What is an automated inventory management system?

Would you like your inventory operations to be more effective? Learn how an automated inventory management system can help you get there.
November 7, 2022
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5-min read
automated inventory management system in warehouse

Whether it's a brick-and-mortar retailer or an online shop, most successful sellers have one thing in common; they all use automated inventory management systems. Thanks to the wealth of benefits it offers, it's fair to say that this business solution has become essential for retail businesses of all types and sizes.

But what is an automated inventory management system exactly? And what advantages do they bring to the table? Let's have a look:

Automated inventory management systems - a short guide

Automated inventory management systems are software applications that allow online and brick-and-mortar retailers to manage their inventory and stock levels from a single solution. This solution automates burdensome tasks such as inventory tracking, forecasting or updating. That means that you won't need to manually update your spreadsheets or databases - your automated inventory management system will do it for you.

On top of considerably reducing your workload, an automated inventory management system will allow you to check your inventory data in real-time. This makes it a lot easier to respond to unexpected changes in demand. To make things clearer, let's provide an example.

Let's say that one of your products has suddenly started to sell really well. This spike in sales has come completely out of the blue - you weren't expecting it at all. Now, you're wondering whether this is just a passing fad or an amazing business opportunity. Should you order some extra stock? Unfortunately, you can't really answer that question without having access to accurate, up-to-date data.

Without an automated inventory management system, you will have to wait for an end-of-month report before deciding whether you should order more stock. But with this kind of automated solution, all you have to do is have a look at your stock control system. In just a couple of clicks, you'll have all the information you need to decide whether you want to put through a new order or not.

Best of all, you can even use your automated inventory management system to put your order through. Let's see how:

How do automated inventory management systems work?

Automated inventory management systems don't work on their own, isolated from all your other business processes. Instead, they're part of something bigger - an Enterprise Resource Planning (ERP) solution. ERPs integrate all your business operations into a single, centralised system. That way, all your departments source their data from the same data pool - which is updated automatically and in real time.

What does this mean in practical terms? In the context of automated inventory management systems, it means that your inventory and stock levels are directly connected to your sales channels. If you sell a product on an online channel, your stock levels will be automatically updated. If a customer returns a product, the same thing will happen. In fact, some automated inventory management systems even allow you to re-order stock automatically once it's sold out.

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But that is far from being the only benefit of automated inventory management systems:

The 3 biggest benefits of automated inventory management systems

Having an automated inventory management system in place can be a real game-changer for any business. Not only will this kind of automated solution simplify your business process, but it will also boost your productivity and bring you closer to your customers. With this in mind, we have chosen the 3 biggest benefits of automated inventory management systems:

1. Accurate stock levels

Apart from being incredibly unproductive, manual stock counts can easily lead to costly mistakes. In the best-case scenario, one of your employees will notice the error and amend it immediately. But in the worst-case scenario, this miscalculation will snowball into an order being cancelled because you don't have enough stock. This can cost you your customer's trust and loyalty - and that is the last thing you want.

Fortunately, there is an easy way to ensure that this never happens to you - implementing an automated inventory management system. Because this kind of automated solution uses your sales data to automatically update your inventory levels, it will always get your stock counts right.

Even better, if one of your products is sold out, your sales channel will be automatically updated. That way, your customers will never have their orders cancelled because of inaccurate stock levels.

2. Automated workflows

Manual workflows are an annoyance for many retailers. They're inefficient and repetitive processes that keep slowing down your business flow. Fortunately, each and every single one of your manual workflows can be replaced by an automated one. And that includes all your time-consuming inventory management processes.

For instance, let's say that one of your customers puts in an order for a product that is unfortunately sold out in your on-site warehouse. If this happens, your automated inventory management system will instantly send a request to your nearest warehouse or logistics centre for that product to be shipped out to the customer. And if it turns out that the product isn't available in any of your warehouses, the order will be automatically stopped.

This would be an extremely laborious process if it were performed manually. With an automated inventory management system, it'll only take a few seconds.

3. Multi-channel sales integration

With an automated inventory management system, your stock will be automatically updated across all your eCommerce channels. Even better, this also applies to businesses with physical and online premises. If a certain product is sold in one of your physical stores, your online channels will be immediately updated with the correct inventory levels.

So, if you're looking for an automated inventory management system, it's best to ensure that it's part of an ERP that offers seamless integration with all shopping channels. As well as giving you full visibility of your operations, integrating your shopping channels with your inventory management system will ensure you're never under or over-stocked.

Manage your inventory effectively with Profit4

The verdict is in - if you want to manage your stock and inventory effectively, you need an automated inventory management system solution that works alongside a full-range ERP. At OGL Software, we've got just the thing. Our ERP Profit4 includes all the features of a stock control system you need - from seamless eCommerce integration to automated stock counts and automated workflows.

If you would like to see what Profit4 can do for your business, please head to our website today and book a free demo. Once you make the switch to Profit4, you'll never look back.

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