10 Reasons Why You Need Automated Inventory Management and Reporting
Inventory count accuracy was one of the top five priorities for distribution centers in 2019. To keep pace with the ever-tightening demand for accurate inventory counts, warehouses and retailers need automation. Automated inventory monitoring is more reliable than manual methods, and it frees up valuable time for small business owners and logistics managers.
So, what is an automated inventory system? It’s a software application that tracks your current inventory levels without you having to do so yourself. It uses sales and purchase orders to add and subtract from stock. For even more accuracy, it can be integrated with barcode-enabled physical stock takes. It updates in real-time, generates automatic reports and syncs with other technology to increase automation throughout your company.
Small stores have the potential to save up to $6,000 on inventory-related labor through automation. Large stores carrying 60,000 stock keeping units (SKU) or more can save up to $72,000 per year. Automated inventory management technology delivers a positive ROI to warehouses, e-commerce stores and retailers. The right inventory tracking software can offer benefits throughout the entire company. Here are 10 advantages your business can gain through stock management automation.
1. Maximize Scalability
What works for a small, single-location operation doesn’t always work for a large one. Many of the ad-hoc processes a small business develops become inefficient even at the mid-sized level. Manually entering an inventory spreadsheet is one of those processes.
Scalable processes, like automated inventory management, are manageable whether you make 50 sales a week or 1,000. Through an automated sales and inventory system, sales numbers and current stock levels update with a lightning-fast algorithm. As your business gets more complicated, it doesn’t result in more time spent on inventory management. When comparing manual vs. automated inventory systems, manual processes cannot grow the same way.
Finale Inventory is a highly scalable inventory management tool. It can support up to 1.5 million items and 800,000 orders per month. The cloud-based software can allow many staff members to update information at once. That means that as your business grows, your monthly sales increase and more products enter your catalog, you’ll be able to track everything with ease.
We also offer multi-warehouse capabilities, meaning you can streamline operations across several locations. Whether you own a small business or a thriving e-commerce store, Finale Inventory has the tools you need to grow and the architecture to support even Fortune 500 companies.
2. Increase Visibility
It’s no secret that inventory is constantly shifting, even after you complete a manual inventory count. The second you make your next sale, a manual inventory spreadsheet becomes inaccurate.
An automated inventory management system factors in sales automatically. As soon as a purchase goes through, the live count of available inventory lowers by the amount bought, even while it’s still in the warehouse. Then, when the item gets shipped out, the number updates again, removing the items from the stock on-hand.
When your warehouse purchases new stock, the order gets added to your availability as soon as it is placed. Then, when the items arrive, they can be scanned in and marked as in-stock. These features give your team much more visibility for your numbers. While manual stock counts can only tell you what you have on your shelves, inventory tracking shows you how much you have available.
For example, if you have 50 T-shirts in the warehouse and a customer just placed an order for 15, you know that your availability is 35 T-shirts. You also know you won’t be able to fulfill an order for 40 T-shirts, despite having 50 on your shelves. However, if you can see that another 30 T-shirts are scheduled for delivery tomorrow, you don’t have to miss out on the sales opportunity.
This visibility can be crucial, especially when working with small margins of safety stock. You’re less likely to oversell or undersell with this 360-degree view of your inbound and outbound inventory.
3. Decrease Human Error
In the manual inventory tracking process, every step it takes to update a spreadsheet has the potential for human error. Here are just a few of the ways your data can get distorted:
- Counting: Many scenarios can cause a staff member to miscount inventory. If a product or a box gets missed, the recorded number might be too low. If items get counted twice, the amount will be too high. A distraction can cause an employee to forget where they left off. Plus, poor sleep or stress can increase the likelihood of errors.
- Writing or recording data: Next, an employee has to write down the number. Messy handwriting is a primary culprit. When it gets entered into a spreadsheet, it’s easy to misread or mistype this handwritten information. Data entry is a repetitive task and the more numbers you have to input, the more chances for typos and omissions.
- Unsaved documents: After the spreadsheet gets edited, the editor must hit save. It’s easy to forget this step. It can become an even bigger problem when several people are updating a single document and the program only saves some of the changes.
- Applying formulas: One advantage of spreadsheets is that they can do math automatically. However, getting the output you want depends on your ability to master formulas. Adding cells together seems straightforward until you miss a row. Applying more complex equations gets even trickier. Of course, if there’s an error in the data before it gets calculated, the number of errors increases.
The potential causes for human error are compounded because errors can be incredibly hard to detect. Studies show that the average person can only detect about 60% of spreadsheet errors. What makes an error so hard to root out? Often, mistakes are within a small range of the actual number. For example, if the exact count of blue coffee mugs in the warehouse is 38, it probably won’t seem suspicious if the amount recorded is 36 or 40. Errors can also go undetected due to the tedious process of double-checking numbers.
Automation has the power to remove most of these human errors. Finale Inventory updates based on the real number of items entering and leaving the warehouse. Plus, manual counts can happen more quickly and accurately with barcode readers.
4. Streamline Inventory Accounting
Anyone who deals with inventory knows that a company’s assets get tied up in stock. Moving inventory with the highest possible profit margin is the primary goal.
Calculating inventory’s value is a challenge because the exact worth can change. The longer an item stays unsold in the warehouse, the more it costs to store it. When an item goes out of season, any leftover stock depreciates significantly. Whenever a product gets purchased from a supplier at a higher rate or sold at a discounted price, it changes the profit margins on an item.
Estimating your inventory’s value correctly is crucial to understanding your company’s financial health. Seeing the margins on each product can help you cut costs and increase profits. Accountants also need to understand the Cost of Goods Sold (COGS) to calculate profit. This calculation involves taking the average cost of the inventory you purchase and factoring your vendors’ shifting prices and storage costs.
It’s also crucial to have an accurate number for tax purposes and to provide to investors. Understating the value of inventory can cause a company to overstate its profits. Overestimating your inventory’s worth can also make a company appear more valuable than it is.
Finale Inventory makes it easy to achieve inventory tracking for accounting purposes. Our software will calculate your average costing and provide a current total value of unsold inventory. It can also sync with accounting software like QuickBooks to give your accounting team all the information they need. Since most accounting software isn’t built for real-time inventory tracking, integrating it with Finale Inventory lets you take advantage of inventory accounting.
5. Organize Existing Processes
Some businesses don’t have standardized processes for many of their daily operations. You might replenish your stock in different amounts from week to week or month to month based on your own predictions. When it comes to picking orders, warehouse workers might only be able to pack one shipment at a time and move through the warehouse inefficiently.
Automated inventory software, like Finale Inventory, is one hub for all your inventory and warehouse operations. With so many features and an algorithm tuned to warehouse efficiency, you can organize and standardize your existing processes.
First, automation decreases the need for manual inventory counts, since numbers update automatically. It also organizes this information and tracks it over time. There’s no need to arrange your spreadsheets by product category or save copies by date.
When it comes time for a physical stock take, the process can be automated using barcodes. As items get scanned, they get logged into the system, which counts them instantaneously. It eliminates most of the steps in a manual stock count, so the process is quick and repeatable.
Sophisticated automation can even control your reordering procedures. Finale Inventory will calculate dynamic reorder reports, factoring in sales velocity, lead times and desired safety stock. You’ll get a notification sent straight to your inbox when it’s time to replenish. The numbers you need for restocking generate automatically. So, you can create and send auto-filled purchase orders to suppliers in just a few clicks.
Automated inventory control with barcoding can even systematize picking and packing operations. Finale Inventory’s barcode readers automatically guide warehouse runners throughout the facility in the most efficient way with the directed picking feature. You can use wave or batch picking for a more orderly and time-saving process.
6. Integrate Disparate Systems
Automated inventory software collects all the data you need in one place. It also integrates with other business software, pushing data to the right location. Accounting software is just one of the many integrations available.
With many of the integrations available for both e-commerce and brick-and-mortar sales, your business can connect all systems to achieve omnichannel selling. Finale Inventory can connect directly to e-commerce marketplaces like Amazon, eBay and Etsy. Your inventory data will update any time a customer buys from any of your online marketplaces.
Finale Inventory will push updated stock counts to all your selling platforms, so your customers can see how many products are in stock as they place items in their carts. If something does go out of stock, your selling platforms will stop taking orders, so you won’t be faced with disappointed customers. Of course, when you’re managing many selling channels, it can often make sense to work alongside a channel manager like Channel Advisor or SureDone. Finale Inventory integrates with several channel managers as well as many shopping cart services.
Another essential software for e-retailers is shipping automation. Finale Inventory integrates with shipping platforms like ShippingEasy and ShipStation to track orders once they ship. As selling platforms update your availability, shipping software can adjust your stock on-hand.
For sellers that have a physical store location, Finale Inventory offers quick and painless POS system integrations. Whether you use Lightspeed, Square or another platform, Finale Inventory can help you track inventory across several stores or a single location. We can even let you or your warehouse know when it’s time to restock.
The best part about most of these integrations is they are as simple as providing your login credentials to Finale Inventory. We can even design custom integrations for whatever programs you use. With any combination, all the data you need will be up-to-date in every system you use.
7. Unify Inventory Operations Data
An inventory management system provides a centralized location for all your operations data. Chances are, you need a lot of data to keep your daily business activities running smoothly. An updated inventory count is just the beginning. You need to know what inventory you’re expecting so you can receive it and plan a storage location. You also need to know how much stock you expect to ship out, so you know how many workers to schedule each day.
Further, you probably need a lot of data stored about each of the products in your inventory. For example, a lack of SKU weight and dimensional information in the system is a leading issue for 23% of warehouses and distribution centers. Not knowing this crucial information can lead to inefficient and bottlenecked operations.
If a worker is given an order to pick and pack without knowing that the combined weight will be over 200 pounds, they may not get the necessary equipment to carry it. Preparing a shipment without knowing how much it weighs or how much space it will need is impossible. Finale Inventory can store all this product information and automatically push it out when required to help operations run smoothly.
You might also need to track locations and sublocations throughout the warehouse. Maybe you store items in several areas throughout the warehouse to make picking more efficient. Or, perhaps item locations are always changing. If you run several warehouses, you might transfer stock from one place to another as needed. Having inventory counts update across locations is crucial to keep all operations, from restocking to order picking, up and running.
8. Save Time and Money
In general, automation with inventory tracking software replaces time-intensive, repetitive tasks. Without automation, manual stock counts are the primary way a company can track inventory. With multiple steps required, the process is time-consuming. Plus, many businesses suspend operations during physical stock takes, which wastes time.
If you have many selling channels, it takes time to pull sales reports and combine them so you can draw conclusions. Automation can pull this data in real time and simultaneously update all channels faster than it would take to do so by hand.
Since automated inventory management software produces fewer errors, it saves your customer service department time, too.
As the saying goes, time is money. Anything that saves your business time reduces labor costs. Besides time-related savings, your company can also save money by preventing overstocks. According to recent reports, 87% of retail professionals say inaccurate inventory counts cause more lost revenue than theft. Finale Inventory’s sophisticated technology has a high degree of accuracy for sales forecasting. It calculates restocks based on these predictions, so your company can invest in less stock while still meeting demand. The less unsold inventory your warehouse keeps, the more money you can save.
9. Get Real-Time Information When You Need It
Finale Inventory can provide more than real-time data. It can send you data as soon as you need it, so you’re always in the know. For example, if you track product locations, barcode readers will provide this information during item picking. Your picking team will know the correct bin to retrieve merchandise when they begin picking for a sales order.
Our program also offers automated email reporting for whatever reports you want. You can schedule reports as often as you like and even send them to your colleagues or vendors. For example, you can email a daily shipment summary to your transportation and shipping partner without ever thinking about it. You can also set up a low-stock alert to send to one of your suppliers so they can stay up-to-date on your reordering needs. Any data you want to see will arrive in your inbox at the interval of your choosing.
10. Boost Customer Satisfaction
Automation streamlines operations in many ways. Many companies primarily see automation as a way to stay efficient behind the scenes. Automation makes your job easier, and it can also have tangible benefits to the consumer. By saving money on operational costs, you can pass savings on to the consumer to win more sales.
Up-to-date stock information can also be a helpful, value-adding service for online shoppers. If an item goes out of stock, a customer can see it instantly and won’t be able to check out. They know they won’t be able to receive an order and can save themselves the headache of a back order.
When it comes to click and collect services, a customer can see that an item is in-stock before they check out. So, they know when they drive out to your store, the item will be in-stock and ready for pickup. Even messages like “only three left in stock” can help a customer make a buying decision. They know if they don’t order soon, they might not be able to get the product.
Inventory automation will also prevent understocks in the first place. When something a customer wants is out of stock, it can be a major disappointment. Finding out about it after you make a purchase is even worse. You can prevent this from even happening with an automated inventory control system. You’ll receive instant alerts when stock is low, and the program can generate purchase orders to speed up restocking. Finale Inventory can let you know exactly when to reorder, estimated by your sales velocity and your vendor’s lead time.
You’ll be sure to always have the products your customers want when they want them.
How to Automate Your Inventory Management With Finale Inventory
Automating your inventory with Finale Inventory offers many benefits. Our cloud-based, easy-to-implement technology makes it simple to get started with automation in as little as a few days. We offer inventory automation tools to e-commerce businesses, warehouses and other companies. We also provide free consulting and training with any paid plan, even during the trial period. You’ll learn how to automate your inventory from our dedicated customer service managers. With low-commitment, month-to-month plans and no startup costs, you can begin automating at any time.
Contact Us for a Free Trial or Real-Time Demo
If you’re ready to automate your inventory management process and make it easier and more efficient, the next step is to reach out to us. You can schedule a product demo tailored to the particular tracking and automation features you want to implement. You can even try our services free for 14 days to see if they have the automation capabilities you need.