Effective inventory management to small businesses is what managing kitchen is for a homemaker of a middle-class family. All the things required to cook food and provide for his/her family should be present all the time and also making sure that money is not wasted on overstocking or buying unnecessary things is crucial. A homemaker manages all of the above-listed works singlehandedly and doesn’t require any specialized inventory management tools and techniques.
However, inventory management for small businesses requires efficient software to manage everything because things get bigger than a kitchen. A lot of money and dreams are invested in small business along with the core emotion of a homemaker being the same – who wants to provide for their kids, in this case, customers.
You might ask, “ Is it necessary to have an inventory management software? I can manage my inventory with Excel and all’s going pretty good”
Well, yes you can manage things with Excel there is nothing wrong with that but don’t you think it’s time to innovate and upgrade?
“Big players innovate not because they are big players,instead,they became big players because they innovated and upgraded themselves with the changing world.”
Let’s go step by step, and understand the Whats and Whys of inventory management software-
What is Inventory Management Software?
Inventory management software is a platform that helps you to track your inventory in a more simpler and transparent way. It helps you to track your sales, shipments, returns, productions, and purchases. With the help of this software, you can have accurate data on – where a product went and how much of it is left and where it is kept. Inventory management tools and techniques when used smartly can increase the bottom line of your business. Many of these inventory management softwares can also be integrated with many online marketplaces, accounting software, CRMs, POSes, and 3PLs.
Why A Small Business Needs Advanced Inventory Management Tools And Techniques?
As far as inventory management is considered, small businesses have lesser things to manage as compared to large scale businesses but the real catch is that the staff required to complete those lesser tasks are even lesser. That can be due to many reasons with one being the budget crunch. In this scenario, you would definitely want an option that will make managing your inventory easier for you without investing more in hiring more inventory staff.
Likewise, there are many more reasons why a small business needs inventory management software?
Read on –
The major problem in an entrepreneur’s life is that there are many jobs he/she has to manage within a stipulated time and budget. This is where Inventory management software plays the role of a savior. The everyday mundane tasks like keeping a track of stock, everyday order confirmations, shipments, returns and accordingly increasing or decreasing inventory can be done easily with the use of the automation in an inventory management software.
“According to research done by Get Data Research, 16% of the surveyed small business owners say that they save more than a day/ week because of inventory management software and 55% of owners said that they save more than 4-5 hours a week.”
Isn’t it great? A whole day to plan other things and get ahead of your competitors.
Softwares like Orderhive with the AI technology are self-sufficient to the next level. These softwares come with numerous automation programming that you can choose from and perform your everyday tasks even while you are asleep. Using these types of software saves you time and also makes you a company that is growing with time.
Now you might be wondering, isn’t hiring a software costly than the regular inventory management techniques? Well, initially you might feel that it’s costly but once you start using it, you will understand that it actually saves money.
- Controlling your spending is the key factor in small businesses and hence an inventory management software can efficiently save the money spent on unnecessary overstocking (which you can spend in places where it can generate quick results like promotion, marketing or giving out discounts).
“Controlling the expenses to small businesses is what controlling the breath for a diver is. The diver can’t release all of his/her breath at once, otherwise, the survival under water won’t be long enough and he/she will have to come out.”
- The inventory management software will always pinpoint the stocks that are in surplus or overstocked so that you can get rid of those products as soon as possible.
- The losses involved in the business of perishable items can be reduced because of the advanced inventory management tools and techniques that enable you to have a clear view of the items that will become obsolete or get spoiled after some time.
- FIFO and LIFO methods can be automated according to the type of products through inventory management software. This again can save money by avoiding losses.
If you are doing a business of perishable products like food products, medicines, delicate objects, apparel that need you to follow certain fashion trends or seasons, then, of course, the methodology used will be of LIFO i.e. last in first out. This way you can provide your customers with the latest or the freshest products.
On the other hand, in the case of normal products that are not affected by time, FIFO i.e. first in first out should be the technique to go for.
There are businesses that also require a combination of FIFO and LIFO techniques for their inventory and hence there are inventory management tools and techniques present in software that help the small business owners do that as well.
- Prevent out of stock scenarios and losing out on customers with the help of almost 100% inventory visibility with perpetual inventory management software.
- Inventory management tools can allow you to accurately forecast the required materials in due time hence enabling you to manage your budget accordingly.
- Don’t have to hire more staff to manage inventory.
- Track and eschew loss of products through theft with the help of real-time inventory management software.
Still skeptical about the cost-effectiveness? There are many softwares that come at nominal prices with Orderhive providing automated inventory management tools and techniques in as low as $49.99.
“79% of companies with high-performance inventory management software have higher revenue growth than their Industry competitors according to the professional service network Deloitte”
Stock Counting or Cycle Counting Made Easy –
This is the most crucial and time taking part in inventory management. To ensure that the virtual inventory is same as the actual inventory, inventory managers carry out counting of available products periodically( mostly every 15 days or weekly) and section-wise.
This is time-consuming and exhausting but with the help of inventory management software, you can use a scanner and complete cycle counting quicker than counting with a pen and paper.
Easy To Integrate With Marketplaces And Other Softwares
The coolest feature of an Inventory management software is that it can be integrated with your online marketplaces like Amazon or Shopify or the POSes at brick and mortar stores, accounting software like QuickBooks, CRM software and many other Softwares. These integrations make inventory management, accounting, order placement and shipments easier and fully automated. For small businesses, it’s a boon because updating each software independently is time-consuming, exhausting and increases the chances of errors.
Increases Sales And Bottomline
- Inventory management software supports an increase in sales by improving inventory visibility so that you can offer alternative products to the customer looking for various options in different price ranges and promote upselling.
- Also, you can be sure of the products that are available to sell and that need to be ordered to avoid losing out on sales due to no stocks.
- The inventory management software tools forecast future demands hence enabling you to maintain your inventory level accordingly which in return helps you to make the most of the festival seasons and also refrain from investing more money on products that are not needed.
- With the new age automated inventory management softwares like Orderhive, you can know the Available To Promise (ATP) stock in real-time. This ultimately decreases overstuffing and understocking hence ultimately increasing the inventory turnover ratio and also increasing Bottom line.
- Bottom line is the actual profit you make i.e. the amount left after subtracting the cost of operations and inventory management from the total revenue earned. As mentioned above, inventory management software helps you to save money on operations, which means that the money saved will automatically account for the increase in Bottomline.
Learn more about how an inventory management software can boost your sales
Better Than Excel
Almost around 48% of small businesses don’t use better inventory management tools and techniques. They mostly depend on excel for managing their inventory. If it were the 2000s or early 2010s, then using excel could be a smart move but it’s 2019, and automation is no longer the future it is the present that we live in.
The major drawback of excel is that it’s not a proactive software, it will tell you only when you will ask or will store information when you put it in. So, if you are managing inventory with excel, you can read more about the reasons why excel doesn’t work for inventory management.
On the contrary, the inventory management software will automate things right from purchase to sales and even returns.
“ 38% of small businesses are more bent towards moving to an inventory management software”
For example, Let’s take the story of an entrepreneur, Bill, the founder of Robemart.
Bill had a growing online eCommerce business that offered the finest quality of Turkish bathrobes on its online website – robemart.com. Now since Bill wanted to grow his business he moved to multi-channel eCommerce and opened a store on Amazon as well. This proved to be a profiting affair but the profit and skyrocketed sales bought their own set of problems.
Bill tracked inventory, computed inventory levels and estimate purchases with one master spreadsheet which made counting inventory across warehouse and online store a more frustrating and time-consuming affair. Added to that he also had to work on fulfilling orders in a short time period.
And, most of the time the data maintained on the sheet was inaccurate and inconsistent across all the departments, which made Bill lose money. This was the time he decided to move on from a spreadsheet to an automated inventory management software.
To know what happened next click here to know the success story of Robemart after they moved from spreadsheets to inventory management software – Orderhive.
Boon For Dropshippers And Ecommerce Platforms That Rely On JIT Delivery
Dropshippers are the ones who don’t have an inventory, rather they have a tie-up with the manufacturers or wholesalers to whom they handover the list of the orders to be shipped.
Inventory management software is a blessing because the software reduces the manual effort of managing online orders and coordinating with third parties. The inventory management system provides end-to-end tracking of the products and also gives a proper idea of sales and revenue earned.
Also, the major concern for a dropshipper is real-time inventory visibility. Since the inventory is held by a third party, confusion regarding ATP (Available to promise) products can be an issue, hence, a management system can show customizable data feeds, that can ensure supplier data accuracy.
In case of eCommerce platforms that use just in time delivery (JIT), the inventory management software also plays a pivotal role in allowing the process to be smooth by providing real-time inventory visibility, boosting shipment processes and raising purchase orders proactively.
Here is the success story of a start-up who sells plants online and had a headache managing the JIT inventory. The startup was keen to manage the business with low inventory levels to reduce the inventory costs and also was aware that any spoilage would lead to an effect on profits. As a result, it resorted to using inventory management software that allowed them to manage the backorders it received. The software also used to raise purchase orders instantaneously for the backorders with the help of supplier id. To know more about the success story of the start-up with Orderhive click here
In the end, it can be arguably said that the inventory management software is the change, for managing your inventories, that you as a small business owner is looking for. It saves time, increases the bottom line, boosts sales, helps you focus on reforms, reduces the efforts in cycle counting, and makes dropshipping and JIT delivery easier.
In short, the coming of age inventory management tools and techniques would empower small businesses to reduce investment costs and increase sales by being quicker and more customer-friendly.
“Don’t be a busy bee who is busy buzzing, instead concentrate on honey, and leave the rest on automation”