A good inventory tracking system will make sure that you do not run out of any interruptions.
5. Proactive steps
This software helps you understand the company inventory. It lets you be prepared and avoid extra costs. You can take intelligent steps through proper inventory management tools for a small business to fail-safe your manufacturing business.
What Makes TranZact the Best Inventory Management Software?
Implementing modern tools and techniques of inventory management can improve inventory performance. Every business must recognize the value of inventory management systems. They should implement the best inventory management software specifically for their needs.
TranZact is a software that specifically helps SME manufacturers to digitise their inventory. It helps you with the timely planning of purchases by monitoring stock. Using TranZact's inventory module, many vendors have been able to reduce the inventory holding period from 60 days to 15 days. It offers a quick overview of the current stock and indicates low stock across multiple stores, all in real-time.
It also offers easy barcoding when carrying out inventory movements and reduces significant manual effort. With hassle-free user experience, zero effort, and 24/7 lifetime support, TranZact makes sure of 100% implementation in 14 days. What's more, you can book a free demo and see how it works!
FAQs on Inventory Management Tools
1. What is an inventory management tool?
An inventory management tool is an automated system that helps businesses control, and optimize their inventory levels, This makes sure of efficient stock management, record-keeping, and streamlined inventory operations.
2. What is inventory management in TranZact?
TranZact Inventory is a centralized cloud-based software for inventory and production management. It offers real-time and intelligent inventory analysis, with features such as barcode scanning, physical stock restriction, and more for SME manufacturers.
3. How many different types of inventory exist?
There are four main types of inventory: raw materials, work-in-progress (WIP), finished goods, and maintenance, repair, and operations (MRO) inventory. Other types of inventory used by businesses include decoupling inventory, safety stock, and cycle inventory.
4. Which software is recommended for inventory management?
An inventory management software that is easy to use, cost-effective, GST-compliant, and integrates with your core business and accounting tools is the best one to go for. You can choose a user-friendly software that offers a lifetime free plan with base features.
5. Which is the best inventory management software in India?
Inventory management software should reduce operating costs and efforts while increasing return on investment and profitability. A digitized system like TranZact helps SMEs to grow better with the power of cloud, data, and technology, making it the best inventory management software in India.
6. Which inventory management software is the best one for small businesses?
The best inventory management software for small businesses will be the one that is simple to use, easy to understand and does not need much user training. It must provide all functional features and should be affordable and accurate. TranZact is built especially for small and medium-scale businesses, making it the best software for inventory management for small businesses.
7. Which is the best inventory management software for manufacturers?
A manufacturing business comes with several fine nuances: GST-compliant invoicing, transaction monitoring, accounting integration, inventory, production, materials resource planning, analytics, and more. TranZact's inventory module fulfils all of these requirements.
8. Do you have to invest in new hardware or software to use an inventory management system?
No. If you have a laptop and access to the web, you can easily start using an inventory tool over the cloud. Being a cloud-based software means you can access it from anywhere, on the go.
9. What are the tools used to manage inventory?
Inventory management tools include barcode data collection, cycle counting, ABC analysis, an inventory management software system, and serial number traceability.
10. What is inventory management analysis?
Inventory management analysis is the process of examining and evaluating a company’s inventory management practices to determine its efficiency, profitability, and overall impact on the company’s operations.
11. What are the 3 tools used to improve inventory management?
Three tools used to improve inventory management include:
- Inventory management software
- Mobile devices and barcoding systems
- Advanced analytical tools
12. What are the 4 techniques of inventory control?
4 inventory control techniques are:
- ABC analysis
- Last In, First Out (LIFO)
- First In, First Out (FIFO)
- Safety stock
13. What is the ABC technique of inventory management?
ABC analysis is an inventory management method that groups items into three categories (A, B, and C) based on their level of value for a manufacturer.
14. What are the 4 types of inventory management systems?
The four types of inventory management systems include:
- Just-in-time management (JIT)
- Materials requirement planning (MRP)
- Economic order quantity (EOQ)
- Days sales of inventory (DSI)
15. What are the 3 systems used in inventory control
?The three primary types of inventory control systems are periodic, perpetual, and just-in-time (JIT).
