Your business may have started small, using paper or simple computer management tools to keep track of your inventory. However, as your business has grown, your inventory management system should grow as well. You may be feeling the need for a better system in your customer satisfaction ratings, your profit margins, and more.
To keep pace with your opportunities and ahead of your competitors, a versatile inventory system helps reduce downtime, remove bottlenecks, increase profits, and retain customers.
Just remember that a great inventory system is not a magic wand that can conjure up a good workflow – it’s a tool that needs to integrate with your existing structure to improve its performance. Consider these tips to choose the right system for your business.
The features an inventory management system needs
To be effective, an inventory system needs key features, such as:
- Reporting metrics
- Storage optimization
- Barcoding and scanning
- Workflow traceability
- Part tracking
- Demand forecasting
- Automated reordering
The numerous benefits of having these features include reducing surpluses, reducing downtime in your fulfillment process, making your cash flow more consistent, eliminating excess ordering, reducing storage costs, and increasing customer satisfaction.
Without these systems, retail inventory management is accurate only 63% of the time. However, the positive effects are only possible if the system is a good match for your business, which requires more than just the right on-paper features.
How to choose an inventory system for your business
When most inventory systems have many of the same features, consider these factors when choosing between them:
The type of system you need
Not all inventory systems work the same way. Some work on-site while others transmit data and results from cloud-based servers.
While on-site inventory systems are more expensive to start and maintain, they tend to offer more customization options, better security features, and more direct control over the infrastructure.
However, they are only leveraged for onsite inventory and make it more difficult to manage multi-location operations or inventory in transit.
By contrast, cloud-based systems typically have subscription costs, require an internet connection, and smart devices . Yet, they have fewer upfront costs, cheaper maintenance, greater scalability, and increased accessibility. With them, you can manage your fulfillment process from anywhere in the world.
The type of business you run
Your business’s infrastructure matters when choosing the right inventory system. Not every platform can handle thousands of SKUs and multiple warehouses. Oppositely, if you don’t have a lot of staff or monthly transactions to track, you don’t need to shell out for the systems with the highest (and most expensive) capabilities.
The cost you’re willing to pay
Different inventory systems come at different prices, as well as different pricing systems. For instance, while on-site systems have high setup fees, cloud-based systems are cheaper to start.
No matter which type of system you get, you’ll have to pay a licensing fee plus a recurring cost based on the system’s options. They might charge a monthly or annual subscription fee or a flat rate for every transaction.
The features you need
Depending on your business type and size, you may prioritize data security, stock analysis, automated functions, analytics, third-party software integrations, or product organization. Look beyond the basic functions to find inventory software that matches your business’s structure.
The selling channels you use
Depending on your selling platform, you will need an inventory system that accommodates it. A brick-and-mortar store, e-commerce site, and consignment shop should all look for different functions in their inventory system.
Your company’s goals
Different inventory systems can be used to achieve different goals within your company’s existing infrastructure. If you hope to sell products faster, reduce costs, move more merchandise, diversify your products, or improve customer satisfaction (or a combination of them), you should look for a system with features that matches your company’s initiatives.
The takeaway for businesses
An inventory system can improve and automate your business’s fulfillment process. However, the features you pay for should be matched to the goals of your business. Consider more than just the system’s basic features when choosing the right system for your goals.