How Does Inventory Management Work?

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Inventory management is the backbone of every business. It allows you to keep track of product stocks, sales, orders, returns and purchasing trends, to name a few. The inventory system can also be applied to keep tabs on company-owned assets like equipment, computers and devices, vehicles, furniture etc. In other words, inventory management can also take on the aspects of asset management.  But more on that later.

Poor inventory management can lead to frequent stockouts, more obsolete inventory on hand, high storage costs, ordering and shipping mistakes, and much more.

Some companies put off implementing an inventory and asset management automation because their focus is elsewhere. A Celect and Coresight research study in 2018 put the loss down as $300 billion for U.S. retailers alone.

Automation is the answer

Today, automation is revolutionizing asset and inventory management systems. Businesses that have automated systems in place have profited from the benefits of speed, accuracy, real time monitoring and improved inventory control.

While inventory or asset management software is expensive it pays for itself in the long run. Small businesses that have adopted automated systems can vouch for the greater ROI that is a result of efficient operating methods, better customer service and increased customer loyalty.

How do automated inventory systems work?

Automated inventory systems track products using RFID tags and/or barcodes. When a product is scanned its information is recorded by the software. With this data you can do more than just keep a count of new stock and sold products. It optimizes your inventory by maintaining the right number of products without over or under-stocking. Alerts notify you when stocks go above or below a certain threshold or even when items get close to their expiration dates.

Knowing where your product is stored is also important. RFID tags and readers can relay location data to your inventory tracking software so you can locate it instantly without having to go through a labyrinth of spreadsheets. RFIDs can also be incorporated in transit, allowing you track incoming inventory and products that are out for delivery.

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