What Are the Benefits of Inventory Management Software?

Inventory Management Software is a big investment, and many wonder if it's worth it. Small to mid-sized businesses, especially, need to know that the investment they will be making is worth it in the long run. Inventory management software also comes in various configurations; some are industry specific, and many of them can be custom fit to accommodate special circumstances.

Start Early
When a business is small or has a small inventory, the bookkeeping needs can usually be handled fairly easily by the sole proprietor or a helper, but as a business grows there is usually a need for better organization and more detailed record-keeping methods. Inventory management software can be very useful to employ when a business is small so that criteria and specifications can be established while the scope of the effort is still manageable.
Purpose
Good inventory management is essential to the success of a business, both for its own records and for records that will be reviewed by the IRS and other outside entities. If inventory is not tracked, it is impossible to accurately identify where money is being made and lost or to learn how to improve processes within a company to help it grow. Inventory management software aids management to easily track company investments and see where improvements might be made.
Time Saving Benefits
Inventory management software helps the inventory manager to save time by keeping calculations up-to-date giving the manager easy access to the numbers that are needed for reporting and restocking information. These figures can easily be accessed by Purchasing for fast, up-to-the-minute information on what will need to be bought. Executives can easily access this information for help in determining where a company makes and loses money.
Money Saving Benefits
Inaccurate bookkeeping in a company's inventory can result in over-purchasing and under-purchasing of products that the company uses or sells. Either of these situations leaves room for loss; the under-purchased inventory runs out and stops production or sale of that item and over-producing causes an overage that can go to waste. The time-saving aspects of inventory management software save vast amounts of money, keeping production running smoothly and reducing personnel costs associated with record-keeping because much of the software is automated.
Automation
Inventory management software uses automation for many of its basic functions. Numbers can be simply "plugged" into specified areas and the software makes all the calculations. For instance, a person in the sales department will punch in a product code and quantity ordered by a customer to generate a receipt for the sale. The numbers will then be automatically entered into inventory, taking the product out of stock, adding the dollar amount to sales and calculating the gross profit made on that sale. This information is broken down and reported to the accounting department, and the purchasing department is notified that the sale has been made and stock will need to be reordered.
Potential for Growth
When purchasing inventory management software, the buyer should consider the current state of the company and what it may become in the future. The software is a big expense, but identifying how it can help facilitate the growth of the company is a critical step in the decision process. Many times buyers underestimate the success of their business and end up having to re-invest in new software a couple of years down the line. This can be a major, unnecessary expense and an even larger, avoidable hassle--transferring all the data to a new system.