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Automated Inventory Management Software For Small Businesses in 2022: Why Do You Need It?

22 Jul, 2022 | Inventory Management

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Automation continues to be one of the most talked about concepts globally. Due to major manpower shortages driven by the pandemic, companies are looking to automate now more than ever. Inventory management is not an exception to this. Businesses around the world today want to leverage automation to create leaner, more efficient inventories.

However, there’s a big myth that only large corporations have the means to pull it off. This is because automation looks like a giant mammoth that is difficult, often fatal to tame. The reality is quite the opposite. With powerful inventory management software like DEAR systems, small and medium businesses can easily automate their inventory management and grow exponentially.


What is inventory management software?

The ecommerce inventory management software for small retailers is a platform that helps you to track your inventory in a simpler and more transparent way. It helps you to track your sales, shipments, returns, productions, and purchases. With this software, you can collect data on your inventory: where it went, how much is left, and where it’s kept. When used well, inventory management tools and techniques can increase the bottom line of your business. Many of these inventory management systems can also be integrated with online marketplaces, accounting software, CRMs, POSes, and 3PLs.


Why a small business needs advanced inventory management tools and techniques

Small businesses may have less inventory to manage than large scale businesses, but a small business still needs to have staff on hand to oversee inventory tasks. Because your small business may have a small budget to hire staff, consider using an inventory management system to streamline the process without requiring additional staff.

Save time

A small business owner has to manage many tasks within a specific timeframe and budget. This is where inventory management software comes in. The everyday tasks of keeping track of stock, order confirmations, shipments, returns, and increasing or decreasing inventory can be done easily with an automated inventory (AI) management system.

According to Get Data Research, “16% of surveyed small business owners say that they save more than a day a week because of inventory management software and 55% of owners said that they save more than 4 to 5 hours a week.”

That’s a whole day to plan other things and get ahead of your competitors.

Automated inventory management software for small businesses such as DEAR is self-sufficient and comes with numerous automation programs to perform everyday tasks. Using this type of software and its inventory management services allows you to save time as you grow your business.

Save money on investment and wastage

You might think that investing in an inventory management system is more expensive than using regular inventory management techniques. But using advanced inventory management services can actually save you money by avoiding loss of product.

Controlling your spending is a key factor in running a small business. An inventory management system can efficiently save money that might otherwise be spent on unnecessary overstocking. In addition, you won’t have to hire more staff to manage inventory. The money you save can be spent on promotion, marketing, or customer discounts.

Inventory management software for small businesses will pinpoint overstock so 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.

First In, First Out (FIFO) and Last In, First Out (LIFO) methods can be automated according to the type of products.

If your business sells perishable products such as food, medicine, delicate objects, apparel that need you to follow certain fashion trends or seasons, then, of course, the methodology used will be of FIFO i.e. last in first out. This way you can ensure minimum wastage.

On the other hand, in the case of normal products that are not affected by time, use the LIFO method if it suits the business needs.

Some businesses require a combination of FIFO and LIFO techniques for their inventory. Inventory management software can help you find a balance.

Inventory management tools can allow you to accurately predict required materials, enabling you to manage your budget accordingly. Prevent out of stock scenarios with the help of almost 100% inventory visibility with an inventory management system. You can also track and avoid 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. DEAR provides automated inventory management tools and techniques for as low as $325.

“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

Stock counting/cycle counting is the most crucial and time-consuming part of inventory management. To ensure that your virtual inventory is the same as your actual inventory, inventory managers must count available products periodically (usually every week or every 15 days) and by section.

This can be time-consuming, but with the help of an inventory management system, you can use a scanner and complete cycle counting quicker than counting with a pen and paper.

Integrate inventory management software with marketplaces and other software

Inventory management software can be integrated with online marketplaces such as Amazon or Shopify, or at POS 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. This benefits small businesses because updating each software independently is time-consuming and increases the chance of errors.

Increases sales and bottom line (total profit)

Inventory management software for small businesses supports an increase in sales by improving inventory visibility. For customers looking for various options in different price ranges, you can offer alternative products and promote upselling. By knowing which products are available to sell and which ones need to be ordered, you can avoid losing out on sales due to low stock.

Inventory management software tools predict future demands, enabling you to maintain your inventory level and refrain from investing money on products that are not needed. You can also keep track of inventory as holiday seasons are approaching.

With automated inventory management software like DEAR, you know the available to promise (ATP) stock in real time. This ultimately decreases overstocking and understocking, ultimately increasing inventory turnover ratio and your bottom line.

The 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 save money on operations, which means that the money saved will automatically account for an increase in the bottom line. Thus, using inventory management services provided by the leading companies in the market is the key to earning more for your business.

Proactive AI inventory management software is better than Excel

Almost 48% of small businesses don’t use effective inventory management tools and techniques. They mostly depend on Excel to manage their inventory.

The major drawback of Excel is that it’s not a proactive software. Excel will tell you only what you ask or will store information when you put it in. In comparison, an inventory management software will automate the entire process: from purchase to sales to returns.

For example, let’s take the story of Bill Derek, the founder of Robemart.

Bill had a growing online ecommerce business that offered the finest quality Turkish bathrobes on its online website robemart.com. Since Bill wanted to grow his business, he moved to multichannel ecommerce and opened a store on Amazon. This increased Robemart’s profits, but skyrocketing sales brought their own set of problems.

Bill tracked inventory, computed inventory levels, and estimated purchases with one master spreadsheet, which made counting inventory across warehouses and online stores a more frustrating and time-consuming affair. In addition, he had to fulfill orders in a short time period.

Most of the time the data he maintained on his spreadsheet was inaccurate and inconsistent across all the departments, which made Bill lose money. Then he decided to move to an automated inventory management software for small businesses.

Boon for dropshippers and ecommerce platforms that rely on just-in-time delivery

Instead of holding inventory, dropshippers give a list of items to be shipped from manufacturers or wholesalers.

The major concern for a dropshipper is real-time inventory visibility. Since inventory is held by a third party, confusion regarding ATP products can be an issue. A management system can show customizable data feeds that can ensure supply data accuracy.

Automated inventory management software can help a small business by reducing the manual tasks of managing online orders and coordinating with third party vendors. The inventory management system provides end-to-end tracking of products and provides a more accurate idea of sales and revenue earned.

For ecommerce platforms that use just in time delivery (JIT), inventory management software ensures a smooth process by providing real-time inventory visibility, boosting shipment processes, and raising purchase orders proactively.

Let’s take a look at the success story of a start-up that sells plants online but had trouble managing the JIT inventory. The start-up wanted to maintain low inventory levels to reduce inventory costs and avoid spoilage that would affect profits. Using inventory management software allowed the start-up to manage the backorders it received and raise purchase orders instantaneously for backorders with the help of supplier ID.

As a small business owner, you should consider investing in inventory management software. Inventory management tools and techniques can empower small businesses to reduce investment costs and increase sales by being more efficient and customer-friendly. They save time, increase the bottom line, boost sales, reduce the effort of cycle counting, and make dropshipping and JIT delivery easier.


Inventory management FAQs

How would automation improve inventory management?

Inventory management can be stress-free with the help of automation. You can automate safety stock notifications, have real-time inventory information, automate order fulfillment processes such as confirming an order, creating a picklist, invoices, shipping label, and manifest, raise purchase orders (if a particular product reaches reorder point), and track shipments and returns. Moreover, it makes managing an unlimited amount of SKUs and serial numbers, tracking the life cycle of each product, supply chain, and most of the everyday tasks that consume your time easy and quick.

How do small businesses manage inventory?

Small businesses generally focus on keeping track of inventory by cycle counting, feeding the data into the Excel sheets, and trying to predict the inventory needed by looking at past data.

Small business owners also focus on things like keeping an eye on low stock, reorder points, using FIFO, dividing the stock into A, B, & C categories (the ABC method), and maintaining a good inventory turnover ratio. Small businesses that choose to use an inventory management software to handle these tasks can increase efficiency and profit and decrease investment and loss.

What is the inventory turnover ratio?

Inventory turnover ratio is the rate that goods are sold and restocked. You can use your inventory turnover ratio to measure the efficiency of your inventory management. It is the ratio of cost of goods sold compared to the average inventory. You can find out how many times you sold your average inventory in a year or for a particular period of time.

Inventory turnover ratio = Cost of goods sold/Average inventory

What is a good inventory turnover ratio?

Generally, a good inventory turnover ratio is somewhere between 4 and 6. It depends on the nature of the ecommerce business, but you have a good inventory turnover ratio if it’s between 4 and 6.

What does SKU stand for?

SKU – A stock-keeping unit consists of alphanumeric characters and a scannable barcode assigned to a particular type of product. With a barcode, you can track the life cycle of products. The SKU is also helpful in cycle counting, order picking and packing, return management of products, measuring the number of products, and determining the safety stock of products with the same SKUs. Moreover, SKUs can help ecommerce companies in upselling similar and advanced products.


Automate your small business’ inventory management with DEAR Systems

Inventory management is a complicated and comprehensive process that requires you to synchronize your internal and external operations. From clerical tasks to work delegation, everything needs to be perfect to grow your business. This can be daunting if done manually, but thanks to DEAR Systems, you can make it an effortless process.

Automate sales, marketing, and customer service with DEAR Systems’ robust ecommerce capabilities now. Get in touch.

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