The Beginner's Guide to Inventory Programs | Zip Ordering
We've discussed before on this blog a myriad of topics that tie into the concept of inventory programs, the role that these programs play in the ordering process, and some of the benefits of employing one such program in your business. Inventory management software has the potential to truly revolutionize the way your business functions going forward and is by no means a shortsighted kind of investment that will be rendered useless within a year. Still, there seems to be some hesitation among business owners, managers, and administrators when it comes to deciding to implement one of these programs.
Part of the hesitation to implement inventory-tracking software might very well be due to a lack of total information. The solution to which is a kind of synthesized location where all of the relevant information needed to evaluate this option could be found, like this introductory guide.
It can be a tricky thing to boil down to a few short pages of text, but a descriptive guide may well end up proving far more valuable to owners/managers/administrators than an entire collection of individual articles on the topic. Being able to see the main points, of which there are quite a few, all in one, cohesive location, may very well be the key to convincing the skeptics that upgrading to a proper inventory system could potentially save their business.
This is not going to be your traditional article. Instead, this is going to be a culmination of the many key points we have discussed elsewhere on this site, weaved together to create the perfect narrative that will demonstrate the true importance of inventory programs as an innovative and game-changing tool.
We're going to cover quite a few different aspects of these systems, everything from what they are, to how they work, some pros and cons, and even discuss the different kinds of inventory systems, as they exist today.
We hope that you will find this guide useful as you begin to consider the true potential of inventory programs, and how getting one can add serious value to your business. Without further ado, let's get into (almost) everything you need to know about inventory programs!
What Are Inventory Programs?
Inventory programs are exactly what they sound like - digital programs that are designed to help you manage your inventory. However, there's absolutely a ton more to it than that.
On a super basic level, though, that is the core of what an inventory program does. It helps you, the owner/manager/administrator to get a more comprehensive grasp of your inventory, your needs, your excesses, and how to better adjust it to meet your needs and curb those excesses. It does this in some ways, which we'll get into in just a second, but for now understand that there are two different major types of inventory programs, perpetual and periodic. We'll break each of those down in the next section, but right now we'll focus on some of the main features of a good-quality inventory program.
Analysis is one of the major motivations for people to pursue inventory apps and programs. These systems allow for a pretty solid analysis of your usage habits, which can tell you not only how quickly you're using certain items, but then compare them with other items in your inventory to see which are the most popular and which ones hardly get used.
From this information, you can then glean some key insights into your inventory. Among these insights are things like items that are being all but completely wasted due to a lack of consistent use. You will also be able to determine the most popular menu items this way by seeing which items you seem to go through the fastest.
There is no doubt that inventory programs are a sure-fire way to help you stay more organized in your inventory process. In addition to storing inventory data, it is also much easier to share with others, as well as back up in other locations such that you always have access to it, even if your device goes down.
Some inventory programs offer a kind of monitoring system, wherein you are alerted when the best time to conduct your inventory count is, based on your pre-determined ordering and delivery date. Aside from this, something that can only be found in perpetual inventory systems is the ability to receive notifications of low stock. We'll discuss this a bit more in the next section, though, so sit tight for now.
As you can see, inventory programs offer an awful lot of value, especially when you consider that the alternative is going through everything with a notepad and then having to make paper copies of everything, hoping that they don't get lost or damaged and, even more so, that they are done correctly by the employee that conducts the count. This latter point, however, is one that doesn't completely go away with all inventory programs. In the next section, we're going to address the two major kinds of inventory programs.
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Periodic vs. Perpetual Inventory Programs
As we mentioned earlier, there are two major types of inventory programs, periodic inventory programs and perpetual inventory programs. Both of these options have their unique pros and cons, and in this section, we are going to break each of them down in more detail, so that you can better decide which one is right for your business.
1. Periodic Inventory Programs
This is the more traditional type of the two inventory programs. Periodic inventory programs are undoubtedly the most common on the market, mostly because they are less expensive and more cost-efficient for program developers to create. Its feature set is by no means limited, though, as we'll discuss here, and is still a very good choice for those looking to upgrade slowly.
Pros to Periodic Inventory Programs
- Periodic inventory programs are less expensive for owners/managers/administrators to purchase. This is due, in part, to the lowered cost of development.
- They are great for businesses looking to make the transition to a digital form of inventory management, without going feet first into the deep end of this kind of system.
- It still retains elements of the most traditional kinds of inventory programs, which helps to make it more familiar and easier to transition to.
- These systems also offer a range of reporting features and analysis options, which come in handy when big decisions are looking to be made regarding your inventory or ordering habits.
Cons of Periodic Inventory Programs
- The lower pricing, a result of the lowered cost of development, does reflect the range of features you can make use of.
- All the most basic and necessary functions will remain intact, but the extras will not be present.
- You still need to conduct inventory counts by hand, which leaves the potential of human error being present in the counts you receive.
- You will also need to then input this data by hand, in most cases, unless you secure a system that acquires its data via barcode scanning. Doing so would then lessen the chances of human error, but not eradicate them.
This kind of system, as you can see, is still a supremely solid option for those looking to get into the world of digital inventory programs. It is also good for those who do not need a high range of reporting features, or any bells and whistles that some of the more expensive, perpetual systems come equipped with. Ultimately, it's suggested that this kind of system is ideal for small to medium-sized businesses, but as your company continues to grow, you may want to consider inventory programs that are better equipped to handle the size.
2. Perpetual Inventory Programs
Perpetual inventory programs, by contrast, are a much more complex kind of program. This is not to say that they're complicated to use, but rather, they are a system with more going on internally to produce the range and quality of features that they are notorious for offering. They offer some of the strongest values in the industry and are worth considering, so long as their offerings meet the needs of your business.
Pros to Perpetual Inventory Programs
- Real-time inventory counts, this is the big one, for sure. In essence, the thing that sets a perpetual inventory system apart from a periodic one is their ability to keep constant track of each item in your inventory as it is used.
- Real-time inventory counts are typically done through barcode scanning which automatically sends a message to the system that the item has been, or is about to be, used.
- More importantly, real-time inventory counts eliminate the need for an employee to conduct an inventory count by hand. This feature drastically reduces any error that can be introduced in the process.
- It also eliminates the need to enter the inventory information into the system, another potential spot where error can be introduced.
- Beyond all of this, many perpetual inventory programs are compatible with ordering programs, which allows for the inventory data to be immediately transferred over to them and thus your ordering information will also always be accurate and up-to-date.
- All of the above save you significant time and energy, as a perpetual inventory program essentially eliminates a laborious task from the list of things to be done.
Cons of Perpetual Inventory Programs
- You do still need to rely on employees to do the inventory scanning as they go to use items, though this is infinitely less overwhelming to having it be done all at once.
- Should anything happen with the scanners, the inventory will still need to be conducted by hand.
- It is unclear how liquids, and other non-whole ingredients (such as sugar, flour, rice, etc.), are to be measured regarding usage. This will likely depend on the exact system that you choose to go with, but it is worth keeping in mind.
It is worth noting that, because of the perpetual nature of these systems, they can also be set up to send alerts whenever supplies of ingredients begin to run low, which can be seriously beneficial for situations where you are running low in between ordering cycles.
Which Inventory Program Is Right for Me?
We touched on this a bit in each program type's section, but here is where we're going to break down which type of system is best for which type of business.
These inventory programs are right for you and your business under a few conditions.
Size - How large is your business? I don't mean regarding physical building size, but rather regarding scale. Are you a new business just starting out, or one that has been around a little while but isn't doing insane levels of business yet? If either applies, then this is probably a good place for you to start.
Scale of Service - How busy does your business get? For businesses with some dead days during the week, it may be more beneficial to leave the actual counting process open as a task that employees can complete during low-traffic days. Doing so gives everyone a reason to turn up for their shift, which keeps them getting paid and you with completed work to justify said payments.
Amount of Inventory - This is probably one of the biggest motivators for inventory management programs. If you don't move a lot of inventory, meaning you don't order insane amounts of ingredients every cycle to keep up with massive demand, then a periodic inventory system may work for you.
Perpetual inventory programs are likely best suited for businesses with the qualities below.
Size - If your business has been around for a while, has a pretty high level of traffic, and generally would be considered large-scale, a franchise, or chain, then perpetual inventory programs are likely the right choice for you.
Scale of Service - If you are always busy or at least spend a majority of your business hours as such, then you're going to want to keep up with the constant flow of ingredients from storage to the kitchen, a task best suited for perpetual inventory programs.
Amount of Inventory - If you are constantly ordering large quantities of supplies every ordering cycle, then you are going to need an inventory system that can keep track of the numbers with the utmost accuracy and efficiency. This is the specialty of perpetual inventory programs.
Phew! That's a lot of information. Now, it's worth noting that this is by no means the complete ins and outs of absolutely everything you need to know about inventory programs and their relationship with your business.
However, we hope that we've captured the essence of what makes inventory programs so insanely beneficial to businesses everywhere. More importantly, if you've been on the fence about one of these systems, then we hope we've helped to show you just how much value they can offer.
If you're still interested in learning more about efficient inventory and ordering practices, then take a look at the How to Choose the Best Inventory Control Software for Small Businesses article we've written on some of the inventory technology that small and medium-sized businesses are employing to make serious gains in their growth.