Inventory management software is an application software for businesses to track sales, orders, product inventory levels, deliveries, etc. It is a tool used for organizing inventory data that decades back was stored as hard copies and endless spreadsheets that was almost impossible to analyze or took too long. E-commerce businesses use inventory management software to avoid product outages and overstock. In the services and manufacturing industry it can be used to create work orders, bills of service, resources, man-hours and other output related documents.
Components of an Inventory Management System
The major components of an inventory management system are:
This gives information on product inventory, sales data, activity graph and report. Asset tracking can be done using desktop software, mobile apps, barcodes , RFIDs etc.
A digital inventory management software can be programmed such that when the inventory level of products reach its reorder point, the system automatically notifies the store manager. The reorder point for each product can be set taking into consideration the lead time( i.e the time taken for the product to reach the store after an order is placed) and the buffer stock ( in case of emergencies say there is a delay in stock arrival). The reorder point can be set higher for high demand seasons.
For service providing companies the inventory management software can be used to track the cost sustained or the man hours provided for the service.
Data on products and the order level can be fed into an inventory management system using product identification methods. Any information related to the product can be got using the barcode, RFID and other wireless methods of product identification. QR codes and NFC tags using smartphones as scanners are other identification methods that are used.
These above components provides efficient inventory optimization methods while opening the way to a fully automated demand forecasting system. Having explored the the major components of an inventory management system let’s now see what are its benefits:
Benefits of an Inventory Management System
Time saving, better decision making capabilities, reduction in unwanted inventory and spending are some of the benefits of having an inventory management system for ecommerce sites. Other benefits include
Having an inventory management software for brick and mortar stores, chain stores et cetera help in accessing the inventory from a common dashboard that helps in managing all the stores.
Decisions Based on Real Time Data
Based on the real time information on sales, the Inventory Management System (IMS) gives better insights into profit margins, product performance and inventory levels.
Enhanced Operational and Supply Chain Efficiency
Integrating IMS to ecommerce and EDI (Electronic Data Interchange) systems provide access to the product and cash flow maps giving better insights into profit measures that can be taken across the operations and thereby to more efficient supply chain management.
Promotional Marketing Strategies
With real time information of sales, inventory and projected sales, intelligent decisions can be made on discounts, offers, campaigns and promotion efficacy.
Front and Back Office Under One Portal
With online inventory management tools, audits can be performed quickly and anywhere without having to be in person at each store location. Cash flow, credits, payroll, deposits, taxes, payments etc can be managed from one centralized location.
Inventory and Personalization
Now with the onset of better data analysis and personalization tools, the scope and benefits of an inventory management system have gone up several notches. The 6 ways in which personalization can help online merchandisers:
Dynamic Merchandise Display
Products can be presented on the pages based on the shopper’s profile and in-session behavior. For instance what is displayed on the first page can be varied depending on the customer’s interest, brand preference and other dependent factors like season, day of the week and time of the day. This allows the system to be personalized by determining what are the best products that can be shown to each shopper that will have the higher percentage of acquisition or browsing.
Visibility of Real-Time Inventory
Making the stock level of products visible to the customer provides a two fold purpose. This will ensure that the products that are out of stock are not recommended for purchase. Low stock inventory will encourage the customer to buy the product.
Recommending the right products is an important part of the merchandizing as it depends on similar products, related accessories. Using the personalization tool can reduce the time spent on picking the recommendation and allows the personalization engine to display the most relevant choices to the shopper depending on their purchase history, profile and in-session browsing behavior.
Behind the Scenes Support
To meet the overall objective of the business goals, campaigns are set with specific strategies for items or promotions tied to business goals such as high margin items, new brands/ products or sale, promotional items. The personalization tool helps roll this campaign by filtering and sorting shoppers who are best targeted for these offers.
Improve Customer Experience
With better tracking mechanism of inventory using smartphones, tablets and barcode scanners, store owners can track, manage and provide better experiences for the customer through out the customer journey.
Services like live chat fed with data from the personalization engine helps in the customer’s overall journey beyond the time of engagement initialized by the customer.
To truly optimize your inventory, you have to fully understand your product sales pattern and customers. You have to know the demographics of your customers, their buying habits or budgets. We at Zyxware Technologies have been building robust web applications for our clients in the ecommerce sector for more than a decade. We work with Magento and Drupal platforms to make the best possible package that suits your business. We ask questions. We observe. We analyse. Then we propose an inventory management system that befits your business process and help integrate it to your ecommerce site or even help build the ecommerce site. To get in touch with us click here!