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What is an Inventory Management System? Complete Guide

06 Aug, 2020 | Business Tips

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When you’re running a business, you’re dealing with tons of numbers every single day. You’re thinking about prices, payroll, marketing budgets, and the list just go on. One of the most important numbers you’re dealing with, however, is your inventory. Not only are you thinking about how much inventory you have in stock, but you also need to stay aware of when you’re getting low on a product when a product isn’t selling as it should, and when you have potentially overstocked a certain item.

Having to manage all these numbers manually takes so much time and energy that could be better spent on other aspects of your business. But since your inventory management needs to be exact every single time, you don’t want to run the risk of human error. The solution? A comprehensive inventory management system that can handle these tedious tasks for you.

What is an Inventory Management System?

An inventory management system is honestly just what it sounds like: a system that manages your inventory. Your system will automatically keep track of where each piece of inventory is at all times, and you can access this information with the touch of a button. Particularly as your business grows, it can be overwhelming to monitor all your inventory manually. But with an effective system, you can track as much inventory as you please.

The phrase “inventory management system” refers to both the hardware and software involved to track your products. For the hardware, you’ll often have tools to read barcode labels, tag products, and the like. Software for your system will help identify each item, analyze data and generate relevant reports, and define processes for labelling and reporting. “Inventory management system” can even refer to the people who are trained to make all these things happen.

Why Use an Inventory Management System?

Utilizing an inventory management system is potentially one of the best decisions you could make for your business. Imagine your company without a system like this. It’s tedious and time-consuming to label and track every single product, and there’s always room for human error and miscounts. It’s difficult to determine how many products you have at any given time, which might lead to over-ordering or running out of an item too early.

Having an inventory management system, however, can change all of that. Labelling and tracking each item can be done in an instant, and you always have the numbers available to you. There’s no human error involved, so your counts are always accurate. You can access your reports at any time to determine if you should re-order a product or put something on sale to get it out of your warehouse more quickly.

Other benefits of an inventory management system include improved cash flow, reduction in storage costs, better organization, enhanced transparency, improved relationships with your suppliers, reduction in deadstock, and more. Your employees will be more relaxed in their positions, and you can spend time managing the parts of your business that you’re truly passionate about.

Should I Invest in an Inventory Management System?

Especially if you’re on a tight budget, you might be wondering if it’s worth it to invest in an inventory management system right now. But if you’re looking to save money, this might be one investment worth making. Though you’ll have to pay for the system itself, you’ll save money on purchasing excess products, not to mention the extra storage space you’ll need. You’ll also save on payroll since your employees will be using their time more efficiently.

If your business is growing, it’s definitely time to invest. As you continue to expand, it’s only going to get harder to track your inventory and its costs while staying accurate. By having an inventory management system, you can leave these tasks to the machine while you focus on growing your business.

On the other side, if you find your business is slowing down, an inventory management system might do you some good. Sales slowing down can be a key sign that your stock isn’t being managed as efficiently as it could be. Maybe you’re spending more and more time on paperwork or your employees aren’t sure where everything is supposed to be. Having an inventory management system can help you better organize your inventory and get back on track.

Move Forward with DEAR

For almost any business, a high-quality inventory management system can improve flow and boost sales. At DEAR Systems, we are proud to offer Cloud ERP software that empowers you to effectively manage your business and get up-to-the-minute inventory knowledge. You can manage large product volumes, operate multiple locations, streamline your stocktake, and automatically generate product SKUs with ease.

We integrate with popular business resources like Amazon, PayPal, Shopify, Square, and more, so you can easily use DEAR’s systems with any of your existing accounts. Our inventory management system covers all processes involving the management of your stocks, including creating and managing products, stock adjustments, inventory write-offs, product availability, and more.

Contact DEAR Systems today to discover the difference our inventory management system can make for your business.

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