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Inventory Management Software 101: How It Works, Who It Serves and the Benefits of a Purpose-Built Solution
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Inventory Management Software 101: How It Works, Who It Serves and the Benefits of a Purpose-Built Solution
Jul 5, 2022John McCurdy
“What’s the State of Your Inventory?”
Even for the most organized of operations, that can be a difficult question to answer. You might have a sound approach to tracking your stock levels, logging newly received shipments and accounting for how much you go through each day at your business, but can you say with certainty that all of your quantities are optimized?
Admittedly, inventory management is a complex matter and not an easily perfected practice. Considering most companies only have so much time and human effort to allocate to the many mission-critical processes and responsibilities that must be taken care of each day, it makes sense that harnessing the power of technology to enhance your effectiveness is the right move to make.
That being said, in order to assess how well any of the various solutions available today fit with your company, you need to know more about them. Read on for a full breakdown of inventory management software, from how these systems function and which verticals need them most to their real-world applications and the benefits your organization can unlock via the deployment of an ideal platform.
Feel free to use the quick links to the left to jump to those sections most relevant to you and your organization.
What Is Inventory Management Software?
As you might imagine, inventory management software’s primary function is to track an organization’s materials and finished goods through the various stages of the supply chain. Solutions often also include features dedicated to stock level management, item categorization, sales and purchase order tracking, as well as automatic reordering.
The fully digital nature of these systems carries distinct advantages over outdated methods of record-keeping like pen-and-paper tables or spreadsheets saved to an individual hard drive. Manual inventory management procedures are time-consuming and error-prone—if you’ve ever had to wait for the results of a tedious hand count or wondered if a hastily scribbled figure is one digit or a different one entirely, you know that truth all too well.
Inventory management software increases accuracy, visibility and accessibility of important data and ensures that all stakeholders within the business can have the information they need at their fingertips. The technology can also speed up processes tremendously through automation, as advanced platforms that integrate with handheld or mounted barcode scanners can update your data in real time while freeing up your personnel for more critical tasks.
Some inventory management software is sold as a standalone product, but modern best practices in digital transformation would indicate that seeking an enterprise resource planning (ERP) solution with dedicated inventory management features is more likely to provide a manufacturing or distribution business with all of the tools they need. We’ll explore ERP technology, including what sets superior offerings apart, in another section below.
Industries Served by Inventory Management Software
A complete list of verticals served by inventory management systems would be quite long—after all, any business that deals in manufacturing or distribution likely has inventory on-hand at their facilities that they need to account for. But to give you an idea of the scope and versatility of this technology, these are some of the industries in which an inventory solution is a must-have:
Personal care and cosmetics, which requires various materials and strict adherence to compliance regulations
Apparel, where businesses work with a variety of suppliers and are currently facing a push to use more sustainable materials and practices
Consumer packaged goods, in which many disparate pieces must be procured and combined to meet demand
Industrial manufacturing, where meeting daily plan attainment is only possible with the right parts in stock
Distribution, where order fulfillment depends upon successfully managing the flow of items through the supply chain
As stated above, there is no shortage of applications for inventory management software—for other varieties of process manufacturers, like those specializing in chemicals or nutraceuticals, as well as equipment dealers, wholesalers and more—so this is just a small sample of some of the most notable industries that use these solutions.
Inventory Management Challenges and How Software Solves Them
We mentioned at the outset of this piece that inventory management is an involved process that requires attention to detail and the simultaneous monitoring of items moving through the various stages of the supply chain. A number of tough challenges can arise due to the ever-changing nature of today’s marketplaces and evolving consumer trends and regulatory developments, but with the right software on your side, you’ll be prepared for what comes your way.
Challenge 1: Reducing Waste and Minimizing Losses
One of the biggest sources of waste in consumer goods businesses is unsold inventory that either must be unloaded at a steep discount or otherwise chalked up as a loss. That’s bad not only for your bottom line, as you’ve sunk financial resources into an investment that hasn’t paid off, but also for the planet—sustainability is increasingly seen as an imperative, and it’s critical for your brand’s reputation.
Solution 1: Aligning Procurement Orders with Production Schedules
While embracing a true just-in-time (JIT) model for inventory management poses an undesirable level of risk in a world that continues to deal with supply chain disruptions, it’s still smart to closely align your orders of raw materials with your short-term production schedules. Inventory management software—particularly that which is part of an organization-wide ERP platform—can help you get the insight you need to nail the procurement process in an agile, flexible fashion.
Challenge 2: Anticipating and Responding to Variable Demand
Seasonal spikes occur across the spectrum of industries and product types, from ice cream and swimsuits surging in demand during the summer to electronics and luxury consumer goods being all the rage during the holiday gift-giving season. Without some level of foresight into these developments, your company could be caught unawares and miss out on a significant earning opportunity.
Solution 2: Robust Forecasting and Planning Features
Purpose-built inventory management solutions come with powerful demand projection tools that combine your organization’s historical sales data with emergent trends to create reliably accurate forecasts for the future. That allows you to be proactive in ordering what you’ll need in advance and ramping up production capacity to meet the additional expected order volume.
Challenge 3: Maintaining Stock Accuracy for Confident Fulfillment Commitments
Few things are more frustrating for a customer than making a purchase and receiving a confirmation only to be informed later that inventory levels are too low to fulfill the order. Consumer goods businesses can run into this problem when their stock counts aren’t accurate—which can be the result of an error in recording production volumes, inbound shipments received or outbound orders already shipped.
Solution 3: Automated Data Capture with Integrated Scanners
You can’t afford to leave customer satisfaction to chance, so that’s why you should choose inventory management software that can update your stock levels in real time via integrations with barcode scanners. This feature was referenced previously with respect to how it can make your operations more efficient, but it’s just as useful for ensuring that your item quantities are accurate and up-to-date at all times—which is particularly critical if you sell items on consignment.
Challenge 4: Managing Product Shelf-Life Concerns
In the food and beverage world, the freshness and shelf life of your products is a critical concern, as these factors can have an impact on not just taste, but the viability of a given item once it’s delivered to its retail or foodservice destination. Clients that are routinely disappointed with the condition of the orders they receive are likely to look elsewhere for their needs in fresh food products.
Solution 4: Expiration Date Management and First-Expiry, First-Out (FEFO) Picking Procedures
Good expiration date management is part of inventory control in food and beverage, so solutions built for that industry will enable you to not only track those important windows of freshness and organize your stock accordingly, but also employ a first-expiry, first-out (FEFO) picking method. This lets you get the most out of what you have while ensuring that end consumers will be delighted with their goods each and every time—particularly important for bakeries and other segments where quality is king.
Challenge 5: Achieving End-to-End Traceability and Transparency
Another key consideration in industries like food, beverage, personal care and cosmetics is maintaining complete ingredient and finished good traceability from one end of the supply chain to the other. Regulations pertaining to this matter are getting tougher in many areas of the world, so beyond the food safety implications, you also need to be able to demonstrate compliance and adherence to mandatory standards in order to avoid fines and penalties.
Solution 5: Complete Bi-Directional Tracking of Materials and Products
The time that items spend in your inventory is only part of their journey—you need all of the important data pertaining to your goods from other critical tracking points along the supply chain. This is one of the reasons why having inventory management software that is part of an ERP solution is optimal, as your inventory module and the features therein will share the same data with the rest of your organization and can complement the traceability tools of your larger system.
Key Considerations to Find the Best System for Your Business
Now that you’ve heard all about how inventory management platforms work and the benefits they offer, you may be wondering how you can determine what the best option on the market is for your business. You can begin the process by eliminating any offerings that aren’t built specifically for your industry, as those may lack the specialized tools you need for your vertical.
For example, if you work in the meat, poultry or seafood segments, you likely need catch weight management features to account for the variable cuts and sizes of your products. Likewise, if your company manufacturers complex computer equipment composed of many different parts, you need dedicated bill of material (BOM) functionalities that let you track that information.
Also keep in mind what we’ve stressed about the value of inventory management software that’s fully integrated with an ERP—that’s a game-changing distinction, and the more integrations a solution can offer, the better. Depending on the nature of your business, you may also be interested in a warehouse management system (WMS), product lifecycle management (PLM) solution or routing and scheduling software, and if your inventory platform can sync with those as well, that can streamline your operations even more.
An additional perk to look for is the option for a flexible, lightweight cloud deployment. The business world moves fast these days, putting mobile accessibility, maximum uptime and lock-tight security at a premium. Using a cloud-based system on a software as a service (SaaS) model can tick all those boxes while also offering lower up-front hardware costs.
Finally, consider the reputation and track record of the vendor offering the software. You want a provider that knows your industry inside-out and has built their solutions based on hands-on experience and a firm understanding of the challenges you face. It’s also best if they have a history of successful implementations for organizations like your own.
Getting Inventory Management Right with an Aptean ERP
We’ll conclude with a brief discussion of ERP systems and how those that include dedicated inventory management features are the ideal software solution for manufacturing and distribution businesses engaged in digital transformation, as well as what sets Aptean’s ERP offerings apart. You could choose one of the aforementioned standalone inventory platforms, but you’d be missing out on several key benefits.
For example, ERP products have more than just purpose-built tools for inventory management—advanced systems also include modules for traceability, regulatory compliance, purchasing, sales and order fulfillment, as well as recipe, formula and bill of materials management. Just as crucially, they bring all of your organization’s data into one easily accessible interface, giving you a “single source of truth” from which you can make informed decisions on the fly.
Aptean’s ERPs for food and beverage, distribution, fashion and apparel, and process and industrial manufacturing are all built on decades of collective industry knowledge and an in-depth understanding of the challenges that specialized operations face. They come packed with robust out-of-the-box features purposefully designed to suit the demands of today’s fast-paced business landscape.
Meanwhile, we back up our reputation as a superior solution provider with an approach to client relationships that focuses on being the best possible partner for those companies that choose our solutions. From implementation guidance to professional IT support when your software needs updating or troubleshooting, we’re there for your organization when you need us most.
If you’d like to hear more about Aptean’s full suite of ERP systems and how they can help you nail inventory management, contact us today. You can also schedule a personalized demo to see the software in action for yourself.
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