5 Simple Inventory Management Software Solutions for Small & Mid-size Businesses
What is Inventory Management?
Inventory management is the process by which you track the amount of product you have in your warehouse, with your retailers and distributors, or stocked in your kitchen. Having this information is necessary to ensure that you have the right amount of stock available at the right place, at the right time. Inventory management tracks inventory right from the time it is purchased, till the time it is served up to customers. Once sold, inventory turns into revenue. However, before it sells, it ties up cash. So, too much stock reduces cash flow.
As a restaurant owner, you should be able to gain inventory updates at a glance. This will help you make quick and efficient decisions for your company. To ensure this, an effective inventory management system must be in place.
The three types of inventory management include-
Barcodes use alphanumeric codes to identify every product sold. These contain information like the weight of the product, amount of each item in stock, location of storage, and so on. Barcode systems update inventory levels automatically when employees scan them with a barcode scanner or mobile device that has a scanning software installed.
This method tracks the closing inventory value to be ledgered at the end of a financial year.
This links radio frequency and barcodes with the inventory, point of sale, and manufacturing systems to track inventory movement in real time. It is also termed as perpetual inventory management.
Why is Effective Inventory Management Good for Business?
Effective inventory management helps you keep track of your inventory so that you always have enough supply to meet customer demands. It tells you how to run your business, serve your customers better and increase sales.
With a strategic plan in place, businesses can benefit in the following ways-
- Accurate order requirement
An effective inventory management system will help you track your inventory stored at multiple locations. It will provide you with stock alerts so that you don't overstock or keep obsolete items on the shelves for long.
- Better inventory planning
Imagine you have high demand but not enough stock to meet it. Sounds like a nightmare, right? Make sure you never encounter an eventuality like this with a precise inventory management system, which allows managers to replenish goods only when needed. Such a system can save both, space and money.
- Organised warehouse
An organized warehouse depends on efficient inventory software. Good warehouse management will help a company plan for the present and future effectively. Not to mention, it allows you to be cost-effective too.
By examining data trends from well-performing equities, inventory management can provide accurate demand forecasts. This boosts your revenue, and frees up your cash flow.
- Cash flow
Inventory management helps businesses manage their cash flow. By knowing exactly how much inventory is needed, you can free up funds for reinvestment in other areas of the company.
- Preventing dead stock
Inventory management helps reduce the chances of wastage and spoilage.
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What is Inventory Management Software?
Inventory management software is a set of business programs that keeps track of, manage, and organize product sales, material purchases, and other manufacturing activities.
An inventory management system for restaurants is not a luxury, but a necessity. It simplifies inventory tracking and helps a business control its costs.
Medium and small businesses can now employ systems based on barcodes or radio-frequency identification (RFID) to know when their products have been shipped, when they arrive, and where raw materials are located.
A simple inventory management software can help-
- Increase productivity
- Provide insights into your products
- Save up on costs
- Improve customer service
- Automate inventory management
- Get control of food costs
- Minimize wastage
- Automate supply chain
- Streamline operations
- Reduce human error
How Does Inventory Management Software Work?
Inventory management doesn't simply imply the counting of items on a shelf, but comprehending how the quantity of products affects your profit margin. For crucial restaurant operations, a close and seamless connection between your restaurant inventory management software, restaurant accounting software, and POS system is critical.
1. Covers all costs
It covers everything, from transferring to invoicing and ordering per month. You can utilize one platform to automate invoice uploads, record stock counts, and auto-update item prices if your restaurant inventory management solution is integrated with your restaurant accounting platform. You can speed up tracking from sheet to the shelf and ensure you're working with real time pricing data by collecting important data in one location automatically.
2. Map recipes
You can better understand and control your food expenditure by mapping your recipes to the menu items on your POS system. Recipe costing deconstructs menu items down to the smallest detail, such as portion size and specific components, and calculates them to the penny.
Manually calculating the costs of menu items is inefficient and time-consuming. The amount of each food component needed determines the cost of the recipe. However, keeping track of this by hand on an inventory list is problematic. The better way is to automatically track the yield from each food item on your menu by mapping inventory against sales with a restaurant inventory management system coupled with your accounting and POS system.
3. Engineering your menu
Recipe costing and sales mix polls from your POS system determine your menu engineering. Menu engineering increases profits by helping you identify your most profitable menu items so that you can persuade customers to purchase what you desire to sell.
Menu engineering allows you to make data-driven decisions about which items are popular and which are profitable. Based on food pricing, you can determine whether menu items are overpriced or underpriced and make adjustments to quantities or recipe ingredients. You can take advantage of menu changes to push items with a high-profit margin, but low sales volume.
What Features do the Best Inventory Software Have?
The software you choose must have all the features that are required for smooth inventory management operations.
- Barcode scanning
Inventory management software must be able to interact with barcode scanners for rapid product identification and labeling, making it simple to identify and monitor your products.
- Real time stock alerts
You must be able to receive alerts about your stock in real time. This will help you place an order or clear extra stock immediately.
- Multilocation management
It must be able to manage multiple warehouses and point of sale locations, all which should be integrated into your management system.
- Inventory optimization and stock returns handling
Stock up the right amount of inventory for each product. You can manage returns efficiently through automation.
- Purchase order records
Organize purchase order records into a single display. You can quickly determine which products are in high demand, both year-round and seasonally, and plan accordingly to fulfill your customers' needs.
- Mobile app
The software must have a mobile app to allow you to track inventory, scan barcodes, and view customers' information from anywhere and on the go.
- Managing reports
Reports like stock levels, sales performance, and profitability ratios provide you with a detailed and accurate picture of your restaurant's performance, finances, and everyday operations. You can improve the profitability and efficiency of your restaurant by evaluating this data.
Did You Know?: According to the Pareto Principle, only 20% of your entire inventory accounts for 80% of overall inventory consumption.
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5 Best Inventory Management Software Solutions for Restaurants
This is a food, beverage, alcohol, and COGS management app that allows you to keep track of received goods in the store on a daily, weekly or monthly basis. It makes inventory counts easy and mobile, cutting the time it takes to complete them by half.
Zip Inventory's mobile app has a simple and easy to use interface. It takes the guesswork out of ordering by analyzing your sales data, ingredient usage, on-hand inventory levels, and supplier delivery timetables to produce accurate insights and reports in real time. You can avail of a free trial by downloading the app from the Hubworks app store.
This cloud based inventory management system provides detailed inventory reports to help you keep track of your inventory in real time. It enables inventory tracking down to the ingredient level. When you sell a menu item, Upserve automatically subtracts the used quantity of each component from that recipe from your inventory. You can then issue purchase orders to restock items with a simple click.
The Zoho inventory management app helps monitor your shipments and packages, tracks payments, and manages invoices and bills. You can control your stock at different warehouses and godowns with the app and generate warehouse-specific reports. Zoho Books allows you to integrate with various sellers and receive online payments through payment gateways. It is compatible with different barcode scanners. In addition to tracking inventory, you'll receive reports on your inventory valuation, vendor payments, and inventory expiry dates.
Quickbooks Online allows you to watch your inventory in real time and automatically update your stock figures. You don't have to worry about remembering to reorder ingredients because the tool will notify you when it's time to do so. It will also alert you to popular menu items, overall sales, and taxes.
This cloud based system is easy to use and can make complex tasks like recipe costing simple. It comes with low-stock alerts that inform you about dipping inventory levels. Midsize and small businesses can manage vendors and purchase orders efficiently with this software.
Inventory Management FAQs
Q. How do inventory management software and warehouse management systems differ?
A. A warehouse management system (WMS) is designed to handle the movement and storage of materials, and transactions within a warehouse. Inventory management software, on the other hand, optimizes which products are to be kept in store and in what amounts. Inventory management systems optimize inventory safety stock, reordering points, and economic order quantities (EOQ) to guarantee that future demand is met as planned.
Q. How can I track my inventory based on location and expiry dates?
A. You just need to feed these parameters into the system and assign them to the relevant products. Based on this, you can process orders as per their expiry dates, location, and so on.
Q. Does inventory management software help maintain accounts and financial status?
A. Yes, it allows you to do so. You can monitor your profit and loss and have a clear idea about your capital tied up in inventory.