Remember the old adage: "Nothing happens until somebody sells something?” While the idea is still valid, your supply chain must first operate seamlessly on the back end in order to generate product revenue. Without a strong inventory management foundation, that sale can’t come to fruition! Inventory management is so pivotal that we might tweak the saying: “Nothing happens until somebody manages the inventory.”
Whether your company offers a monthly clothing subscription service, or you sell boxes of chocolate, an accurate and efficient inventory management strategy is essential to fueling long-term success. Because inventory is typically housed at a warehouse, it is important to find a facility that offers a wide breadth of services, specialized labor, and innovative technology to drive forward momentum for your business.
According to the U.S. Census Bureau, manufacturers, merchant wholesalers, and retailers in America carried an estimated $2,270.3 billion in inventory in February 2022 alone — a number that’s virtually impossible to wrap your head around. This is why a strong inventory management strategy is so pivotal to your organization’s success.
Think of inventory as one of your greatest assets (other than your people, of course). Establishing an accurate valuation of your physical inventory — one that aligns with your records — is key for maintaining stability between supply and demand.
The Importance of Tracking inventory
Maintaining accurate inventory figures is a crucial piece of driving efficiency across the supply chain. Inaccuracies in stock levels can be a true nightmare for your business. The reason? Without proper inventory tracking in place, you run the risk of creating a poor customer experience.
And the reality is, in today’s competitive market, it only takes a few hiccups to damage your company’s reputation. Word of mouth and online reviews are incredibly powerful, and they can either attract or deter new potential customers from making a purchase.
In addition to benefiting your business, tracking inventory is mandatory for public companies to maintain compliance with the Sarbanes-Oxley Act (SOX) and SEC regulations. That translates into providing well-documented records of your supply chain processes.
While the need to comply with regulations has encouraged many businesses to adopt better inventory management practices, privately held companies should also consider the repercussions of having a messy or subpar strategy. After all, by losing track of inventory, you’re throwing away potential profit. If you don’t know where items are located or how much stock you have, you don’t have a tangible product to sell. In fact, you’re losing company dollars whenever stock is missing or unaccounted for.
What Exactly Does Inventory Management Entail?
From the point of sale to shipping, it’s important to have the right tools and systems in place to account for your entire inventory. Because you invest so heavily in building, storing, and transporting your company’s products, inventory management is vital to your business’s financial success.
By implementing a strong inventory management system, you will be able to effectively organize and track all the merchandise your company owns through its arrival on a customer’s doorstep. Regardless of your industry or company size, your inventory management strategy can ultimately mean the difference between failing and succeeding. The goal? To maintain appropriate stock levels and ensure capital isn’t wasted on process inefficiencies.
If your business sells high-value items that require long production lead times, having a larger volume of inventory on hand is important for meeting customer demand. On the other hand, for companies with quick turnaround times, there is an opportunity to reduce inventory costs if you’re overstocking items. Companies selling perishable items have specialized needs for inventory management as well, to make sure supply meets demand but doesn’t lead to spoiled items.
What Is Inventory Management Software?
To derive the most value from your inventory management system, look for software that not only maintains product counts but can also deliver actionable insights, like identifying low-performing items or sending notifications to re-order products when stock is low.
An effective inventory management system will be equipped with the technology needed to be certain you’re maintaining the right level of inventory at locations that are closest to your customers. With the rise of e-commerce and omnichannel fulfillment, consumer demand for quick shipping and a seamless customer experience has never been greater. Optimizing your inventory network to ensure proximity is factored into the equation will help keep customers happy, drive business growth, and decrease company costs.
Inventory management is typically included in a facility’s warehouse management software (WMS). A good WMS will be able to integrate with your tech stack and expertly manage your entire supply chain from start to finish. On an inventory level, these systems can provide real-time visibility into your business’s stock levels across various locations.
Features of Top Inventory Management Software
- Inventory Tracking: Using data capture technology, like RFID or barcode scanning, to track the location of merchandise. This may include advanced features, like categorizing each product based on certain specifications (i.e., size, type, etc.).
- Customized Dashboard: This allows users to access crucial data from one easy-to-navigate dashboard, which offers time-saving benefits and provides full visibility.
- Stock Quantities: Users can count the number of goods that are housed at various locations to ensure supply meets demand and avoid inaccuracies in inventory levels.
- Stock Notifications: Stock level alerts ensure you don’t simply run out of stock. Instead, you have full visibility and you’re kept in the know with notifications advising when it’s time to reorder certain items.
- Streamlined Workflow: The right inventory management software will drive operational efficiency by streamlining processes and minimizing the likelihood of human error. Whether that means quickly adding new products to the system or updating item quantities, the goal is for everything to run as smoothly as possible.
- Shipment Tracking: This provides crucial visibility into where your products are — from the time the items are shipped from a warehouse until the moment they arrive at a customer's doorstep.
Establishing a well-crafted inventory management strategy relies on having the right tools and technology in place. Finding a software system that can provide everything from purchase transactions to metadata about a particular product is crucial for optimizing inventory practices and driving business growth.
Strategically Manage Inventory Across the U.S.
At Smart Warehousing, we provide customized inventory management to uniquely meet the needs of each client — all with the goal of minimizing costs and maximizing revenue. With more than 30 warehouses strategically placed in key markets across the United States, we’re able to move your products closer to your customers from coast-to-coast. The result? The fast shipping times your customers demand — and the decreased transportation costs your company demands.
By outsourcing your inventory management needs, you can focus on core business initiatives, like driving growth and reaching new customers. To learn more about our innovative cloud-based technology and full range of service offerings, contact us today.