Inventory management in manufacturing helps run operations smoothly and increases productivity. If you deal with various finished goods and each requires many raw materials, then counting and tracking them with manual methods can take a lot of time. It may also cause a lot of errors.
If you automate your inventory management process by using an inventory management system, you can save a lot of time and money for your business.
In this blog post, we will explain the role of automation in the inventory management process to increase accuracy and efficiency.
Understanding Inventory Management Process
The inventory management process involves managing the items from procurement to delivery. When you receive orders, you need to check the quantity of products and categorize them for storage. You also have to pack the products securely and deliver them to fulfil orders.
When certain products in your warehouse reach minimum stock levels, you need to make purchase orders and reorder them to avoid disruptions in operations and improve your workflow. All of this information is kept to date in an inventory management system.
It gives you an idea of what you have and what you need more of so that you can use money efficiently and increase productivity. It also helps you analyze your customer orders and market trends to predict future demands and order stocks in the right amounts.
What Is Automated Inventory Management?
Automated inventory management involves using technology or software solutions to speed up tasks and increase efficiency. It can provide accurate inventory data from different warehouses whenever you want. It includes using modern tools like barcode scanners and RFID tags. This lets you automate the inventory levels at every stage of the production.
Inventory management software also improves communication between other departments, like production, procurement, and sales. When new stock arrives in the warehouse or is shipped to customers, inventory is updated automatically since there is Inventory management automation.
It helps SMEs avoid human errors especially when raw materials or other products are stored in several locations. Some manufacturers have many warehouses and it becomes difficult to manage the inventory. If you use inventory management software, you can manage raw materials and finished goods between multiple warehouses. The software can update you with the real-time movement of raw materials and products within warehouses.
Role Of Automation In Inventory Management?
The role of automation in inventory management is important for saving money and time and increasing productivity. Let’s understand the role of automation in inventory management.
1. Speeding Tasks
Using automation in inventory management, you can count or categorize different types of products faster. You can also process and update orders, and inventory lists. The software can manage them accurately in a few minutes.
2. Real-Time Tracking
Automation helps you track inventory in real time. It gives you accurate data on everything from raw materials to finished goods. You can find out how many of them are left in the stocks and where they are stored. This information helps you avoid overstocking and inventory shrinkage.
3. Workflow Improvement
When you use automated systems, you can keep an eye on the raw materials, work-in-progress, and finished goods, all at once. It helps you avoid disruptions in the production and manufacture products on time.
4. Automatic Reordering
Inventory management software can set certain guidelines to reorder stocks automatically. The software can conduct inventory analysis. You can set guidelines in the system regarding which suppliers to order stock from and when. The system can also alert you when products reach maximum stock levels.
5. Improving Communication
Automation in inventory management can improve communication between other departments of your business. When all the departments work together, it helps you make more informed decisions. It helps you forecast demand, find potential issues, and invest in the right products.
Key Components Of Automated Inventory Management System
There are many components to an automated inventory management system. Let’s understand the key components of an automated inventory management system:
1. Inventory Records: An automated inventory management system keeps all the previous inventory records of products you have purchased or sold. It helps you predict future demands and identify the most valuable products for your business.
2. Order Processing: It comes with features to track and monitor all the products in your inventory. Features like barcode scanning can give all the details about products and their categories. The system updates automatically at every stage of the production process.
3. Reorder Stocks: The system can reorder stocks at the right time to avoid production delays. It is helpful to improve your order fulfilment process. You can categorize inventory items by using techniques like HML analysis and ABC analysis to identify important products and set reorder points.
4. Integration: You can integrate it with other systems in your business to increase efficiency. You can integrate it with systems like production planning software and accounting software. It helps you make quick decisions and manage other operational tasks.
5. Analysis And Reporting: It helps you improve your inventory analysis process and optimizes it according to your business requirements. The system allows you to get updated reports of your inventory on your smartphone so that you can make smart decisions for your business.
Challenges In Inventory Management Automation
Inventory management automation has many benefits, but you can also face some challenges. Here are some of the challenges in inventory management automation:
- When you adopt inventory management automation, you have to give training to your employees to operate the system.
- If you allow many people to operate this system, it can cause data leaks and security issues.
- You have to update the system at regular intervals to use the latest version.
- You have to integrate this system with other tools to optimize it according to your specific requirements.
- You have to invest more money to implement this system in your business.
Benefits Of Automated Inventory Management System
There are many benefits of automated inventory management system for your business productivity. Here are the most important ones:
- It speeds up various tasks for your inventory items, such as counting and categorizing.
- It reduces human errors and can provide accurate inventory data from various storage units.
- It provides real-time visibility on your stock levels of different types of products.
- It alerts you in situations like maximum stock levels and minimum stock levels.
- It helps you conduct inventory analysis and identify the most valuable products.
- It helps you maintain inventory of various warehouses.
- It helps you reduce inventory holding costs.
- It helps you avoid production delays due to inventory shrinkages.
- It can provide data from different departments in your business.
- It keeps records of previous data that improves your demand forecasting process.
- It allows you to set guidelines to reorder stocks at the right time.
- It helps you make more informed decisions and improves inventory management.
What Automation Can Be Used To Manage Inventory
You can use many automation tools to manage your inventory. You can use barcode inventory systems to get details of various products. You can use purchase order software to reorder stocks automatically when reaching specified limits. You can use specific features of inventory management software to identify high-value products. You can also use cloud-based inventory management systems to access your inventory data from different locations.
How To Choose An Automated Inventory Management Software?
Automated inventory management software comes with many features. Here are the points you should consider when choosing the best software to fulfil your specific needs.
- The first thing you should look for is its customization options. If you deal with various products, consider features that can help you conduct inventory analysis to identify and categorize items according to their value.
- Find out what other systems in your business you can integrate with it to improve communication and decision-making processes. Sometimes you requires other software, like Tally, for accounting.
- Find out how long your service provider will take to implement an automated inventory management system in your business and consider their customer support. Research online and read reviews before proceeding.
- You should finally consider an automated inventory management system that is affordable, easy to operate. It is important that the team should be able to learn and adapt quickly.
Automate And Optimize Your Inventory With TranZact
If you are looking for a powerful tool that can help you manage your inventory, you should consider TranZact. TranZact is the most convenient and affordable choice for Indian manufacturers. It can hugely improve your inventory management process.
TranZact also comes with other modules that can handle other operational tasks like sales, production, planning, etc. It keeps all the historical data of inventory and financial transactions. You can also integrate TranZact with other systems like purchase order software to reorder stocks automatically.
With TranZact, you can improve communication between departments like inventory, production, and sales to make informed decisions. Choose TranZact today for fast implementation in your business without stopping your operations. It is software specifically made for Indian SME manufacturers and traders.
FAQs
1. What are the 5 stages of the inventory management process?
The five stages of the inventory management process are as follows:
- Procurement Of Goods
- Receiving Orders And Quality Check
- Categorizing Products And Storage
- Packaging And Shipping Orders
- Reordering New Stocks
2. How can automation help in inventory management?
Automation in inventory management helps by providing accurate and real-time inventory data across various locations or warehouses. It prevents you from overstocking and out-of-stock situations.
3. What is the role of AI in inventory management?
AI in inventory management can analyze historical data to predict future demands accurately, alert you when minimum stock levels are reached, and reorder stocks according to your guidelines.
4. What is the role of technology in inventory control?
The role of technology like barcode scanners and RFID tags is to speed up tasks and maintain the quality of products more efficiently. They help in updating the inventory at every stage of the production.
5. What is inventory management automation?
Inventory management automation uses technology like inventory management software to track products, process orders, and report in real time to improve accuracy and efficiency.
6. What is an automated inventory management system?
An automated inventory management system is a software solution for businesses that helps with demand forecasting, quality control, reordering new stocks on time, etc.
7. What are the 5 basic components of an automated system?
The five basic components of an automated system are:
- Inventory Records
- Order Processing
- Reorder Stocks
- Integration Options
- Analysis And Reporting
8. What are the benefits of an automated inventory management system?
The benefits of using an automated inventory management system are as follows:
- Accurate Inventory Data Across Warehouses
- Accurate Demand Forecasting
- Speed Up Inventory Counting And Tracking
- Minimized Human-Errors
- Reorder New Stocks Automatically
9. What are the 4 types of inventory management systems?
The four types of inventory management systems are as follows:
- Physical Inventory Management System
- Perpetual Inventory Management System
- Barcode Inventory Management System
- Radio Frequency Identification (RFID) System
