Inventory management software scores big in cash flow stakes.
One of the major challenges facing growing manufacturing businesses is how to manage an increasingly complex inventory. It is imperative to strike the right balance between meeting market demand and minimizing the amount of cash tied up in stock.
Some form of inventory control – usually through software – eliminates the inefficiencies and inaccuracies of paper-based systems, enabling far more accurate stock monitoring and demonstrably improved cash flow. Some software programs can link work orders to a bill of materials, which enables items to track and automatically re-order when customers need supplies, therefore saving time and boosting sales forecasts.
There are many benefits to contemporary inventory management software.
Its ability to optimize stock levels is what many regard as paramount among these benefits. By making sure that you have precisely the right materials your customers want – when they want them – helps to avoid overstock and being burdened with costly ‘slow-moving and obsolete’ inventory. The longer this unwanted and costly inventory remains in stock, the more it can jeopardize your business.
Moreover, by ordering only the materials your customers need at any given moment, you liberate cash that would otherwise be tied up and instead can use it to cover overheads or invest in other areas of your business.
Deploying fully integrated inventory management software also greatly reduces the amount of time staff spend hunting down materials to fill orders and substantially improves order fulfilment accuracy by linking every work order to a bill of materials, which also ensures that inventory is accurately tracked and automatically re-ordered.
Business owners and managers can also anticipate customer needs and significantly improve sales forecasting. Moreover, well-served customers who receive the goods they need, when they need them, along with accurate bills is a huge boost to customer loyalty and a major driver for repeat business.
Strong relationships with reliable suppliers can be greatly enhanced with inventory management software. Good communication and collaboration with accurate information or suppliers can lead to better terms, faster delivery, and improved overall supply chain efficiency, which has been a paramount concern in recent years.
And it’s not just about communication with suppliers. Different internal departments such as Sales, Marketing, and Finance can all greatly benefit from cross-functional management to ensure that inventory decisions align with overall business goals as well as individual departmental goals.
The setup is the key to inventory management success
The first step to successful inventory management is to select the software that is right for you, i.e., whether it fits the specific needs and size of your business. Scalability, feature set, user-friendliness and integration capabilities with existing software systems should all be all key considerations.
Once you’ve settled on a system, you then need to populate it with your existing inventory data, including product names, descriptions, quantities on hand and any other relevant information.
If the new inventory management software supports barcode scanning, make sure the system is set up to work with your barcodes, which can significantly speed up the data entry process and reduce the likelihood of errors.
Use the software to group your products into categories or departments. This will make it much easier to navigate and manage, particularly if you also assign labels or tags to products for quick identification.
The detailed IDs ensure that each product can be restocked before it runs out, which ensures that the business is able to avoid controllable stock shortage interruptions. 
This accurate, real-time information on inventory circumstances provides deep insights into inventory performance that would not otherwise be available, at least to the degree of accuracy provided by traditional methods. Common reports such as stock levels, sales trends and order history can now provide far more confidence in forecasting, planning and crucial decision making.
Many times, that decision making is based on regularly monitoring the performance of your inventory management system. Decisions can then be more strategic, based in data, to accurately identify areas for improvement, where certain processes can be optimized, and what changing business needs will require further adjustments.
A good inventory management system will also include security measures to protect sensitive inventory data, which has the added benefit of being handy for regular physical counts of your inventory audits.
The transition to cloud computing continues to gather pace and those who have not yet migrated will soon find themselves left behind. Any system that is not cloud-based should be looked at with misgivings because they often will not, in practice, perform with anything near the reliability, flexibility, scalability and security of a cloud-based system. The cloud offers a cost-effective and secure solution that can propel a business forward. On the other hand, a reluctance to adopt it could have unintended consequences. The cloud has evolved beyond being a mere choice – it is now a necessity for businesses that want to remain competitive in a rapidly changing digital ecosystem.
In summary, embracing a culture of continuous improvement that is driven by inventory management software will enable you to be more adaptable to changing business environments and emerging best practices. However, most importantly, it will enable you to remain not only remain profitable but be poised and prepared for growth through more accurate forecasting, cost reductions, improved customer satisfaction and significantly enhanced overall operational efficiency.
By Lissa Verhoog
Lissa Verhoog is Product Marketing Manager, at ECI Software Solutions. ECI Software Solutions provides cloud-based business software for running small and mid-sized businesses end to end. Built by experts in manufacturing, residential construction, service management, building supply, office technology and wholesale/retail distribution industries, ECI’s industry-specific software connects businesses and customers, improving visibility, operational efficiency and profitability. With ECI, businesses seamlessly integrate sales and marketing, business intelligence, CRM, data and analytics, ecommerce, mobile apps and payment processing.