5 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 begun 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?

Automated inventory management uses software to perform inventory planning and purchasing tasks that employees would otherwise do. 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 already pushing their employees to the limit; no one in the company has time to take on a huge project that will require 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 time, a new solution for automating inventory management will require capital. Again, SMBs need to be cautious about how they are spending their hard-earned money. Any money spent must deliver a strong ROI, and it can be daunting to see how much will be invested in 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 an SMB is managing well with its current system, it’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 not to implement automated inventory management, you’re really hurting yourself in the long run. Here’s what you gain with automated inventory management:

Efficiency

With automated inventory management, the most obvious benefit is more efficient processes. You now have software that handles complex calculations and data analysis for you much faster than any worker could. This rise in efficiency will echo through your entire supply chain as well – orders will be processed faster, purchase orders will be generated more 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 significant 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 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 growth potential. With digitalization and globalization affecting distributors worldwide, supply chains are lengthening and becoming more complex. Many SMBs end up stuck in a rut of stunted growth and don’t realize that their outdated systems are preventing it. Automated inventory management software will take over and help you pinpoint areas for growth and areas where you could be losing capital.

Free up time

This goes hand-in-hand with efficiency. With your inventory management automated, your inventory managers and purchasers will have more time, as they won’t need to spend so much time crunching inventory numbers. This leaves them with time to pursue new projects and other tasks, such as scouting new suppliers, identifying new markets, and expanding the product portfolio. Many SMBs worry that automation will leave employees out of work, but automation simply enables employees to focus on generating new revenue and growing the company.

Save money

One of the main concerns when implementing automated inventory management for an SMB is the cost, but they often overlook the solution’s ROI. Automating your inventory management saves you a bunch of time, yes, but it also saves your business money the longer you use it. With an automated solution, you can set parameters for how much money you want to spend on procurement. Your existing inventory will be evaluated based on its demand cycle, and the solution will recommend ways to get rid of dying or obsolete inventory items. You’ll minimize the money tied up in stock – all while keeping 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 that growth becomes 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!