How to deal with inventory management software

"Inventory" to many business owners is one of the more visible and tangible aspects of doing business. Raw materials, goods in process, and finished goods, all represent various forms of inventory encountered in a manufacturing organization. Each type represents money tied up until the inventory leaves the factory as a purchased product. Likewise, merchandise stocks in a retail store contribute to profits only when their sale puts money into the cash register.In a literal sense, inventory refers to stock of anything necessary to do business. These stocks represent a large portion of the business investment and must be well managed in order to maximize profits. In fact, many small businesses cannot absorb the types of losses arising from poor inventory management. Unless inventories are controlled they are unreliable, inefficient, and costly. In attempting to control inventories, managers usually lean towards keeping inventory levels on the high side, yet this greater investment (given a constant amount of profit), yields a lower return on the dollar invested. This is one of the contradictory demands made upon the manager with respect to keeping inventory, others include:

• Maintain a good assortment of products - but not too many;
• Increase inventory turnover - but only at a good profit level;
• Keep stocks low - but not too low;
• Make volume purchases to obtain lower prices - but don't overbuy; and
• Get rid of obsolete items - but not before their replacements have taken hold in the market.

Successful inventory management software  or inventory pos system involves simultaneously attempting to balance the costs of inventory with the benefits of inventory. Many business owners often fail to appreciate fully the true costs of carrying inventory - which include not only direct costs of storage, insurance, taxes, etc., but is also the cost of money tied up in inventory. And it is often not realized that small reductions in inventory investment may result in large percentage changes in the company's total cash position. For example, one reward of improved inventory management may be an increase in working capital without the necessity of having to borrow money.