Whether you run a small home-based online shop or a booming chain store, your success will likely depend in large part on top-notch inventory management. An effectively managed inventory allows businesses to maximize their profits and enhance the customer experience—and the best businesses will know how to do all this while minimizing their overall investment in stock.
What we can stand to learn from such companies is that, much of the time, successful inventory management comes down to having access to complete, accurate data about the state of your stock. Businesses should have an effective means of monitoring current stock levels at stores and warehouses, as well as from purchases made both online and at brick-and-mortar stores, orders from suppliers, and a host of other variables to avoid stockouts and overstocking.
Fortunately for modern retailers, enterprise resource planning (ERP) software makes it easy to not only collect and store this data but also to make it accessible companywide. At their core, ERP systems are designed to consolidate company information and critical business functions onto a single platform that the entire organization can work from. This makes it easy for teams to communicate, share information, and monitor activities across different parts of their business—all capabilities that support better retail inventory management.
Let’s take a closer look about how retailers can utilize ERP systems to stay on top of their inventory:
Challenges of Manual Inventory Management
The global supply chain is growing increasingly more complex with each passing year, as international trade policies change, new trade routes open up, and emerging competitors enter the market. In the face of this highly unpredictable new business landscape, inventory management has become too important a task to leave to antiquated, manual processes that are not only time-consuming but also prone to costly errors. Here are some of the major challenges facing retailers still dependent on manual inventory management methods:
Poor planning is at the root of most major inventory issues. If staff don’t have an efficient way to monitor stock levels, or if they’re unable to get an accurate picture of how much stock is currently available, the risk of stocking either too much or too little merchandise rises considerably. This can prove problematic because the money a business spends on inventory is already locked in regardless of sales, meaning a mismanaged inventory can and will hamper profitability in the long run.
Businesses are best-served by preparing their stock ahead of periods of high demand. Seasonal products or products associated with particular festivities, for example, are likely to sell well during specific times of year. Most companies will study past and current trends to help determine how much to stock up in such cases, but manual inventory management can leave companies with inaccurate or incomplete data, leading in turn to erroneous forecasts.
No Central Database for Inventory
Managing your inventory manually can lead to data silos, with information on current orders, finances, stock levels, and other data spread out across discrete files and databases. Under such a system, finding the information you need quickly can be difficult, if not impossible—to say nothing about determining whether or not the information you do uncover is even accurate.
How ERP Systems Can Enhance Retail Inventory Management
ERP systems optimized for retail have a number of functionalities that can simplify, streamline, and elevate inventory management. These systems don’t just keep day-to-day operations running smoothly but also maintain an accurate store of data that aids in the generation of more detailed business insights. With comprehensive information at their fingertips, retail businesses can now make more strategic decisions going forward.
Here are some of the most compelling inventory management benefits retail ERP systems offer:
Automates Basic Functions
One of the strongest selling points of any ERP system is its ability to automate routine processes and tasks, freeing up teams’ time and attention for more value-adding work. When it comes to inventory management, for instance, retail ERPs can handle automatic order processing, invoicing, reordering, and other similar functions.
More Accurate Data
ERP systems work from a single centralized database, which means that companies should have no problem monitoring metrics like inventory levels, average turnover rate, cost of goods sold (COGS), sales numbers, and other critical performance indicators in real time. This data can help businesses make more informed stocking decisions and predict demand more accurately, preventing overstocking and understocking.
Retail ERP systems compile and store historical data on past purchases and sales and are also capable of reporting this information in clear and easily visualized formats at a moment’s notice. Companies then study these reports to make more accurate inventory forecasts—a vital capability to have especially during seasonal occasions and promotional events. In addition to analyzing past sales data, the system is also capable of analyzing variables like supplier projections and warehouse capacity limits and factoring these into its predictions.
Retail businesses based in the Philippines can turn to ANSI for all their ERP needs. We’re a multi-awarded, experienced software provider that has been working for decades to help companies of all sizes build personalized ERP systems that suit their unique requirements and business goals. Visit us online or give us a call today and we’ll gladly help you beef up your inventory management capabilities with the latest software.