How can inventory management software help reduce costs?
As your business grows, it can become increasingly difficult to stay in control of your inventory. That’s especially true when it's stored in multiple warehouses and trade stores. Losing track of where each product is kept and what needs re-ordering is almost inevitable.
If this sounds like your business, you might be wondering about the cost benefits of inventory management software. Can it really reduce costs for your business? The answer is a resounding, “yes”! Let’s take a look at several ways inventory management software could help you to reduce costs.
Automation reduces stockouts
One important way that inventory management software can help to reduce costs is through automation. Delays in re-ordering your stock can have a huge impact on your costs. If a customer purchases an item that is out-of-stock, you won’t be able to fulfil their order, potentially leading to cancellations and negative customer reviews. Meanwhile, if staff re-order items that are still well-stocked, this can lead to overstocking.
Inventory management software provides automated re-ordering. You can set minimum and maximum stocking levels for a product, and once your stock reaches the minimum level, an order will automatically be placed. By also selecting a maximum level, you can ensure that your stock is kept at the optimum amount. You can also arrange for “back-to-back" delivery, so that once a customer places an order, the product is automatically re-ordered to replenish the stock. Automated ordering reduces the chances of stockouts and cancellations, saving money in the short- and long-term.
Detailed sales information
To have an effective sales strategy, your sales team needs access to detailed inventory information. What products has this customer ordered in the past? How much did they pay? What is the average market price for the product? Do we currently have it in stock? Inventory management software can help your staff to answer these kinds of questions.
As an ERP stock management software, for example, Profit4 can provide detailed information on customer sales history. This means your sales team can pinpoint sales leakage from specific customers. They’ll also be able to see accounts information, including overdue payments and credit limits, so they can discuss these issues with the customer during a sales call. All these elements can lead to potential savings for your business.
You’ll also have the option to bulk import multiple supplier price lists. As your sales staff will have full access to the cost price for raw materials, they’ll have clear guidelines for setting a minimum selling price and haggling for the best price with customers.
Improved customer fulfilment
If staff have up-to-date knowledge of stock levels and locations, it’s easier for them to fulfil customer orders. Automated re-ordering reduces stockouts, meaning that customers get their orders on time. Meanwhile, with a clear overview of stock locations, packing operatives can quickly locate orders, speeding up the shipping process. All these factors mean your customers receive the right order at the right time. In turn, that leads to great reviews and increased loyalty, saving you money in the long run.
What’s the point of having stock if it doesn’t sell? Losing track of popular products is equally as damaging to company finances. Inventory analytics will show you what’s selling like hotcakes, and what’s gathering dust on your shelves. This way you can make informed decisions about what to order in the future, and what needs to be sold off quickly in a sale. This not only helps you to make more sales, but also to potentially save money on storage space.
With Profit4’s detailed reporting, you can drill down into customer leakage on individual products too. Even if a customer seems like a big spender, there may be certain products they haven’t bought from you in a while. This type of reporting can help your staff to spot these issues and raise them at the right time.
Increased stock visibility
When you have high volumes of stock across multiple locations, inventory management can become extremely confusing. Aside from issues with stockouts, it can be hard to remember where every piece of stock is located. If your inventory has low visibility levels, warehouse operatives may find it next to impossible to locate an order, especially if its location has recently changed.
With inventory management software like Profit4, staff can be given access to a real-time overview of your entire inventory, across multiple warehouses and stores. This reduces lead time, meaning faster shipping, happier customers and repeated sales.
Multiple sales channels
It takes more than one department to make a company. Naturally, multiple staff members and departments will utilise your inventory. This can inevitably lead to inefficiencies – and potentially big mistakes. For example, a sales team member may take an order for an item without realising the trade counter just sold the last one available. With inventory management software, changes to your inventory are recorded in real-time. This allows sales staff to see when trade or warehouse staff have updated a product in the system, for example.
When it comes to re-ordering, there’s also the option to create a shortage list. All departments can add items to this list to be re-ordered. This saves time as staff won’t need to contact other departments before placing orders. It also saves money, as the larger orders can meet minimum order values and potentially receive bulk order discounts.
Reduced human error
Everyone makes mistakes. Unfortunately, when you run a business, human error can be very costly. Looking specifically at inventory management, this might occur when a staff member forgets to record a stock-out. Inventory management software utilises many automated processes which can help to reduce the impact of human error.
For example, in Profit4, you can conduct perpetual stock counts to generate accurate stock data. As the process is entirely automated, there’s no need to worry about human error.
Cut down on unnecessary costs with Profit4
With inventory management software, you’ll have an at-a-glance overview of your stock – from its location to its stock level. This means plenty of opportunities to make a saving, including avoiding stockouts and reducing human error.
OGL’s Profit4 software combines inventory management with order management, reporting and accounting, along with other features, in an all-in-one ERP stock control software. The software is 100% cloud-based, so there’s no need to worry about tricky installation or security issues.
If you’re interested in how the Profit4 inventory management software can benefit your business watch our 3-min online demo today.