Businesses need to implement a good inventory management system to maintain accurate information on the movement of all inventories. A good inventory management system enables a business to become more profitable and serve its customers better by lowering its operational cost, increasing productivity and reducing data entry errors. A sound Inventory management system should eliminate the ambiguity as to where inventory is going and what should be in the warehouse.
Benefits of a Good Inventory Management System
A properly implemented inventory management system streamlines every aspect of the business’ inventory by significantly reducing wastes and the operational cost. The key advantages of implementing the inventory management system include:
- Increase speed of inventory updates due to automation data capture.
- Increased accuracy due to the elimination of human error in counting of the inventories.
- Increased accountability since the data is easily accessible.
- Enable automatic correction of damaged labels by use of mobile computers and printers.
Components of a Good Inventory Management System
There are four core components of a good inventory management system which include:
1. Inventory Tracking Software
The software choice will determine how the inventories are to be tracked. The depth of reporting and support for the batch updates vs. real-time will determine the software choice to be used in the inventory management system.
2. Mobile computer
Inventory and changes need to be regularly made throughout the business facility. Many devices such as wireless communication devices can serve this process.
3. Wireless infrastructure
Wireless infrastructure is an excellent tool to facilitate real-time inventory updates, therefore it is an essential component of a good inventory management system.
4. Bar code printer
Bar code allows easy and quick location of inventories.
Elements of a Good Inventory Management System
- Location labels and names are well organized and easy to read with no ambiguity.
- Item descriptions are clear with no ambiguity.
- Items are distinctly numbered.
- Units of measurement are very specific.
- Trained workers on good inventory management practices.
- Excellent policies on inventory management.
What to Address when Creating an Inventory Management System
To create an efficient and effective inventory management system, the following aspects should be addressed:
- The type of inventory to be tracked, whether individual items or case items.
- How the expiration dates are to be tracked, whether using batch, serial number or lot.
- Satisfaction level of the existing labels.
- The best automation to be applied, whether real-time updates or batch collection.
- The ability of the existing wireless network to contain the inventory management system.
- The reporting type that is expected to be generated by the system.
- The number of users the business will have using the system.
In conclusion, an effective and efficient inventory management system lowers the operational cost, increases productivity and reduces data entry errors, therefore enabling businesses to become more profitable. Implementation of the components of a good inventory management system has a high payback, and every business should consider it as an opportunity for increasing competitiveness.