What is inventory?
Inventory refers to all the items, component parts and raw materials that use in production or for sale.
Inventory is not only the finished goods, but also the raw materials and work-in-progress items. It is a very important current asset as it can be converted into cash.
What is inventory Management?
Inventory management is an approach for keeping track of the flow of inventory, and involves the process from ordering, storing, to using, and selling.
Inventory management means the right stock in the right place at the right time, and an effective inventory management system can help the company to make a balance between being understocked and overstocked and achieve optimal efficiency and profitability.
3 Top Challenges in Inventory Management
Inventory management is vital to the health of a business, as it helps to ensure that the stock is always at the right level to fulfill customer needs and operate profitably. However, inventory management is absolutely not an easy task and here are 3 top challenges that are faced by retailers:
1. Lack of Visibility and Supply Chain Responsiveness
Inventory visibility is crucial to retailers, as it allows them to view and track inventory in real time, and gain insights into exactly how many quantities of each item are in stock at each location, and where it’s stored.
Inventory invisibility will lead to incomplete, inaccurate, or delayed shipments, which harms the customer satisfaction, as well as the company revenue. Also, it will defeat the company's capabilities of adapting to change and delivering positive customer experiences.
2. Inaccuracies Caused by Disconnected Systems
In traditional inventory management, staff are requested to input the quantity and location of inventory to the system manually, and the manual operation will inevitably involve human error and result in inaccurate data.
In addition, if each department in a company has their own unique system with no integration with each other. The manual operations will double the data entry work, as well as the human error. Also, the unsynchronized data will cause inconsistent information, and results to incorrect re-ordering and procurement arrangement.
3. Impacts of Poor Demand Forecasting
Poor demand forecasts may lead to higher risk of stock-outs, excess and obsolete stock, unmanageable replenishment plan, and finally, lost revenue.
Determining the right stock levels or setting appropriate safety stock levels can be difficult for many retailers, even during more predictable economic times.
Underestimating demand can damage customer satisfaction and retailer’s reputation as customer needs cannot be fulfilled. While overestimations of demand can result in excess stock that ties up cash and warehouse space. Both are very unwelcome to retailers.
How does Cloud-based Inventory Management System Help Retailers
What is Cloud-based Inventory Management System?
Cloud-based inventory management system allows you to track your inventory through a web browser on any devices. All the data is stored in the cloud, rather than on a single computer, which means it can provide accurate and real-time information in anywhere and anytime.
Benefits of Cloud-based Inventory Management System
Cloud-based inventory management system provides a single, real-time view of inventory across all locations and sales channels. Choosing the right platform can help retailers to automate processes, improve inventory practices, and enhance customer experiences.
Here are some benefits of cloud-based inventory management system:
1. Transparent Performance
Cloud-based inventory management system allows retailers to increase transparency across the company. The web-based operation enables anywhere, anytime access to real-time data, and allows real-time visibility into warehouses and other inventory locations, either domestically or internationally.
With higher inventory visibility, retailers will be able to plan their replenishment accurately to meet customer expectations and seasonal or even unexpected changes in demand.
2. Integrated Solutions
An inventory system that is integrated across the company not only optimizes inventory to ensure product availability, but also enables the entire supply chain to run efficiently and effectively.
Some cloud-based inventory management platforms provide integrated solutions to retailers. They are integrated with finance, sales, and warehouse data to help retailers to predict the demand and schedule orders according to changing customer preferences, material availability and seasonal trends, which greatly minimize the human error and data discrepancies caused by manual operation.
3. Better Analytics for Inventory Forecasting
Some inventory management platforms include automated inventory forecasting that takes advantage of machine learning to constantly improve the projection process. It helps retailers to forecast optimal stock levels, taking into account business goals and company processes. Machine learning systems reduce errors in supply chain networks and decrease stockouts by training the algorithm to learn from the incoming data and make adjustments.
Merging data analytics with inventory management can help retailers to predict future trends and patterns, and eventually, reduces the cost of overstocks, minimize out-of-stock situations, and forecasts demand and profitability more accurately.
Upgrade to Cloud Inventory Management System
Are you ready to take your inventory management system to a new level? Or need support in improving your inventory management system?
Contact us today and we will provide you with professional consulting and technical assistance.
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