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What is Inventory Management System ?

 Inventory changes constantly. Throughout each day, sales, returns, new receipts – even damage and theft – affect your inventory levels. While daunting, effective inventory management and inventory control are the most important jobs in a successful retail or wholesale business.

Effectively managing inventory gets harder as your business scales and the amount of inventory you’re handling increases. Taking advantage of technology can make things easier for yourself and your employees. This is why an inventory management system is invaluable not only for liquor shops but to any retail business.

This guide will tell you all you need to know about inventory management systems. We’ll explain the types of systems you can choose from, and which may suit you best.  We’ll also describe the principal features that systems need to improve efficiency and overall customer satisfaction.

Before we get there, though, it’s worth spending some time on the fundamentals. Let’s get to grips with precisely what inventory management is and the benefits you’ll see from handling it efficiently.

What is inventory management?

If you’re in the process of just starting out in retail or wholesale, you may be asking yourself “What is inventory management?” or “What is inventory control?”

Effective inventory management and inventory control are one in the same – and the definition is pretty simple to understand.

Inventory management refers to the process by which you track the amount of product you have on your shop/ warehouse shelf, in store or sitting with other retailers and distributors. This enables you to succeed in having the right number of units in the right place, at the right time and for the right price.

When effectively tracking and controlling your physical inventory, you’ll know how many of each item you have, when you might be running low on products and whether you should replenish that item in order to keep selling it.

And as a busy business owner, you should be able to do all of this at a glance. This enables you to make good purchasing decisions quickly and easily. It’s where having the correct inventory management system comes in, too, as we’ll learn later.

Why you need Inventory Management?

It is crucial for an organization today to understand its inventory to achieve both efficient and fast operations, that too, at an affordable cost.

An effective management of inventory helps in reducing costs which further keeps accounts and finances in check.

From a customer’s point of view, it helps you to provide better customer services through fast delivery and low shipping charges, hence, meeting customer expectations.

Here’s how inventory management solution can help you achieve these benefits:

1. Tracking Inventory

A good system will help you keep track of your inventory and offer a centralised view of stock across sales channels – how much is in stock, and where. It will also allow allocating inventory to specific sales channels, which is important if you have warehouses/ shops and distribution centers at multiple locations, thus, enabling warehouse management.

2. Control your costs

Keeping reports about your inventory helps you understand what stocks are doing well, versus which are just taking up shelf space. Lack of the right inventory at the right time can mean back orders, excess inventory, etc. These drive up costs.

3. Improve your delivery

Late delivery due to stock-outs is bound to give you a bad reputation. For tracking, it is important for you to know when the vendor is shipping inventory and when it will arrive. This helps you manage customer expectations by delivery as, when and where they want.

4. Manage planning and forecasting

The software can help you improve demand forecasting by analysing data trends from well-performing stocks. This minimizes your holding and handling costs, improves revenues and frees up cash flows. Also, by planning and forecasting – you deliver on customer expectations better.

5. Reduce the time for managing inventory

With a good inventory management solution, you can reduce the time taken to keep track of all the products you have on hand and on order. Additionally, you save the time taken up in inventory recounts if your records are in place.


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