Today’s warehouses are dynamic, complex operations that involve many moving pieces. For inventory-based businesses to operate as efficiently as possible, they need to deploy robust systems and technologies that provide real-time visibility and maximum inventory control. For this, many organizations choose to deploy a comprehensive inventory warehouse management system.
Efficient inventory and warehouse management is essential for an organization’s success and profitability and for customer satisfaction. And while there are some alternatives to using an inventory warehouse management system, in most cases they’re a less desirable option.
Here’s everything you need to know about using an inventory warehouse management system, including why an organization might use one, the benefits of using one, and key features to look for when selecting one.
The Importance of Efficient Inventory Management
For inventory-based businesses and warehouses, efficient inventory management has emerged as a key determinant of success. That’s because when inventory is being properly monitored and managed, organizations can maximize their profitability and make data-based decisions, and customers can receive the best service possible.
For example, data shows that when companies use integrated order processing they experience significant boosts in productivity, space usage, and stock use efficiency. Further research shows that when you fix issues of understocking and overstocking, you can reduce inventory costs by 10%.
When inventory is not managed effectively, it can have cascading impacts on a business and its customers, including:
- Inaccurate ordering: Improper inventory planning and management can lead to issues such as overstocking, understocking, and long lead times. These scenarios can then negatively impact the customer experience, strain your supply chain, and lead to lost revenue opportunities.
- Lack of real-time visibility: Ineffective inventory systems can result in a lack of real-time visibility into inventory levels and purchases, making it difficult to promptly meet consumer demand and react to market fluctuations.
- Inadequate forecasting: Accurate demand forecasting is critical for predicting how much stock you’ll need in the future. Without accurate data and real-time visibility, accurate demand forecasting is extremely challenging.
- Challenges in data volume: As the volume of inventory data increases, ineffective systems can become overwhelmed, leading to errors and inefficiencies at scale. Even if ineffective systems work relatively well on a smaller level, it can be difficult for organizations to grow.
There are many other potential impacts of ineffective inventory management systems, from higher operational costs to inefficient time management. To avoid these scenarios and to achieve optimal results in a warehouse, organizations can choose to deploy an inventory warehouse management system.
What is an Inventory Warehouse Management System?
An inventory warehouse management system is a comprehensive technological solution for automating and optimizing different facets of inventory control. The typical components of an inventory warehouse management system include tools for inventory tracking and reporting, forecasting, real-time visibility, and integration capabilities with other warehouse and business software.
What are some of the benefits of using an inventory warehouse management system? They include:
1. Increased accuracy and reduced errors
An inventory warehouse management system can eliminate data entry errors associated with manual entry by automating the process, and ensuring accurate and real-time updates to inventory levels.
2. Time and cost savings
These systems streamline inventory management processes, reducing the time required for tasks such as counting, replenishing, order fulfillment, and data analysis. Also, with these automated systems handling routine tasks, warehouse staff can be positioned more effectively, leading to cost savings for labor expenses.
3. Real-time visibility and tracking
Inventory warehouse management systems give you real-time visibility into inventory levels, enabling businesses to make data-driven decisions at the pace of business. You can also continuously track inventory, from the warehouse to the end customer, and intervene in unfavorable scenarios.
4. Improved customer satisfaction
With real-time inventory data, businesses can fulfill customer orders accurately, reducing instances of stockout or delayed shipments, and leading to improved customer satisfaction. Keep in mind that data shows that 40% of US shoppers will only wait two days for a delivery, while only 12% are willing to wait between five and 14 days.
5. Streamlined operations
A robust inventory warehouse management system can streamline overall operations and enhance productivity. These systems automate routine tasks such as data entry, order processing, demand forecasting, and replenishment, therefore optimizing workflows. They can also seamlessly integrate with your other business systems (such as an enterprise resource planning solution) and unify business units (such as accounting and sales).
Overall, an inventory warehouse management system addresses the challenges of manual inventory solutions, while providing benefits such as improved accuracy, cost savings, enhanced visibility, and increased operational efficiency.
The Alternatives to an Inventory Warehouse Management System
Let’s say you don’t want to use an inventory warehouse management system, what are your alternative options? Manual systems are your primary alternative, where warehouse teams must manually track, monitor, and record inventory. This solution is simple and low-cost, and while it might be suitable for small businesses with limited inventory, it can be challenging to scale, and can also be prone to errors.
Another common solution is for inventory-based businesses to use an enterprise resource planning (ERP) solution. This software is common across different types of businesses, and it includes different tools and technologies used to run a business. Many inventory-based businesses choose to use an ERP in conjunction with an inventory warehouse management system because these two tools are complementary. An ERP functions across your entire business, touching elements such as HR, marketing, accounting, and inventory. In contrast, your inventory warehouse management system specifically manages and improves your warehouse and inventory operations.
Many leading inventory warehouse management systems can integrate with common ERP solutions, and often provide training at the end of implementation, to ensure success with your current systems.
Key Features to Look for in an Inventory Warehouse Management System
Whether you’re choosing an inventory warehouse management system for the first time or you’re looking to upgrade your current systems, here are key features to look out for:
1. Demand forecasting
Demand forecasting uses advanced algorithms and real-time data to project how much inventory you’ll need. It works with historical data but also takes special events into account (such as promotions and new customers) to ensure you end up with the most accurate forecasts possible. You can also use sophisticated forecast hierarchies to best suit your business needs.
2. Inventory analytics
Inventory warehouse management systems include next-generation inventory analytics features which can improve efficiency and reduce operational costs. For example, this software can immediately notify you about stock outs, and even help you avoid these scenarios in the future. You’ll also have insights into excess and dead inventory.
3. Replenishment Planning
Replenishment planning features help you keep an optimal amount of inventory at all times, and these tools can generate purchase orders, transfer orders, and work orders. This software can also automatically adjust for real-world factors (such as cycle intervals and holidays) and can handle things such as supplier minimums and container loading.
4. Supplier performance management
Monitoring supplier performance can help you improve it. These features allow you to use lead times calculated from receipt history, instead of just fixed numbers or averages. That way, you’ll always know what’s on time and what’s late. Plus, you’ll have the data you need to understand if an item is expected to run out of stock, so you can expedite an order if need be.
You can also keep an eye out for other features in an ideal inventory warehouse management system, such as promotion planning and tools for S&OP improvement. Ultimately, your choice of software should maximize visibility, give you a wealth of data, and optimize the way you manage your warehouse and inventory.
Take Control of Your Warehouse Inventory with StockIQ
If you’re ready to improve your inventory efficiency through enhanced supply chain visibility, StockIQ is here to help. StockIQ is an advanced supply chain planning suite that gives you the technology and features you need to run efficiently, improve forecast accuracy, and reduce inventory levels while providing unmatched service to your customers and shippers.
With StockIQ, you get instant answers to your most urgent questions, so you can reduce stockouts, improve service levels, and reduce planning cycle time. Find out how StockIQ can enhance the way you manage your warehouse inventory by contacting us today.
