4 Ways an Inventory Management System Drives Profitability

inventory management system

Nothing is more frustrating to a customer than placing an order online only to find out after the fact that it’s out of stock. Retailers can lose nearly half of intended purchases when customers encounter stockouts, according to the Harvard Business Review. Those abandoned purchases translate into losses of about 4% of overall sales for a typical retailer.

Inventory management is more than knowing how much of something you have on the shelf; it is the tracking and organizing of goods from supplier, through the manufacturing process and into customers’ hands. 

Inadequate inventory management directly affects the customer experience. Without a real-time understanding of inventory on-hand, and its status, businesses are unable to effectively plan and execute on customer orders.

According to one report, 43% of small businesses either track inventory manually or don’t track it at all.

By relying on manual, paper-based inventory practices, businesses suffer from:

  • Inaccurate, time consuming inventory reporting
  • Inefficient inventory management, resulting in excess products in one location while out of stock in another
  • Inaccurate planning, resulting in increased discounting and write-offs of excess, slow-moving and obsolete inventory
  • Unnecessary handling that increases the cost of goods sold (COGS)
  • Stockouts that lead to lost sales from customers going to a competitor
  • Inability to track and trace the product from supplier to customer order

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Managing Inventory Automatically with Software

Automating manual processes associated with managing inventory and having the insight to better forecast and utilize inventory improves inventory management across these four areas:

  • Multi-location

  • Replenishment

  • Cycle Counting

  • Traceability

Multi-location

If you stock, sell and fulfill items in more than one location, it is essential to have visibility into stock levels across all locations to optimize inventory usage and get products to customers in the quickest and most profitable way. Inventory management software allows you to set pre-defined parameters such as whole order inventory availability and location, which sends orders to the location that has all items available, which eliminates multiple shipments for a single order and increased shipping charges. Inventory management software can also help maximize inventory sell through and minimize out of stocks.

In fact, with NetSuite Inventory Management, stores can be set up as a location, providing a true enterprise-wide view of inventory. With visibility into inventory across all locations, you can proactively monitor stock levels and sell through, transferring inventory between locations as necessary to ensure inventory availability and minimize obsolete inventory. Sales associates are empowered to save the sale in stockout situations with access to enterprise-wide inventory availability, enabling them to transfer, hold or ship items directly to the customer.

Businesses can also minimize the amount of inventory required to be on hand by executing a cross-channel fulfillment strategy, easily fulfilling online orders from store. With NetSuite, multi-location inventory management also allows you to analyze and understand seasonal and location specific trends.

NetSuite Inventory Management

Companies that ditch the pen and paper for NetSuite’s Inventory Management solution gain a better understanding of inventory and how it’s allocated. Businesses can confidently rely on a demand-based production model, keep less inventory on hand, and decrease overhead costs associated with storage, ultimately increasing their bottom line.

Learn more about how to pick the right inventory management system for your business. Contact Nuage for a free product tour today!


Source: from the experts at NetSuite

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