What Is Inventory Management System?

What Is Inventory Management System?
source: blog.capterra.com

An inventory management system is responsible for the effective and efficient control of goods sold in a store. The system tracks how much inventory is available, where it’s located in the store and what prices are used to sell the items. When the products go on sale or become clearance items and when new shipments arrive.

Inventory Management System helps you in:

  1. Tracking the inventory status by keeping track of where each item is located in each store. This system also keeps track of how much inventory remains in the warehouse to ensure the correct amount is ordered for resale when needed.
  2. It helps you make up one’s mind whether to order more or less of any product. If you suspect that a hot seller is about to run out, you can increase your orders and save yourself from empty shelves and lost sales.
  3. The system also ensures the safety of employees and customers by keeping track of which items are located where in the store. (For example: Making sure crates of eggs are not left near the back of a grocery store.)
  4. This system allows you to track which items are selling faster than others, leading to more efficient ordering and stocking processes.
  5. Many stores also use inventory management to save time during periodic inventory counts required by local or state governments for tax purposes.

What are the types of inventory management systems?

There are three types of inventory management systems:

1. Just In Time (JIT)

This system ensures that a store does not have too much or too little inventory. The goal is to keep the minimum amount of items necessary in stock while maximizing sales. Manufacturers often use JIT methods, and it has become popular for stores as well.

2. Manual

This system is often found in smaller stores. The owner uses their memory to determine how much inventory remains. Unfortunately, this system does not provide accurate results and can lead to lost sales if the owner fails to order enough of a product that sells quickly.

 3. Computerized

The computerized version works by scanning barcodes of products every time a customer purchases an item. The system automatically orders more of the product, kept in storage or a nearby warehouse.

This system ensures that the store never runs out of any product.

Is Inventory Management System effective?

Yes, Inventory management systems are most effective when they are used correctly. A sound inventory management system will keep track of all items in a store or warehouse and then give employees information on where to find them to be restocked for sale.

Not only does the system keep track of which items are selling and which need to be restocked, but it also shows sales trends in a particular department. This information is useful when ordering products for resale.

Conclusion

An inventory management system helps a company keep track of its inventory, leading to more efficient ordering and stocking processes. Many companies also use inventory management to save time during periodic inventory counts required by local or state governments for tax purposes. A sound inventory management system will ensure that the store never runs out of any product.

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