One of the technology trends in this decade refers to the applying Internet of Things (IoT) in inventory management. Here are what you need to know.
Business today is a big game attracting enormous numbers of players. The rapid growth of logistics and international trade induces several intermediate phases before the product coming to end customers’ hands. As a result, the concept of warehouse management plays a vital role in the value chain, where the products are stored and controlled before selling to consumers.
Obviously, the concept of inventory commonly takes place in the business of physical products, retails, or wholesale, for example. Along with the expansion of the e-commerce market and the high demand for online purchasing, firms need to adjust stocks or inventory status in real-time. It presents customers exactly what can purchase, and how many volumes compatible with the products are available. Consequently, inventory management software or warehouse control software are indispensable tools for doing e-commerce business.
The market size for inventory management software is significantly increased from roundly US$ 2.3 billion in 2019 to expectedly US$ 4 billion in 2026. According to EasyPost, the predicted growth based on the proven positive impact of an inventory management system.
In fact, the automatic warehouse control system boosts approximately 25% of productivity on average, while the effective use of stock reportedly rises by at least 15%. To help you navigate the brief details, we specify here with the core information you need to know about e-commerce inventory management software.
Understanding Inventory manage software term
Inventory management refers to the process of controlling the flow of products to and from the warehouses, including adding stock in and subtract orders out. On the other hand, inventory management also supports multi-warehouses control, indicated through the product moving among different warehouse locations.
In practice, the tracking of inventory directly affects business performances. In which, useful tracking seemingly carries more extra profit due to resource optimization, while poor performance of inventory management tends to be a predictive signal of business bankruptcy.
What is Inventory management
Ecommerce inventory software works as a digital form of the tracking system, which offers tools to tracks and manages inventory’s status. Custom inventory management software can be developed to meet personalized requirements. Basically, inventory software offers three main tasks: tracking inventory levels in real-time, prevent shortages or overstocking, and optimizing warehouse usage.
Expected features In a Warehouse Management software
- Tracking location, origin, and volume of products: warehouse control software provides location details of the product even when it is in delivery. Besides, you can manage the product quantity as well as where its storage.
- Visual dashboard to centralize overall information
- Integrating with “ship from warehouse” system
- Cloud-based features enable flexible devices and multi-location management.
- Barcode inventory system and tracking by serial number
- Suppliers management and order entry
- Report and analytic: keep up with auditing
When you should develop an inventory management software
- The Food and beverage company that sells fresh food or short shelf-life products: optimizing inventory management products help companies reduce waste of over-date expired goods. Inventory management software will send notifications for Near-Expired Food and Beverage Products to be sal off.
- Retailers or wholesalers who need to deal with massive volumes of products, various types of items, or series of warehouses in different locations.
- Companies provide seasonal products, which need accurate timetable in managing inventory status.
- Intermediates who need to sync multi-sale channels. Several businesses decide to add more sales channels to maximize the potential to approach customers. Besides, it causes difficulties in managing processes, inventory included. The inventory control system provides tools to manage all in one software, which enhances efficiency and productivity.
Related article: Top IoT solution in Food and beverage industry
Hidden truths behind applying warehouse management software in e-commerce
We generate here with four highlight effects of inventory management software, which commonly contribute to the rapid growth of an e-commerce business.
1. Avoid overstocking and supply shortage
Inventory management software will not help you add or remove items physically. It will notify you when you need to do these tasks. Obviously, having exceed dead stocks mean losing money due to the cost of warehouse maintenance. The software will tell you what items you need to push up selling, including discounts or promotions.
On the contrary, if you oversell your inventory, your customers would not receive their orders in the time you promised. It leads to losing customers’ loyalty, which damages your brands in the long run. Using inventory management software to make sure you keep track of shortage and restock in-time.
2. Best friends of scale management
Manual inventory management does not make sense when businesses raise their scale. In an e-commerce perspective, almost companies sell their products on several platforms (i.e. Shopee, eBay, Amazon, Lazada, etc.). They face difficulties in managing multiple partners, suppliers, and venders, which might distract the inventory management task. Additionally, with a long list of warehouses, control tasks have to perform automatically.
3. Solving problems of managing several warehouses simultaneously
The primary task of inventory management software refers to the simultaneous control of several warehouses in a single program. There are varieties of inventory management tools in the market that you only need to pay a small fee to register. However, with the number of warehouses get bigger, you should think about developing a custom software serving your custom needs.
4. Providing insights for annalistic and prediction
Understanding the parget customers will lead your business to success. However, it seems like an ambiguous concept that purchasing behaviors do not have any exact formula to calculate. In practice, most professionals have forces to rely on realistic data to draw the market pattern. Warehouse inventory management gives you more than that. It allows you to access the inventory data on a real-time basis with visualizes graphs, which keep updating. Depending ton of data, business owners have strong evidence to make decisions.
Implement inventory management software: strategies and methodology
Remember that inventory management software is a tool, not a treatment. Your business should prepare to use this tool effectively to assist other strategies. Check out some suggestions
Use historical data to forecast future demand
Forecasting refers to one of the most beneficial features that e-commerce firms are looking for in optimizing their warehouse management. The best practices refer to review past sale data in a relationship with set elements, including seasonal term, scale condition, overall business situation, and purchasing pattern.
When businesses got their forecasted volume, they can handily reduce the risks if lacking items in the peak selling periods. Besides, in gloomy market times, companies can avoid largely exceed supply.
Set initial minimum stock
Those companies have already run the e-commerce shops need to set the minimum stock volume for each selling item. The purpose of deciding minimum viable stocks refers to avoid any potential delay in restocking. Inventory management software will notify you when any product’s volume is under the preset number. In which, you got some time to contact suppliers for additional orders.
Implement ABC analysis
The ABS analysis methodology arranges inventory into three categories:
- Categories A consists of high- value products with low sale volume (i.e luxury goods, year membership tickets, high-end machinery, etc.).
- Categories B consists of neutral-value products with neutral sale volume (i.e electronics products).
- Categories C consists of low-value products with supper sale volume (i.e foods, outfits, cosmetics, etc.).
In principle, 20% of customers generate 80% revenue for companies. In other words, customers purchasing products in categories A brings the majority of sales rather than the remaining. As a result, businesses have a high incentive to sacrifice customers buying products in categories B and C to retain customers buying category A products. Depending on the companies’ orientation, you should decide the inventory capacity in each category.
In conclusion, custom inventory management software tends to be a useful assistant to e-commerce businesses in preventing unworthy losses. If you got struggling with warehouse controlling, let thinking about hiring a professional software development company to start a custom inventory software that fits with your business.