What are inventory management solutions?
Inventory management solutions are tools programmed to help retailers and manufacturers manage their inventory. There are many types of inventory management solutions, but they all have one goal- to reduce the amount of money wasted during the process of distribution. There are two methods that inventory management solutions use to improve the efficiency of managing inventories. Firstly, they can manage a company's entire global distribution network, which includes physical locations, web stores, and third-party vendors or suppliers. Secondly, they can also provide real time information on sales and shipments in order to create custom forecasts so that companies can predict how much product they will need in future months.
Inventory Management Solutions- A Single-Step Process to Boost Your Business
Why is Inventory Management Important?
Inventory management is extremely important for a business to stay profitable. When stocks are received, their barcodes are scanned and their quantities recorded in a point of sale (POS) system. As stocks start to get sold, the POS system keeps updating the inventory list.
Merchants are alerted when stocks begin to deplete and it's time to reorder. Inventory management tells restaurant owners the exact quantity of supplies they have, and how much has to be reordered. This way restaurants don't face embarrassing stock-outs and avoid over-purchasing and food wastage.
Inventory management therefore has to be combined with astute demand planning so that stock levels can be optimized and consumption variance, or mismatch between expected and actual usage of supplies, can be prevented.
Inventory tracking is also essential to keep tabs on stock loss due to pilferage, spoilage, supply fraud, and pest attacks. Indeed, being disorganized about inventory management can weaken a business from the inside and defeat all attempts to push up sales.
Why Business Owners Need to Know How to Manage Their Inventory
1. Reduce food waste- According to Statista, yearly per capita household food waste in the U.S. in 2020 was 130 pounds. According to the RTS report 'Food Waste in America in 2021- Statistics and Facts', the U.S. discards about 40 million tons of food annually, which is more than any other country. This amounts to 30-40% of the total U.S. food supply.
Such a massive wastage has negative humanitarian and financial consequences. When predicted demand does not meet supply, is frequently wasted in restaurants. Effective inventory management can help cut down this waste.
2. Reduce food expenditures- Food cost accounts for about 28-35% of a restaurant's revenue. This financial burden is exacerbated by wastage. A restaurant can reduce soaring food prices by better managing stocks and making more informed purchases.
3. Increased earnings- A restaurant can significantly enhance its revenues by decreasing food wastage and costs, withdrawing underperforming products from the menu, and focusing on popular items.
4. More data-driven judgments- A good inventory software provides vital sales data, which helps explain demand-supply dynamics better. It also forecasts sales trends and enables a restaurant to make more informed strategic business decisions. Inventory management technology helps downsize the inventory maintained and saves carrying costs by revealing the inventory turnover rate. It thus provides a restaurant with a competitive advantage.
5. Better supplier management- An inventory and order management system with batch-tracking tools improves product traceability for restaurant owners. It shows them which vendors are most beneficial to the company and who are not. It also offers restaurateurs more negotiating power with vendors, allowing them to strike exclusive deals. Purchase orders and payments can be effectively managed with the help of technology. This way, vendor Management Supply chains, too, are streamlined.
6. Customer satisfaction- Using technology to track inventories in real time avoids embarrassing scenarios like being unable to serve a menu item despite great demand, only because of a scarcity of crucial ingredients. This will lead to customers being dissatisfied, and salesand the restaurant's reputationsuffering as a result.
7. Food recalls are easy to handle- Product recalls are unavoidable at times. It's possible, for example, that an allergen will be discovered that makes food dangerous. Without efficient batch-tracking, tracing affected products will take effort and time. This problem with the food supply chain can be solved with the help of inventory management systems.
Basic inventory management for small businesses can be effectively handled with the help of Google Sheets and Excel Inventory management spreadsheets. These spreadsheets are cheap and easy to use and ideal for a small business looking for a quick solution to its stock-taking needs. However, these tools are susceptible to human error, take a lot of time and effort to update and audit, don't update in real time, have limited functionality, and are not easily scalable.
This is where cloud-based inventory management technology helps. This technology is hosted on the internet with data stored on third-party servers, unlike spreadsheets that reside in local computers.
Manual stock tracking is incredibly difficult to maintain and is error-prone, especially considering that demand and supply vary all year round and stock levels fluctuate. Using technology to automate inventory ordering allows business owners to maintain control of their operations without expending too much effort and time. It also frees them from the worry of inventories running out or getting spoilt. Restaurant staff can dedicate more time to customer service with an inventory management system working quietly in the background.
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How to Use the Process of Inventory Management?
Inventory represents the sales of a business that hasn't yet been rung through the register. So an entrepreneur must keep an eye on what's going on in the back office.
If the inventory is properly maintained, a restaurant should have just enough stock available to never have to 86 a menu item, but not so much that things start to get spoilt. ('86' is a commonly used expression in the restaurant business that indicates that a menu item is out of stock or no longer available to be served.)
Inventory management can also prevent the restaurant or its managers from being tempted by a supplier's 'amazing offers'. Although inventory management is a delicate balancing act, developing and improving a method helps in keeping the restaurant stocked and the business healthy. Here's how business owners must use the process of inventory management-
1. Start with your most important items- Your menu is a significant part of your business, which is why it's an excellent place to start when it comes to inventory control. You can't afford to miss a step when maintaining the inventory for menu items, particularly when it comes to best-sellers on the list (great value, low-cost items). You should have tightest control over your critical items. These objects should be inventoried during every shift, and at the very minimum, everyday.
2. Set pars for each item- The point at which stock is renewed is referred to as 'par' in inventory management. Setting a par lets you have enough stock on hand to avoid exhausting what you require. To make sure that the business does not run out of critical commodities, many organizations set the benchmark at daily sales, plus delivery time.
Knowing how much stock you have is useless unless you can link it to your sales and production. To determine when and what quantity to order, make sure to include the par in your on-hand count. This will also assist you in keeping track of your sales units.
3. Establish a process- Take the effort to set up a system for restaurant inventory management and stick with it. Determine the best time for stock-taking and make managers accountable for doing so. The time could be tied to ordering and delivery processes. The more complicated and diverse your menu, the more important it is for the stock-taking to be completed accurately.
4. Use accounting software- Although paper and pencil tallies can still be done, be careful to record them into the software that is linked to your sales. The Food Beverage (food and beverage) industry has become far too complex, and time constraints have made it impossible to maintain a record of inventories without the help of software.
5. Spot check- Once you've developed your procedure, make sure you are the first to finish it. When your team is in charge of inventory, you should spot-check the process. This can be done at intervals that you are comfortable with, whether it's once a month or once a quarter.
How to Choose the Right Inventory Management System
If you are an entrepreneur who's not sure which inventory control or inventory management software best addresses your business needs, these are the questions you need to ask before selecting an inventory management system-
1. What size of company do you run? Is it a small, medium, or large company?
Large companies have more complicated inventories and need more sophisticated inventory management capabilities.
2. What are you attempting to accomplish? What problems are you attempting to resolve?
Make a note of the operational issues you're having and the inventory management goals you would like to meet. This could range from decreased inventory holding costs to more precise inventory management, faster operations, simpler scalability, and increased profitability.
3. What are the features you absolutely must have?
The tools and features you will need to run your business will be determined by the kind of products you offer. Bundles and batch tracking are supported by some inventory management systems, but not by others. Ensure that the system you select has the features you need to satisfy your specific needs.
4. What is the maximum amount you are willing to pay?
The cost of vital functionality might vary greatly, and you must remember that paying for it can increase your profitability and lower your costs over time.
5. What are your sales channels?
You'll need a system that can manage multiple sales channels if you sell through more than one. Several platforms, like Amazon, Shopify, Lazada, and BigCommerce can be directly integrated with reliable inventory management systems.
6. What kind of integrations are you looking for?
Most cloud-based and enterprise resource planning (ERP) Inventory Management solutions, but not all, enable integration with other critical service providers, like logistics providers, shipping providers, accounting systems, and so on. Custom integrations are also possible with some suppliers via an application programming interface (API).
7. Who needs access?
If multiple teams will use your system on a frequent basis, a cloud-based inventory management system that automatically updates in real time for everyone to access data anytime, and from anywhere is a good choice.
8. Do you require training or assistance?
Suppliers offer varying degrees and kinds of support and training material for their software solutions. Some subscription providers offer free help, while others charge an additional amount based on the type of support you require and your membership tier.
What is the Best Inventory Management Software?
When it comes to Inventory Management software, Zip Inventory is by far the best for restaurants. This product is extremely easy to use, and is available on the special app store for restaurants, Hubworks.
When an inventory count is taken on the mobile app, it gets automatically linked to the cloud with Zip Inventory. Inventory management software allows you to keep track of all of your inventory in one convenient location. Inventory counts, therefore, are more precise. This dispenses with printed count sheets, that are not only inefficient but also waste paper.
You can select variable count frequencies for stock items. To avoid confusion or mistakes, you can set individual count frequencies for each product and keep the count sheets distinct.
Inventory levels can be tracked in real time, and the total number of each item sold can be easily seen. Inventory reports can be accessed anytime and can be shared with any member of the staff, across a number of devices.
It's bad for business if a restaurant runs out of its most popular item. The menu mix quickly displays the total number of menu items sold, the estimated total food cost, the total price of products sold, and the profit percentage of each menu item. Zip Inventory lets you categorize the menu mix to see which menu items are the most popular, ensuring that you always have adequate products on hand.
When an inventory count is wrong or when another inventory-related problem arises, you will be notified immediately so that swift corrective action can be taken.
Zip Inventory also lets you keep food costs under control by revealing wastage in dollar value and comparing the expected and actual usage of products. This Hubworks product also allows recipes to be improved and standardized, and the staff to be kept up to date on recipes.
When used with Zip Supply Chainanother Hubworks productPurchase Order management and vendor management become doubly efficient.
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Inventory Solutions That are Easy to Use
1. Zip Inventory- With its voice search functionality, Zip Inventory allows stocks to be counted quickly. A manager can now take inventory simply by stating the item's name to be counted. The voice search option saves a lot of time.
2. inFlow- Manufacturers, internet merchants, business-to-business (B2B) distributors, and retailers can benefit from inFlow's software. It is one of the best solutions for B2B firms because of its strong reporting features and shoppable B2B showrooms.
3. Megaventory- It is an operations management tool that allows you to keep track of the packaging or assembling process, as well as inventory, ordering, and fulfillment. It's a simple system to set up, making it ideal for small and medium-sized manufacturing businesses.
4. Zoho Inventory- It is an online Inventory Management solution that offers free and paid options. Zoho Inventory is a great free alternative for small businesses and start-ups because it allows them to add items, fulfil orders, and monitor inventory from any device.
5. Orderhive- It is a cost-effective solution to begin selling across multiple platforms. It offers business owners automatic real time updates, barcode scanning, and inventory data. Its simple interface makes it easy to group items for sale or start a drop-shipping company.
Best Solutions for Inventory Optimization
1. Zip Ordering- This software solution, which is available on the Hubworks app store, comes with reporting features that offer in-depth insights into the utilization rates of inventory items. Not only can you view the order cost information for each item, you can also better understand your inventory consumption. This helps you optimize product ordering for your company.
2. EazyStock- It is an inventory optimization tool that integrates with ERP systems and digitalizes inventory management. While most ERPs are capable of stock control, many still require users to compute and input demand estimates, inventory levels, and order amounts manually, which is wasteful, time-consuming, and frequently wrong. Spreadsheets are not needed with EazyStock.
It automates demand forecasting, optimizes stock levels, and generates dynamic order recommendations, taking Inventory Management to another level.
3. Fishbowl- It is a hybrid manufacturing and warehousing management solution best suited to small and mid-sized businesses. Material requirements planning (MRP), inventory control, workorder management, job shop floor control, bills of materials, and manufacturer orders are just a few of the key elements. The application can be installed on-premises or in the cloud.
Barcoding, raw materials management, asset management, reporting, cycle counting, automated ordering, and purchasing are just a few of the advantages Fishbowl has to offer. It sends real time updates on stock levels to multiple warehouses of an organization, thereby helping in warehouse management.
It can be integrated with shipping, e-commerce, merchant services, and customer relationship management (CRM) systems, such as QuickBooks, Shopify, Magento, Salesforce, and Zencart.
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Frequently Asked Questions
What are examples of inventory management systems?
Inventory management systems are any methods used to track the movement of items or materials within a facility. Inventory management systems should be able to ensure that inventory stays in stock and is available for use at all times, either through purchasing new items or editing the existing inventory to maintain proper levels. The four most common types of inventory management systems are bar code systems, radio frequency identification (RFID) systems, computerized supply chain planning software and manual recordkeeping. In addition to these methods, there are also some other less common inventory management practices that may still qualify as inventory management procedures. These include- -Warehousing -Retail shrinkage prevention -Inventory aging -Inventory turnover analysis -Early warning system for shortagesInventory management systems are any methods used to track the movement of items or materials within a facility. Inventory management systems should be able to ensure that inventory stays in stock and is available for use at all times, either through purchasing new items or editing the existing inventory to maintain proper levels. The four most common types of inventory management systems are bar code systems, radio frequency identification (RFID) systems, computerized supply chain planning software and manual recordkeeping. In addition to these methods, there are also some other less common inventory management practices that may still qualify as inventory management procedures. These include- -Warehousing -Retail shrinkage prevention -Inventory aging -Inventory turnover analysis -Early warning system for shortages
What is best tool for inventory management?
Managing an inventory is quite a task, especially when you have a warehouse of products and need to keep track of them all. But with the right tool, you can manage your inventory like a pro! Read on to learn what our top 3 picks are for the best inventory management tools.Managing an inventory is quite a task, especially when you have a warehouse of products and need to keep track of them all. But with the right tool, you can manage your inventory like a pro! Read on to learn what our top 3 picks are for the best inventory management tools.
What are the 4 types of inventory management?
Businesses that want their inventory to be managed efficiently and effectively will want to take advantage of the 4 types of inventory management. Inventory management is a process that helps you maximize goods available for sale and promote sales by controlling the distribution, pricing, and tracking of goods. To optimize your business's inventory management, first consider which type of inventory management will work best for it.Businesses that want their inventory to be managed efficiently and effectively will want to take advantage of the 4 types of inventory management. Inventory management is a process that helps you maximize goods available for sale and promote sales by controlling the distribution, pricing, and tracking of goods. To optimize your business's inventory management, first consider which type of inventory management will work best for it.
What software do companies use for inventory?
Assessing inventory is a key part of running any business. Understanding what your products are doing at any given time, how much they are selling, and when they are coming back in stock allows you to manage your company's resources better. With this in mind, it can be tough to decide which software to trust for inventory management. Here, we will discuss the top five software companies that businesses use for inventory management and help you choose the one that is right for you.Assessing inventory is a key part of running any business. Understanding what your products are doing at any given time, how much they are selling, and when they are coming back in stock allows you to manage your company's resources better. With this in mind, it can be tough to decide which software to trust for inventory management. Here, we will discuss the top five software companies that businesses use for inventory management and help you choose the one that is right for you.