Frequently asked questions

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Inventory management software – frequently asked questions (FAQ)

The best inventory management software goes beyond simple record-keeping to provide advanced inventory optimisation features that deliver real return on investment.

With sophisticated forecasting, simulation and analysis functionality it’s easy to make better supply chain management decisions.

Inventory management software reduces stock holding costs and improves customer service – at the same time. It ensures that you hold the right levels of stock to meet demand, without tying up too much working capital. Many small and medium-sized businesses are looking to inventory management software as a critical tool to reduce inventory carrying costs by upwards of 30% and reach service levels of 95% and over.

Inventory management software typically includes forecasting and replenishment modules. Forecasting helps you balance your target service level or expected demand with your current stock levels and incoming supplies. Replenishment helps determine the safety stock levels that are needed at points along the distribution chain to satisfy orders at a given fill rate.

A subset known as inventory optimisation software employs complex algorithms to recommend what to stock and in which quantities to meet demand across the entire supply chain or at a specific location.

Inventory management software is available standalone or in ERP and supply chain management (SCM) suites. However, not all solutions include inventory optimisation and product life-cycle tracking which are key components for successful inventory management.

The broadest definition of the term “inventory management software” would have to include Enterprise Resource Planning (ERP) and Material Requirements Planning (MRP) legacy software that record basic data on inventory.

Advanced Planning and Scheduling (APS) tools help manage the raw materials and components used in manufacturing, and Warehouse Management Systems (WMS) have analogous features for warehouse inventory management.

Today, the term “inventory management software” denotes a distinct category of specialised tools for collecting and analysing inventory-related information for planning purposes.

A warehouse management system (WMS) primarily aims to control the movement and storage of materials within a warehouse and process the associated transactions, including shipping, receiving, and fulfillment. It controls and optimises the movement, storage, and tracking of inventory in and around a warehouse.

In contrast, inventory management software optimises what products to keep in stock and in what quantities. Inventory management systems optimise the safety stock, reordering points and economic order quantities (EOQ) of inventory to ensure that future demand can be meet according to plan.

There are very few projects that can increase profitability as much as inventory management in companies where the inventory or product flow is the core business.

The quickest return on investment often comes from lower carrying costs. Below is a direct quote from an EazyStock customer outlining their operational and financial benefits of optimising their inventory:

We reduced our stock levels by over $1 million, corresponding to 23%, reduction in inventory while at the same time improving our service level by 13% points.

Svante Stenström, Supply Chain Manager at AxIndustries.

Here are three main advantages of optimising your inventory management processes with software:

  • You can reach the target service levels you are aiming for – within one replenishment cycle.
    Higher service = fewer stock outs = higher sales.
  • You can reduce working capital tied up in stock and free up cash flow.
  • you can save time and money by automating the procurement and replenishment processes.
Integration, data quality, and training are usually areas that require attention.

Inventory management software must be integrated into existing ERP or business systems – be careful when choosing a provide that this doesn’t come at great expense. Evaluate different system providers’ capabilities to integrate or transfer data between your ERP/WMS etc and the inventory management solution.  With EazyStock you can get started with a simple Excel import and export data transfer. We’ll have you up and running in days and your business will get value from the system within weeks.

At EazyStock we believe that every company holding inventory should have access to a great inventory optimisation tool that’s easy to understand and maintain.  Just because the functionality in a system is advanced, it doesn’t mean that the user should require a Ph.D. degree to use it.  Users of inventory management software can be easily trained to understand the system and the data it produces.