How to Choose the Right Inventory Management Solution
Whether your distribution company is B2B or B2C, proper inventory management is a key component of an efficient supply chain. If your company is in the startup stage, your priorities are going to be more basic – think hiring staff rather than market expansion. But once these challenges are behind you, it’s time to choose the right inventory management solution to scale with your growing business.
Good inventory management can be boiled down to one idea: having the right products in the right quantities in the right place at the right time for the right cost. There are three main strategies to managing inventory:
- Preventing stockouts
- Minimizing overstocking
- Improving processing
Before you select the best inventory management solution, follow these inventory management strategies to prepare your business.
Lay the Foundation for Inventory Management
The first step is establishing effective processes. Use demand forecasting to determine optimal inventory levels for your business. This means maintaining a sufficient level of stock in your warehouse, but not so much that you’re spending money just to carry it. Additionally, to ensure your forecasting formula is accurate, perform regular stock counts.
Understanding your sales history, market trends, actual demand and other data will allow you to develop “leaner” inventory – reducing inventory levels while minimizing stockouts. Improving your processes will address the human side of inventory management, which begins with the moment an order comes in to when your customer receives it. Manual processes leave room for error. While proper training, a defined chain of command and accountability are imperative, there is only so quickly and adequately your employees can complete the tasks necessary. Here’s where an inventory management solution comes in.
Choose The Solution for Your Business
As your distribution business grows, so will its complexity. Manually managing inventory will become more difficult to maintain. Investing in an inventory management solution will automate manual processes, allowing your business to grow and cut costs from supply chain operations.
When choosing your inventory management solution, know what you need now and consider what you will need later. While no one can predict the future, being prepared for future expansion will leave the door open for development. Understand both the tools and limitations of each software option.
A Case Study in Inventory Management Success
As fitness franchiser and distributor 9Round expanded their business, the inventory management solution they had previously depended on was no longer sufficient. Stockouts became a problem, and the company was losing significant business every month simply because orders could not be filled. 9Round implemented NetSuite, a solution optimized specifically for several industries including distribution.
When considering their inventory management solution options, 9Round prioritized their needs in order to make an informed decision about the software that will scale with them as they continue to grow rapidly. Among the business benefits 9Round saw following their implementation were:
- Better inventory accuracy and demand planning
- Improved customer experience
- Streamlined operations with automated warehouse management
Asking yourself the necessary questions in order to prioritize your needs and select the right inventory management solution for your business is the first step. But you might not have all the answers you want before making a decision. To learn more about choosing the right inventory management solution to scale with your business, download our white paper.