Inventory Software - Do You Know How Many Things You Have?

For B2C businesses, managing their inventory, so that they can satisfy market requirements at least cost, is a key priority.

Anyone with a half-decent understanding of manufacturing or retail business knows that the supply chain can make or break companies. Supply chain managers are constantly grappling with issues like how to develop optimal ordering plans that reduce inventory exposure, what levels of buffer stock are adequate to guard against uncertainties and what are the potential areas of cost saving. Inventory software has evolved as a consequence of this soul search.

Today’s inventory software is a sophisticated animal. It straddles the entire logistics and supply chain, enabling inventory planning across all stocking locations from vendor sites and warehouses to redistribution centers and points of sale.

Not only that, a good system also provides critical inputs necessary for making accurate demand and replenishment projections. The net result is a more efficient use of resources and higher profitability.

In order to be effective, it must address the following issues:

Optimize inventory levels: The system must be able to determine the ideal inventory level that must be maintained for each item or stock keeping unit. It must be able to take a total view of inventory, at all stock holding points, and make a positive impact on order fulfillment.

Improve demand forecasting: This is quite tricky, as retail demand varies with seasons, promotion offers and trends. While human expertise is required to take these fined tuned decisions, the job of this software is to reduce manual effort and make it possible to strike the right balance between stock levels and demand satisfaction.

Reduce cost: In the final analysis, nothing else matters as much as this. By optimizing order levels, supply patterns and replenishment cycles, the system must lower total landed cost.

Although software makes up the heart of any modern inventory management system, it needs visible components, such as bar codes and RFID tags to make it work.

There is no denying that inventory management systems have become very sophisticated; however, experts send out a warning – these are only tools, and must be used accordingly. An automated solution is not a replacement for an experienced supervisor's expert instincts.

The system may generate a lot of micro-level data and analysis, but converting that into market insight is the user’s domain. For all the advances that have been made, retail inventory management is still an art; inventory software merely helps people paint faster!