Running an inventory management operation can be quite a daunting task. Not having enough stock or too much stock can quickly become a burden. Too little stock will only slow down progress and make customers unhappy. In contrast, excess stock leads to a waste of money. Organizing your stock in multiple locations is another critical factor. Unfortunately, about 43% of small businesses use a manual tracking system or don’t track inventory at all. Additionally, on average, retail shops have an inventory accuracy of 63%. If these problems were fixed, businesses could quickly improve their bottom line.
Luckily there are systems out there to help automate and simplify your entire supply chain process, including ordering, reordering, and order fulfillment. These tools allow small businesses to stay competitive and larger businesses to simplify their complex daily operations.
What is Inventory Optimization?
Inventory optimization can be simply defined as having the minimum inventory to meet your target service levels, without excess. This can be broken down into three areas: demand forecasting, inventory policy, and replenishment.
Demand forecasting means to predict future demand as accurately as possible. Inventory managers must know how an item demand changes throughout the product life cycle and seasonally. This helps the marketing department to plan carefully for upcoming promotions and campaigns. As a result, you can create an inventory policy to decide what items and quantities to stock in which locations.
Supply chain managers may classify all their SKUs with a simple ABC analysis. This analysis is an inventory strategy that categorizes and prioritizes items based on the value each provides to the company. Some classes will have tight inventory control and precise records while others may have more relaxed controls and keep minimal records.
It’s best to ensure that you have safety stock to cover sudden changes in supply or demand at all times. The last phase of inventory optimization is replenishment. Replenishment involves reordering the right quantities at the right time. Keep track of all of your supplier leads and schedules to ensure on-time shipment arrivals.
An inventory optimization software helps you simplify and automate the process of determining the exact amount to order for every SKU and the precise timing of each order. Such a tool ensures you have the right products in your warehouse without overspending on inventory.
Best Inventory Optimization Solutions in the Market
We’ve collected 5 of the top inventory optimization solutions available to you. Here are some of their features:
Fishbowl is an inventory and manufacturing management software designed specifically for small to midsize manufacturing companies. One of this platform’s unique aspects is that it integrates seamlessly with other apps like QuickBooks, UPS Ready, Salesforce, Xero, and many other solutions. This tool is an inventory-centric system with an abundance of features like asset management, barcoding, customized reporting, and raw materials management. It automates the ordering, quoting, and purchasing processes for you. Fishbowl has a work order feature to build and share work orders with suppliers and other team members. Fishbowl features enable you to scan barcodes and trace orders through serial number identification.
EazyStock is a powerful inventory optimization cloud solution that aids small and medium businesses in automating purchasing, inventory control, and cost reduction. This service helps keep up with rising customer demands by ensuring prompt deliveries. EazyStock makes sure that businesses have just the right amount of inventory stocked up without storing an excess amount. Removing excess stock not only saves you inventory costs but also frees up capital that can be used for other business activities. This software is also compatible with ERP apps like accounting, project management, risk management, procurement, and others.
TRXio is an inventory intelligence software that helps businesses of any size protect their brand, manage their assets, and comply with industry standards. One of the hallmark features is the ability to track all assets and inventory. Users will receive instant access to stock movement analytics and current inventory status. Their smart technology can create visual workflows and highlight areas for improvement using quantifiable information. It can track down lost items, simplify order fulfillment, and view product divergence. The great thing about this service is that it’s on a monthly subscription base that is affordable to most users.
Optimiza is a supply planning and inventory optimization software dedicated to mid to large-sized businesses. It works to help manage orders, stocks, and demand fluctuations. This software takes a more personalized approach by considering the unique demand and supply flow characteristics for each product. It uses scientific algorithms to determine what inventory is needed to achieve service levels while maintaining an optimal safety stock. With this tool, you can track the supply chain in each stage from the factory, confirming the order, the shipment, leaving the dock, and returning to your warehouse. Users can view KPIs to monitor and improve their performance based on inventory statistics.
GMDH Streamline is a supply chain planning software designed for enterprises. It specializes in building highly accurate statistical forecasts to help managers make better decisions regarding inventory and supply chain management. With their tool, you have specific inventory planning features such as order planning, accurate demand forecasts, projected inventory levels, and overstock and stockout alerts. This software enables you to easily pull in data from your sales system to fulfill orders at a much faster pace. According to GMDH, they have reduced stock-outs by up to 98% and reduced overstock inventory by 15 to 50%.
If you’ve decided that now is the time to enroll in an inventory optimization software or upgrade to a new one, you’ll want to determine what features you need in an inventory solution. You may consider a few things, such as the size of your business, budget, and the deployment strategy.
Some software caters to a specific business size and others offer more affordable terms. A deployment strategy consists of either an in-house IT infrastructure or a cloud-based system. Once you have a list of priorities, you can easily make an informed decision about the best inventory software for your business.