In this highly technological world, every possible tool to help in improving and strengthening businesses are not available, that only one has to choose and decide which one will actually be the best fit for the operation of the business. Moreover, the technological requirements needed to run computers and manage databases have become lesser and more accessible. Also workers are now more equipped to use technology than say ten years ago, thus the possibility of adapting technologically advanced systems and programs is more likely even for small and medium business enterprises.
In both product-oriented and service-oriented business an inventory management software can be used to efficiently track their inventory of raw materials, supplies, products and costs. An inventory management software is a computer program designed to track the inventory level in terms of company orders, its actual sales and incoming and outgoing deliveries. For production-oriented companies the inventory software can be used to create and track work orders, purchase of materials and usage of materials for production. The main benefit of using an inventory management software is so that companies can avoid overstocking and shortages. Overstocking would mean that capital will be tied up on materials and supplies which small and medium enterprises cannot afford, while shortages may disrupt production and operation that would also be costly for the company. Either way, businesses would want to avoid overstocking and shortages as it would lead to financial loss.
Inventory management software are computer programs that usually ran on web-based systems that automatically records the inventory through scanning barcodes or more recently the RFIDs on incoming and outgoing products and supplies. The process is actually very simple, and the rewards are plentiful. In the past inventory was managed using pen and paper methods and stored in spreadsheets, this crude procedure only served to keep track of information. Using the automated software aside from managing information, the program also have additional features that would improve efficiency such as sending out alerts when supplies are short or when to place an order so that shortages can be avoided. This would ensure that business operations can flow smoothly and improve efficiency.
An inventory management software has several components that work together to achieve efficiency and to organize the inventory of the company. First is the reorder point which would refer to when a certain supply threshold is reached, the program would send out the alert to make an order or to stop making order so as not to overstock. The program can also track assets even as soon as it enters and leaves the warehouse. It can accurately track where it is and who is using it if it is being used in production and will generate daily reports as to the quantity of any supplies and materials. Aside from determining the quantity of the inventory the program can also gather all sorts of information like the prices, manufacturers, the order time and date of delivery. All of which will greatly inform the company to ensure that processes and services are delivered accurately and efficiently.
For the inventory management software to work, each product, supply or material should have a barcode or an RFID tag that can be used to identify the manufacturers’ details and prices. This would also mean that the company has to equip its warehouse and offices and production area to be able to track the movement of the supplies. As such, the company would be able to effectively prevent pilferage and losses that could hurt the business. More than just a tracking software, it can also serve as asset management. Moreover, inventory management software can also prevent and avoid obsolete product and unnecessary spoilage. Without a computer-based system, warehouse managers would have difficulty making sure that every last product/supply is utilized as it was intended to be and to avoid stocking products that may have reach expiration dates or one that are not in use anymore. In service-oriented businesses inventory management programs can be used to create work order requests, billing of materials used to achieve the correct pricing of the services rendered. This would mean that the company would be able to track what products are needed and utilized more than the others and how much it costs, in this way the company can determine their costs and profits and would be able to adjust prices to be able to realize profits.
The advantages of using an inventory management software are manifold, the most obvious of which is that it is cost-effective. The savings derived from the use of inventory program will greatly help the company utilize its resources more efficiently. A company’s inventory is where majority of its investment is tied up, ensuring that the inventory is updated, monitored and managed, then losses and spoilage can be prevented. Another benefit is improved efficiency. In the past inventory management was done by hand and it took a lot of manpower and working hours to be able to accurately inventory the contents of the warehouse. With automation, inventory management is easier, faster and with a high degree of accuracy. It allows the company to maximize resources on other aspects of the business. Moreover, the inventory data would be readily available to the management and they can make informed decisions regarding the operation of the company based on the said data. Lastly, the generated reports from the program would give owners or the management insights on the product trends in terms of which product is utilized more, which are not being utilized and the speed at which it is used, as well as determine peak months and lean months, all of which will be used for the strategic plans of the company. Further, this would enable the company to forecast the needs of the business more accurately and manage its financial resources more effectively. The benefits that can be derived from using inventory management software greatly outweigh the costs, and thus one only has to seek out the most suitable program for the needs and goals of the company.