Cloud inventory management in layman’s terms is defined as the process of ensuring that a company has full visibility and control of its products on hand using online software.
Through a systemized inventory management, a company has a full analysis of their entire stock of products and making sure that their stocks are at the right levels of quantities, cost, place, and time.
Let’s take this for example.
John owns a retail pharmacy store that sells medicine prescriptions to the people within his neighborhood.
He is required to ensure that all medicines are in stock and cannot reach a number below let’s say 20 percent threshold.
By having an inventory management system that automatically tracks the inflows and outflows of medicine, John will have full visibility of all the medicines in his store.
Once a certain medicine hits the lower threshold that he sets, he will receive an automated notification to repurchase the said medicine to level out his inventory.
This inventory automation is very helpful because instead of manually checking on the stocks, John can focus on the business areas that require more attention, so that John can continue to provide excellent service to his patients.
Is there a difference between inventory management and warehouse management?
Inventory Management and Warehouse Management are sometimes being mistaken as the same system as both deals with managing products and operations within a company.
The truth is, both are not the same, although they have overlapping functions, there are some differences too.
Human factor would be one of the significant differences between the two systems.
Warehouse management includes tracking and managing the crew that is working in the warehouse – for example, how many crews are on shift, division of groups in operation, etc.
While inventory management only focuses on the product items – whether it is in the process of being manufactured, stored, or distributed.
Inventory management is more product control-oriented compared to warehouse management– which means that it solely focuses on tracking the availability, pricing, quantity of products in each warehouse.
Although warehouse management has the capability of monitoring products, this system is also able to oversee what exactly happens in the warehouse such as temperature and equipment control among others.
Although Inventory Management is less equipment-specific than warehouse management, it comes in handy for smaller and medium-sized companies by allowing them to plan their inventory levels ahead of time and gives them the oversight of understanding their product cycles better.
How important is automation?
In this age where digital implementation is becoming a more crucial part of our daily life, it is no surprise that companies are required to transform, adapt, and shift their business processes towards a digitalized solution.
This includes automation of inventory management to reduce manual tracking of inventories which is time-consuming and proven ineffective.
A cloud-based automated inventory management system offers the ability to reduce manual effort, enhance supply chain management, and increase speed and accuracy when it comes to tracking stocks, managing deliveries, and maintaining stock levels to name a few.
Key benefits of a streamlined inventory management
- Avoiding Data Inaccuracies
Manual inventory tracking increases the likelihood of human errors such as miscalculation, wrong data tracking, and aggregation which can be a very costly mistake affecting the bottom line.
By using cloud inventory management system – inventory counts and data are automatically captured, tabulated, and processed, thus further eliminating human error.
- Increasing Time Efficiency
Business owners loathe inefficiency in inventory tracking, and it is for a good reason. Manual inventory management takes a lot of time to pull data, calculate and generate reports which inevitably causes long delays.
Implementing an automated inventory management system reduces the time needed to manage stocks– this increases operational speed and allows for any issues that arise to be resolved quickly.
- Putting Importance on Scalability
A company’s scalability is severely limited if the inventory management system is obsolete.
It is impractical to expand to several warehouse locations if a company still uses manual management processes.
Staff will be needed at each location to keep track of inventory, collaborate on data, complete purchase orders, and perform other tasks. This will necessitate a lot of effort.
- Optimizing Cost
With the help of an inventory management system, you can prevent over or under-stocking. Inventory management that is inefficient will result in revenue loss, overspending, sunken cost, and other issues.
For example, an inventory management system will automatically notify you when a stock item is low and needs to be restocked in your store. So that you can always fulfill customers’ orders as and when they wish to make a purchase.
- Improve Stock Visibility
Automation on inventory records greatly helps companies to know what, where, why, how, and when their stocks need to be managed. This leads to better customer service, streamlined processes, and overall increased productivity for the company.
Are there drawbacks to not implementing a proper inventory management system?
If your business wants to be competitive in a digital economy – think of cloud-based inventory management as a necessity and not just a helpful measure.
In fact, here are some potential downsides of not regulating inventory properly.
- Lack of centralized control
Using a manual approach to inventory management, your data is not up to date and it might cause inconsistencies across the whole operation.
An automated inventory management system helps companies to get real-time updates on their stock levels without any lag or delays.
- Inefficient Inventory Process
A manual inventory system poses limited growth opportunities when companies decide to upgrade and expand their business.
To add, business intelligent data such as cost-control, predictive analysis, and technical processes cannot be implemented using a manual system.
- Poor Inventory Planning
An inventory management system allows companies to schedule purchases of stocks, production, or distribution ahead of time to prevent delays and cost overruns.
Poor planning can influence revenue predictions and project scheduling if done incorrectly.