There’s a chance this article won’t benefit you. Really. It’s a possibility. And, I don’t want to waste your time if it’s not going to help you out. There’s one quick way to tell. Ask yourself the following question: How would you honestly assess your company’s inventory control? If the answer is “tight, efficient, and cost-effective,” you can safely move on. Congratulations. Self-check complete. You and your inventory management are good to go! If the answer on the other hand is, “loose, inefficient, and expensive,” stay tuned. This article is for you.
Exploring the inventory software opportunity
Let’s run one more self-check to get started. Does the phrase, “We can get by without it,” sound familiar? No reason to feel bad if it does. “We can get by without it,” is a fairly irresistible line of thinking when it comes to evaluating software features. It’s attractive precisely because it’s generally true. There are of course always ways to “get by” without all kinds of features. But it’s a bit of a red herring, though, isn’t it? The question really isn’t, “Can we get by without it?” The questions should be, “Is it to our business advantage to do without?”
When it comes to inventory software, there’s actually quite a large difference in the quality of the solutions on the market. Many entry level packages offer some basic inventory functionality, but can fail to deliver in key areas. Often a solution which worked well as a start-up, or when there were fewer records to manage, simply becomes inefficient and unwieldy with company growth.
Inventory options for your specific needs
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The good news is that there are lots of inventory solutions on the market. Industry niche requirements are getting addressed more specifically every day. Software developers are continually improving integration capabilities with other business systems, opening buying options. Additionally, the cost of advanced features is coming down. What may have looked cost prohibitive in the past, could well be an ROI opportunity today.
The first step to solving your inventory issues is familiarizing yourself with the options available to address them. Read on to find out about a variety of inventory control features, typically not found in lower end solutions, which could provide you the functionality you need to get a tighter grip on your inventory management.
Eight inventory features you might be able to live without, but shouldn’t
1. Advanced Costing
The net income your company reports is dependent on your inventory cost valuation method. Any program will support average costing, but LIFO or FIFO costing may be more advantageous when there is an inflationary or deflationary trend for material costs.
Impact: The amount of net income your company generates is affected by your inventory costing method. Advanced costing methods can have a significant impact on the amount of money your company owes at tax time.
2. Bar-Coding & RFID
Bar-coding and RFID technologies provide increasingly more passive ways to handle inventory counts. Bar-coding can be enabled with bar-code printing, scanning equipment, and a compatible system. With RFID, once items are tagged, they can be scanned entirely passively and at a distance by RFID reader equipment.
Impact: Manually recording and entering hand counts of inventory items is time-intensive and error prone. Bar-coding and RFID can significantly decrease the labor costs associated with inventory management, while increasing the reliability of inventory counts.
3. Graphical reports
A table based format of raw inventory data can be difficult to interpret quickly. It’s particularly ill-suited to presenting information mapped over time. Graphical reports utilize charts and graphs to provide impactful information about inventory.
Impact: Decision makers looking for a way to spot trends and problem areas in stock levels can much more quickly glean key business info from graphical information displays.
4. Movement histories
Most inventory programs will have a field to identify the location of a given inventory item. However, many lower-end solutions simply don’t have the ability to adequately record an item’s movement history.
Impact: Recording inventory histories provides a way to more effectively track down inventory issues and their causes, such as lost items, theft, and stock damage.
5. Customizable fields
The need to record custom inventory information is very common. However, every company is different and the nature of the data that needs to be tracked can vary. The ability to add custom fields is often a critical necessity of an effective inventory program. Flexibility in determining data types and searchability of custom fields are hallmarks of inventory systems well-adapted to the challenge of tracking custom inventory data.
Impact: In a system lacking custom fields, it’s very common to rely on additional manual data tracking or spreadsheets. This kind of approach is both time-intensive and error-prone. It’s also creates difficulty in providing multi-user access. Custom fields provide the benefits of a single, comprehensive inventory repository.
6. Landed cost management
The ability to calculate and account for landed costs provides a much more accurate picture of your inventory’s true cost. Landed costs not only include your cost from the supplier, but other costs related to the acquisition (for example, brokerage fees, shipping, tariffs, taxes, insurance, handling, and so forth).
Impact: Calculating landed costs and getting them properly assigned to the right inventory manually is time-intensive. Additionally, without calculating landing costing you have a much less accurate picture of the profitability of individual product sales. Comprehensive software management of landing cost calculation and application, saves time and can help you more effectively focus on profitable product sales.
7. Bill of materials & kitting
If your items are sometimes sold in assembled kits, you already know that it can represent a challenge. Basic bill of materials or kitting functionality helps streamline a number of tasks related to selling kitted inventory, including managing for simple assemblies, handling price discounting, recording packaging specifications, and properly tracking inventory count subtractions.
Impact: Programs designed for kitting can streamline a lot of the data management related to combining discrete items as a sale unit. Additionally, the flexibility to create kitted offerings can help you increase your available product offerings to customers.
8. Volume pricing and discounting
A simple one price fits all approach to pricing inventory can be limiting. The ability to calculate and apply volume pricing adjustments can offer greater flexibility and a way to win the business of loyal or larger customers. Advanced inventory modules will provide the capabilities to automatically calculate prices based on rules you specify.
Impact: With a limited set of inventory, managing volume pricing and discounting can be fairly simple. As the breadth of your offerings and your transaction volumes increase it is one more drag on efficiency. Support for volume discounting provides a mechanism both to incent customers to place larger orders and a way to adapt to economies of scale by adjusting profit margins in a way that takes into account the overall revenue opportunity.