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How automating your inventory can eliminate pain points: A quick guide

17 Oct, 2022 | Inventory Management

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Pain points are persistent or recurring problems (as with a product or service) that inconvenience the business. Clearly, they’re issues that every sales and manufacturing business has to identify and find ways to overcome. The best way to do this, we feel, is by automating. In this article, we’re going to explore how automation – the kind that’s specifically for organizing and managing inventory – can help identify, get rid of, and prevent some of those pain points, while at the same time making your operations so much easier.

Pain points that occur when it comes to inventory – areas where things can, and do, go wrong

Inventory tracking

Knowing what inventory you have and where it is at all times is important for good warehouse management. Without this knowledge, decisions about buying new stock or organizing the movement of goods through the supply chain are just guesswork, and guesswork in business means spending money and resources unnecessarily.

It also means that there could be real delays and problems in getting products and items to customers, which is another potential pain point as it degrades the customer experience and tarnishes your brand image.

Automation can overcome these obstacles. When inventory management is automated, the system tracks the stock everywhere consistently, giving managers the ability to see where goods are and to make cost- and time-effective decisions. An inventory management system takes guesswork out of the equation.

Warehouse management

Fulfillment can easily become a pain point when several warehouses are involved and orders come in from several points of sale (POS). If information about which warehouse a certain item is stored in is not immediately known, making arrangements for picking and shipping can be chaotic. Similarly, for a large fulfillment operation, it’s beyond wasteful if you don’t know which warehouse is nearest to your customer’s location.

Automating the system solves all these problems. The system keeps track of which warehouse holds the products you need, and which one is nearest to your customer. All you have to do to get the information is tap the keyboard.

Lost and damaged stock

This is a big one. When stock is lost or damaged at any point in its fulfillment journey, costs increase, and there’s a very real possibility of items not being delivered to a customer, or, maybe worse, not being delivered in perfect order. To prevent this pain point, it’s vitally important to know where in the chain these losses and damages are happening. However, being able to “see” this is incredibly difficult when stock is managed manually.

Again, automation is the answer. When the system is automated, it’s possible to track each item, and that means being able to identify where and when losses and damage are taking place. When that’s known, steps can be taken to correct problems.

Running out of stock

When a company runs out of a particular item, it’s called a stockout. It can apply to finished goods or raw materials. While both can have consequences, if the stockout is a raw material, a whole production line can shut down, and pain points for a business can be significant as they will not get the raw materials they want in a timely manner. This delays the final deliveries of finished goods to the customer and causes harm to the brand’s reputation.

The chances of any of this happening with an automated system are minimal. That’s because when you have a system that’s tracking stock continually, there’s ample warning when any of it is running low. What’s more, an automated system like DEAR Systems can take care of reordering stock for you.

Additional overhead due to overstocking

This is the opposite of stockout. If you’re overstocked, you have too much of something. Results of this are increased costs for warehousing and insurance. Plus, there’s a danger of a company being stuck with inventory it can’t sell.

Overstocking can easily happen when inventory is tracked manually. The guesswork involved with that can lead to ordering more than needed or, worse yet, duplicating orders because of bad communication. Once again, automation can prevent any of this from happening.

The tedious task of classifying inventory

In a well-run warehouse, especially a large one, inventory is split into three categories. They are:

  • Fast-moving items: Those that are sold or used quickly and need to be restocked often.
  • Slow-moving items: Those that take time to be sold or used in the production process.
  • Non-moving items:  Those that have gone out of fashion or are not needed any more.

As would be expected, the items that are accessed most will be upfront and easy to get, while those less in demand don’t have to be. While this is logical from a practical point of view, in planning terms, it’s also important for allocating resources in the most efficient way. Taking care of all this is challenging if done manually, but very easy with an automated system.

Losses incurred due to inaccurate record keeping

If you’re keeping track of your stock on a spreadsheet manually, the likelihood of errors being made is high. That’s because people make mistakes. A particular item can be left off, or the number it’s been ordered in can be incorrect. Plus, recording information in this way is time consuming. Errors cost money. The left off item can cause production breakages and delays.

Inventory management software, on the other hand, will not, of itself, make a mistake. In addition to keeping accurate track of your stock, it can generate invoices and account for them accurately as well.

Problems with communication

If inventory stocking and warehousing are taken care of manually, the chances of something going wrong because of miscommunication increase. Going wrong means duplicate orders being made, or stock outs happening because no one noticed that it was time to reorder, or orders being missed. Overall, the company may face losses and the average cost of production could increase.

Communication issues are minimal with an automated system. Stock is continually tracked digitally, purchase orders for replacements are sent out automatically when the stock reaches a predetermined low, and invoices are emailed on time and tracked.

Poor forecasting

Poor forecasting can be disastrous for any organization. It can lead to either overstocking or understocking of the products. In both cases, the company will face financial and reputational damages. It’s really advantageous for a company to know in advance what inventory it will need. This may sound like guesswork, but if the right information is combined, it isn’t. This information is:

  • Classification of inventory: fast moving, slow moving, or nonmoving;
  • Lead time: time it takes to receive stock after placing an order;
  • Consumer trends: what customers are choosing;
  • Industry trends: what the industry as a whole is doing;
  • External economic factors: what’s happening in the economy; how potential customers are responding to it;
  • Offers and marketing events: discounts and promotional offers from in-house marketing departments;
  • Environmental factors: politics and weather events that affect logistics.

Any combination of these factors can affect the demand for raw materials and finished goods. Although no human or machine can 100% correctly forecast the future, a powerful inventory management software, like DEAR Systems, can help. Using your previous data and track record, DEAR creates insightful reports that will help you plan your purchases.


Automated inventory management systems – what are they and what do they do?

Good inventory management is the backbone of a company. If it’s done right, the company will make great strides; if it isn’t, that same company could fold. We’ve discussed the pain points for businesses that can result from poor inventory management and examined how to eliminate them. An automated system is one of the best ways to reduce these pain points. But what is an automated inventory management system and what do they do?

Put simply, an automated inventory management system is a computerized program, a collection of software, hardware, and firmware that oversees every aspect of those items a business holds in stock. It keeps an accurate record of how many there are and where they’re stored, and tracks them when they’re moved from one area to another.

An inventory management system can take care of a lot of heavy lifting when it comes to controlling inventory and managing it in the most cost-effective and efficient way.


How automating your inventory management can be good for you

An automated inventory management system can boost the growth of your company. It will enable management to make informed decisions at the right time, and provide information that marketing teams can use to create incentives that increase sales.

Here’s how automation can make the management of your inventory, and your company, much, much better:

  • Automating tasks that used to be done manually results in faster, more accurate results.
  • Overall, the efficiency and productivity of the company will improve.
  • Inventory can be managed and controlled at its optimum level.
  • Management has real-time visibility over inventory in all aspects.
  • All data and records can be kept securely.
  • Stockouts and overstocks can be prevented.
  • The improved efficiency you get will boost customer satisfaction.
  • No more incorrect forecasts for demand of your product.
  • Issues and problems will come up right away and can be solved quickly
  • Visual aids like graphs and charts that can be really helpful to management’s decision making.

If you are interested in automating your inventory management, at DEAR systems, we have experts who can tell you more about our automated software, and explain how it can get your company to the next level. Why not call us today?

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