Retail stores rely heavily on their inventory, and as a business owner, you are concerned about the best way to oversee your products, assets, equipment, supplies and raw materials. In the past, the best way to monitor and maintain inventory may have been by using a spreadsheet, but there are many challenges that are present with this method.
An integrated inventory management system is the most efficient way to combat this challenge, but what does that entail?
What is an Inventory Management System?
An inventory management system is a combination of software and hardware designed to assist with the process of controlling and tracking stock. It supports businesses by providing real-time updates about their inventory, regardless of whether they are in-store or working remotely. An inventory management system should not be confused with a warehouse management system. However, it may be included in your inventory management system.
Types of Inventory Management Systems
There are two types of inventory management systems, periodic inventory and perpetual inventory. Both have their own advantages.
- Periodic inventory management relies entirely on stocktaking. It involves employees counting stock regularly (every 3 months) to verify the stock and the accuracy of the sales figures.
- Perpetual Inventory Management is a system that updates as orders are received, and products are sold and delivered. Often these systems are used in department stores to streamline the backend process and assist with in-transit and picked products.
Which type of inventory management system is better for me?
Determining what inventory management system is better for you can be decided by which you consider more important: margin of error or effort.
A periodic inventory management system works best for small businesses that have minimal and easy-to-index inventory. Outside of that, perpetual is the best system to choose as it encourages a hands-off approach while providing all the necessary information about products and stock levels, as well as up-to-date records about purchased and sold goods.
When to implement an Inventory Management System
One of the biggest decisions is deciding when you need an inventory management system or when to update your inventory management system to one that better suits your business model. As you would know, the worst time to consider implementing a new piece of software is during your peak selling period, but there are some best practices when it comes to choosing the right time.
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Costs are increasing
Human resources, products, and raw materials are expenses that continue to grow as your business expands. It can be a major expense if you don’t properly manage it or identify new ways to optimise your business. By implementing an inventory management system, you can reduce the tasks your employees will need to conduct on a daily basis and optimise your storage solutions and inventory to more efficiently meet the demands of your customers.
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Growth is slow
Something customers love is a fast turnaround and quick responses. If employees are required to go to the back to see if something is in stock or have to write out receipts and product reports can be a glaring sign that you need a new inventory management system and that you are missing out on some valuable customers.
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Stock accuracy is essential
One of the biggest reasons you should consider a new inventory management system is if it is becoming increasingly difficult to find and sell products. A perpetual inventory management system such as Acumen will provide you with real-time and accurate data about your inventory from any device.
Benefits to having a POS-Integrated Inventory Management System
Inventory management is essential to the success of your business as it determines what products are sold and when you sell them. Efficient businesses utilise their inventory management systems to maintain their customers, provide real-time updates and improve their sales process by meeting the demand of products. There are an array of benefits as to why you should consider an integrated POS system such as:
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It reduces the labour
An integrated inventory management system automates tasks that are typically done by hand. These include stocktaking, cycle counting and processing orders. By implementing an inventory management system into your business, you improve employee efficiency and allow them to better serve customers.
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No more dead stock
With live updates on what is selling and what is not selling, you have a clear idea of dead stock and sales trends which allow you to make more effective purchasing decisions. With an integrated POS, you can create automatic purchase orders for products that sell in high volume or sell quickly to ensure you always have stock.
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Improves cash flow
Improving your inventory processes will save time and money and improve your cash flow. An inventory management system has extensive reporting features, allowing you to understand how your stock sells and how quickly it is processed. As you optimise this process, you improve the cash flow by spending money on products that sell and have a high-profit margin. You also save money on employee expenses.
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Cross-promote products
When an inventory management system is kept updated, it is the perfect addition to your point of sales as it can assist with upselling, cross-selling and service reminders. When buying a table, your employees will be able to suggest the perfect set of chairs or suggest a supporting coffee table to match, improving how quickly things are processed and improving what is sold and when.
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Keeps customers happy
When things are processed quickly and businesses are able to keep promises such as delivery dates and stock levels, customers are more likely to come back and remain loyal to your business. An inventory management system assists with that as it is able to provide live stock updates and talk to your Point of Sales to determine appropriate delivery dates and processing times.
Choosing the right Point of Sales
Every business is built differently and has processes that are unique which means you need a Point of Sales system and inventory management system that is created and tailored specifically to your business. At Acumen Computer Systems, we have experience in developing custom, complex point of sale systems for businesses across Australia. Our team is completely locally based and can provide real-time support for all of your challenges.
