Why Ignoring Automated Inventory Management is Killing your Supply Chain

5 min read

Tags: Blog, Inventory management, Purchasing & replenishment

Julia Montgomery, EazyStock Inventory Expert

Julia Montgomery   June 25 2018


Automated Inventory Management

Index

  1. Excuses for not Automating Inventory Management
  2. Benefits of Automated Inventory Management

You’ve heard about robots in the warehouse and self-driving trucks, but automation is taking over even more areas in the supply chain. The most surprising? Inventory management. Automated inventory management is nothing new to huge, enterprise-sized companies. However, small- and mid-sized businesses have only recently been investing in this new automation for their inventory management – and many SMBs are still hesitant about investing in this new technology. So what exactly is automated inventory management?

Supply Chain Manager Working Inventory analysisAutomated inventory management is using software to perform tasks regarding inventory planning and purchasing that would otherwise be done by employees. This includes using software to identify demand patterns of SKUs and generate purchase orders based on demand, customer service level, costs, etc – basically, using software to optimize your inventory management so that you have the lowest levels of spending and stock possible while giving your customers high service levels.

It’s one of the best things you could do for your inventory management, so why are so few companies hopping on board?

Excuses for not Automating Inventory Management

When it comes to new software and spending, SMBs are understandably cautious about investing. For investing in automation software, here are a few of the excuses for why a company isn’t investing that we’ve encountered. Do any of them sound familiar?

“It takes too much time”

Many small- and mid-sized businesses are pushing their employees to the max already; no one in the company has time to take on a huge project that will include hours devoted to research, negotiation, implementation, training, and maintenance. Implementing a new solution is a whole project on its own and often SMBs can’t afford to lose revenue in the interim.

“It costs too much”

Beyond taking up time, a new solution for automating inventory management will require capital to go along with it. Again, SMBs need to be cautious about how they are spending their hard-earned money. Any money spent will need to have a very positive ROI, and it can be daunting to see how much money will be invested into a new solution.

“If it’s not broken, why fix it?”

This is an enticing trap for many SMBs – and even enterprise-sized businesses – to fall into. Many companies grow comfortable with their legacy systems, but just because a system has worked in the past, doesn’t mean that it’s the best option for your company’s future. If a SMB is managing well with their current system, they’ll see no need to spend time or money on a new one.

 

Benefits of Automated Inventory Management

While these may seem like valid excuses to not implement automated inventory management, you’re really hurting yourself in the long run. Here’s what you gain with automated inventory management:

Efficiency

Female Inventory Manager using Eazystock SoftwareWith automated inventory management, the most obvious benefit is more efficient processes. You now have software handling complex calculations and data analysis for you at a much faster speed than any worker could generate. This rise in efficiency will echo down your entire supply chain, too – orders will be processed faster, purchase orders will be generated quickly, and your suppliers and customers will see the smooth, speedy results.

Accuracy

With software now doing your computing for you, you’ll see a major boost in your inventory management accuracy. Even the best supply chain manager or purchaser can’t go up against software that analyzes demand trends for every SKU and generates purchase orders and forecasts based on that data and based on your parameters (desired service level, stock turn, spending, etc). Automated inventory management eliminates any human errors and determines the best course of action for your business.

Scalability

Companies that get caught up in their legacy systems are missing out big time on potential for growth. With digitalization and globalization affecting distributors worldwide, supply chains are lengthening and increasing in complexity. Many SMBs end up caught in a rut of stunted growth and don’t realize that it’s their own outdated systems that are preventing growth. Automated inventory management software will take over and help you pinpoint areas of growth and areas where you could be losing capital instead.

Free up time

This goes hand-in-hand with efficiency. As your inventory management is automated, your inventory managers and purchasers will have their time freed up as they don’t need to spend so much time crunching inventory numbers. This leaves them with time to pursue new projects and other tasks such as scoping out new suppliers, identifying new markets, and expanding the product portfolio. Many SMBs are worried that automation will leave employees out of jobs, but automation just make it possible for employees to focus on bringing in new revenue and grow the company.

Save money

Save Money with Automated Inventory ManagementOne of the main concerns of implementing automated inventory management for a SMB is how much money it will cost, but they fail to take into account the ROI of the solution. Automating your inventory management saves you a bunch of time, yes, but it also ends up saving money for your business the longer you use it. With an automated solution, you can set parameters on how much money you want to spend on procurement, your existing inventory will be evaluated based on it’s demand cycle and your solution will recommend ways to get rid of dying or obsolete inventory items, and you’ll minimize the money you have tied up in stock – all while keeping your customer satisfaction high (and therefore bringing in revenue).

The longer you use an automated inventory management solution, the better off your company will be. Automated inventory management frees up time and capital, allowing you to pursue other projects and keep your customers happy – to the point where growth will be inevitable. As your supply chain continues to evolve, your processes should be evolving right along with it. Don’t get left behind; see how automated inventory management can work for you!

Download White Paper