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The Benefits Of Using An Inventory Management System (2021).

Written by:

Aimee Manning

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Inventory Management
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When it comes to growing your online business, one of the biggest challenges lies in managing your inventory.

In fact, as your order volumes increase and you start to expand across more sales channels and into new markets, attempting to manually manage your operations becomes near-on impossible.

Think about it.

Do you currently have to log in and out of your different selling channels to list your products and process your orders? And are you having to manually adjust your stock levels on each platform every time you make a sale?

Not only are these huge barriers to business growth, they almost always result in human error such as overselling, which leads to a damaged reputation at best and marketplace suspension at worst.

Now while this in itself highlights the importance of inventory management, it’s not the only reason to consider using a system of this kind.

To help you understand whether your business could benefit from inventory management software, we’ve summarized some of the additional advantages below.

Download: The Full List of Inventory Management Techniques

Simplified inventory management.

Perhaps the biggest benefit to using inventory management software is that it makes the process of managing your inventory a whole lot easier, saving you time, money and quite frankly, sanity.

With supply and demand changing throughout the year and your stock levels continuously fluctuating, inventory management software helps to avoid the risk of human error by automating your key business processes. 

Reduced risk of overselling.

Overselling is a major challenge for online sellers, often resulting in loss of control, disappointed customers and in some instances, being suspended from marketplaces such as Amazon and eBay.  

That said, it is a selling challenge that is preventable.


By synchronizing your orders and inventory across each of your online marketplaces and eCommerce platforms, ensuring that stock levels are adjusted each time you make a sale.

Now while this is often easier said than done, you can see how home and garden retailer, Rinkit, overcame this exact problem and went on to expand their business worldwide.

Greater cost-savings.

By streamlining your inventory management processes, you not only stand to eliminate the inventory costs associated with human error, but you can also benefit from further cost-savings.

So, what are these inventory cost reduction techniques?

Well to start with, it can improve your chances of shortening your supplier lead time through better supplier management relationships. 

It also allows you to reduce excess and obsolete stock, not to mention the subsequent costs incurred, by establishing your par levels and calculating your safety stock

That's not all though.

Perhaps the biggest cost saving comes from automation.

Poor inventory management can cause significant revenue losses, driven by avoidable errors including stock-outs and overstocks.

Which leads us to the next inventory management benefit...

Avoidance of stock-outs and excess stock.

When it comes to managing your inventory, trying to maintain the right balance is a challenging task.

After all, too little stock can lead to a stock-out, unhappy customers and potential loss of sales.

Having excess stock, however, can take up valuable warehouse space and incur unnecessary charges.

Either way you look at it, it comes at a cost to your business.

Fortunately, with stock control inventory management software you can track low stock levels and identify the re-order points for each product, in turn avoiding the occurrence of stock-outs.

More specifically, this type of software will be able to calculate these re-order points - also known as par levels - through the use of a reorder point formula.

Improved business negotiations.

By using inventory and order management software with batch tracking capabilities, you will have far better product traceability and subsequently be able to access valuable information allowing for potential negotiations with suppliers.

More specifically, you will be able to obtain a far better understanding of which suppliers are benefiting your business the most and which require improvements.

With detailed information on supplier performance, you will be better equipped to negotiate more favorable trading terms and even exclusivity deals.  

Find out our tips for establishing strong relationships with your suppliers here.

Better product visibility in the event of a recall.

Product recalls can at times be inevitable.

The problem, however, is the time and effort it can take to track down the affected products without batch tracking functionality.

We’re talking countless hours and numerous headaches.

In fact, without full product traceability and the ability to easily locate necessary batches, attempting to resolve the problem with your supplier can be a major challenge.

Not ideal when you’re trying to run a business.

The ability to make more profitable business decisions.

Effective inventory management software can provide invaluable sales data, allowing for more data-driven business decisions.

As an example, with a more informed understanding of supply and demand, you can go some way to forecast sales trends, giving you a more competitive edge. 

With access to reporting features and inventory metrics, many inventory management systems equip you with the tools needed to make strategic decisions.

Additionally, with the ability to work out your inventory turnover rate, you will also be able to identify opportunities for reducing the amount of inventory you are holding in your warehouse(s) and lowering your inventory carrying costs.

So, there we have it. 

Some of the benefits of using inventory management software.

To help you sell better, increase efficiency and reduce costs, we've also detailed some of the most common inventory management techniques and best practices that you can read here.

Inventory management software that grows with your business. Book a demo.

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