For businesses that are not prepared for change, Singapore’s push to become the world’s first “Smart Nation[1]” might result in them being left far behind from their peers. However, those who embrace the rapidly changing business environment, the digital infrastructure in particular[2], can reposition themselves to their advantage with a competitive edge over their peers. In this article, we shall explore how businesses can employ a proven IT Platform in material resource planning to improve their inventory management process.
What is Inventory Management?
Inventory management is basically how a business manages the storage, usage and re-ordering of its raw materials, intermediate materials and finished products. Essentially, it attempts to ensure that just the right amount of the right type of raw materials or finished products are ordered or manufactured to be at the right place and at the right time. This makes inventory management much more efficient, reducing the level of excess inventory. This will tremendously benefit the business as low inventory means less capital or cash is tied up in idle and unproductive stock. Other benefits include reduced costs in warehousing and obsolescence avoidance.
Benefits of an efficient inventory management process
It is virtually impossible for medium to large businesses to manually manage their inventory due to the complexities and high probability of human error. This is where businesses can make use of existing IT infrastructure through the adoption of an electronic inventory management platform. One such platform is TradeGecko which offers integration with, among other things, accounting, eCommerce and CRM systems. By seamlessly integrating all these processes, a business can reduce costs and increase revenue through[3]:
- Optimising their inventory – Add-ons such as the Point-of-sale and eCommerce platforms allow a business to utilise real-time visibility of stock to enhance their sales order, purchase order and planning systems. A business can adopt the Just-in-time inventory management system to minimise excess inventory.
- Refining supply chain visibility – Businesses who work with supply chain partners can use supplier and 3PL (third-party logistics) add-ons to enable their partners to jointly manage inventory levels to maximise customer satisfaction.
- Improving the accuracy of financial reports – By syncing real-time inventory data with your accounting process through the accountancy add-on, businesses can ensure that their book value matches their physical value with regards to inventory assets.
- Increasing employee productivity – The automation of the inventory management process indubitably leads to more employees being freed up from tedious logistical tasks to focus on other issues.
Moreover, TradeGecko offers comprehensive customisable analytics and reports that allow a business to examine which products are the most popular among customers or even seasonal demand trends so as to optimise the forecasting of inventory requirements. A business may also increase revenue through focussing on top performing products and remedying the problems that plague some unpopular products.
Nevertheless, it is crucial for a business to train their employees in the use of such a system and the different intricacies that come with the integration of multiple platforms in order to utilise it to its fullest potential.
Looking ahead
In the near future, perhaps with the advent of the Internet of Things and Singapore’s pursuit of being a Smart Nation, businesses can consider the use of a customer managed inventory system where the inter-connectivity of devices allow consumers to effortlessly upload usage data onto a business’ inventory management system. The business can then analyse the data to better forecast inventory needs and even identify or pre-empt product faults so as to quickly resolve them by liaising with technical support[4].
Obtaining cash flow to help with Inventory Management
Technology can make or break a business. If you are considering implementing an automated inventory management system but are concerned about its costs and your cashflow, we at InvoiceInterchange can provide an innovative solution. Businesses can optimise their working capital through our fast, flexible and transparent platform which facilitates the auction of unpaid invoices for cash.
[1] Setting the standard worldwide: intelligent city, Smart Nation. (2015, August 03). Retrieved July 12, 2016, from http://www.spring.gov.sg/Inspiring-Success/Enterprise-Stories/Pages/Setting-the-standard-worldwide-intelligent-city-Smart-Nation.aspx
[2] Ibid.
[3] The benefits of integrating your inventory software with your accounting and back-office processes. (n.d.). Retrieved July 12, 2016, from http://www.netsuite.com.sg/portal/resource/articles/inventory-management-software.shtml
[4] The Internet of Things – building smart machines. (n.d.). Retrieved July 12, 2016, from http://www.salesforce.com/ap/crm/internet-of-things/
