If you have been in one of your city’s larger supermarkets, take a look around you. Right in that moment, you are bearing witness to one of humanity’s largest victories in logistics.
All these big shops move products around and across multiple storage units and store fronts from all corners of the world. One of the biggest retailers we know today has been reported to own warehouses in at least 50 countries. And when we convert these numbers into money, we could probably come up with a number similar to a the GDP of a medium sized country.
Given these huge numbers also comes immeasurable complexities. This is where the advent of computer systems play a critical role. Inventory management software coupled with inventory control systems are considered a must when owning a retail business of significant size.
Features have also been developed to further enhance these systems like, for instance, finding out which products can safely be discounted without incurring losses by automatically forecasting consumer buying patterns.
Who Uses Inventory Management Software
Having inventory management software is imperative if you own a big-sized business. But, do not discount the value that it gives to medium sized and even smaller businesses. Ironically enough, the main goal of a smart inventory management software is to have as little stock as possible. To understand why this is the case, we should first understand how the retail business works.
Products moving either from buying supply from one of the factories, or by selling products to its consumers. Profit can only be earned by selling, so if no more product can be moved because the stockroom is full of products that cannot be sold, the profit would stop flowing. A good inventory management software will be able to balance the supply and demand internally within the store so that the stockrooms are never full.
Should inventory stop moving, customers will start to find less items to buy from the store because it will be full of items that are not sellable or have depreciated in value. Although, your stockrooms may be full, this can be considered a fool’s gold. And because products are moving faster than ever with the advancements in production and manufacturing, the challenge to ensure the quick movement of inventory becomes a tougher challenge.
Inventory Management: Then and Now
Stock tracking is at the core of every retail software that is in use right now. You should have heard the loud beeps at queues where a cashier points a scanner gun to a series of black and white lines. You may have wondered what the red light is for and where it was coming from. This is the bedrock to which all modern retail software is built.
The first merchants were not as tech savvy as the giant retail stores that we have now. The process they follow is generally straightforward. They count the items they have at the start of the day, they sell their products, count how many of each were sold, then purchase an estimate to sell the next day. While crude, the same process holds true in today’s world of retail. However, it still relies on the merchant’s intuition which is far from scientific or mathematical. This inexact method has obviously been a thing of the past but should be noted that smaller stores still employ a version of this.
The industrial revolution presented a boom in products that would then flood the market. Efficiency in production brought upon by the invention of the coal powered factories jump started the age of consumerism. Because products are now being mass produced, the customer experience has also improved at the point of sale.
The invention of the computer brought a massive shift to the point of sale. Even during the earliest stages where punch cards were still necessary for computing, simple designs around this technology have already been developed. Of course, the earlier point of sale systems had to be improved considering the cost it took to maintain massive computer rooms.
The Need for Automation
As with any great inventions, necessity paved the way for the modern inventory management software. The invention of the barcode and the scanner allowed big box stores to fast track the movement of product so it can cater to more customers than usual. Automated point of sale systems made it easier for store staff to handle multiple lanes of customers.
Although inventory management software is typically sought after for its ability to track inventory, it is inherently interconnected with other aspects of retail service as well. The sales for instance generates crucial information that helps inventory management decide which products are to be considered low level or a low priority.
Another aspect in inventory management that can has become a fixture is auto ordering or the ability to automatically place orders on certain products should the levels reach a certain threshold. Without any human intervention, the process is less susceptible to human errors in both computing and in judgement.
Because the systems are powered by machine learning, it can be assured that trends are mathematically being computed based on information fed to it by the store operations. Of course, human intervention should still be possible to make up for variables that may not be forecasted through historical data alone like the introduction of a new product or a trend dictated by an extensive marketing campaign. Although automated, it is still important that the store owner will have the final say whether to go ahead with a transaction or to override and cancel it.
Achieving a fully automated inventory management software can only be realized if the platform it is built on is sturdy. Interconnected software can become difficult to manage if not planned out properly from the beginning.
The Future of Inventory Management
Artificial intelligence, which was initially just considered as a thought experiment became a fixture in modern computing. The same technology would give rise to the first true modern inventory management software and allowed the rise of retail technology.
Embrace the future – starting from your inventory management.