Inventory Management Explained

What is Inventory?

Inventory is the total number of items (e.g. products or goods or SKUs) that are stored in the
warehouses or in the storage rooms at a certain period of time. It is important to know
precisely the total amount of goods or products you have in order to manage your business.

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What Is Inventory Management?

Inventory management is primarily the monitoring and maintenance of stocked products.
It consists of all the administrative tasks involved with measuring and keeping track on incoming and outgoing products and all the inventory on hand.
Inventory management helps to protect regular and planned course of business against any disturbance of running out of goods. It shows how much stock you have, it reduces errors or “walking stock” and helps to make future plans to grow your business.

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What is Inventory management software?

Inventory management software helps you keep track of your stock, helps to manage orders, sales and deliveries. Its main purpose is to avoid overstocking or prevent shortage of goods.
It organizes the stock information and provides different reports that are necessary to optimize the inventory and to make future plans. Inventory management software also helps to track:

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What is Inventory management system?

Inventory management system is not just an inventory management software, instead it is a set of integrated software and hardware tools used according to rules agreed among companies employees.

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What is Order Management?

Order management is a series of actions a seller needs to follow in order to deliver the goods or services that have been ordered by the customer. It is a process that begins when the customer sends the order and ends when the customer receives the goods. It is a chain of actions you need to complete faultlessly to guarantee a successful sale in the end.

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What Is Periodic Inventory System?

A periodic inventory system is a solution for inventory management. Periodic inventory is suitable when there is no need for daily track of inventory. It is harder to see if something is stolen, lost, or spoiled because the data is collected periodically. After a certain period a physical inventory is performed, and the results are then compared with the data from the previous stocktaking. Between these periods purchases, cost of goods sold, and goods on hand cannot be checked. Usually this information is not that necessary for company officials.

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What is Perpetual Inventory?

Perpetual inventory is part of effective inventory management. It is a system where all the necessary information on your goods (quantity and availability) is always up-to-date. Usually the perpetual inventory system is connected with accounting software where orders are made and with point of sale system (in retail). This connection to other programs gives a guarantee that the data is constantly updated.

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What Is Stock Control?

Stock control software helps you to keep track of how much stock you have at any given time and where you have it. Efficient stock control ensures that you always have the sufficient amount of stock. It reduces the risk of capital being tied up unnecessarily and protects you from the errors of “walking stock”. It also helps to make future plans.

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What Is Procurement Management

Procurement management is a process where you have to procure something from an external source. This means working with suppliers or vendors in order to get the necessary goods, services or resources for your business. You have to get what you need in terms of quality and quantity, time and location and also with the best possible price. Purchase order software helps to organise this by creating, sending and managing purchase orders.

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What is Effective Inventory Management

In order to run your business smoothly you must have a well-functioning inventory management system. If you don’t have one, it might cause a lot of trouble and start to disturb the execution of orders and day-to-day business.

Inventory management can be very convenient if you know how to do it. Well-functioning system is a process of overseeing the flow of items into and out of your stock. It’s a balance of having just enough products in the warehouse. Effective inventory management keeps the stock costs under control so you can run a successful business.

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Common mistakes entrepreneurs make in managing their inventory, and how to correct them

As an entrepreneur, taking care of your inventory is probably not the thing that got you into the business or what gets you the most excited to wake up in the morning.

Unfortunately, it is essential that you learn how to manage your inventory properly if you don’t want to lose valuable sales and if you want your company to continue to grow and prosper.

Having a bad inventory system can actually be worse than having no system at all.If you learn not to make a few key mistakes, you will realize that eventually it will be second nature and you will see your profits rise.

Here are a few common mistakes entrepreneurs make in managing their inventory, as well as how to fix and avoid these mistakes. Read more…

Vendor Managed Inventory Software

For a vendor, there is an evident advantage in building a long term alliance with a customer. It greatly reduced business volatility risks and helps to keep a steady cash flow. A vendor also gets to know the customer better, and can thus provide better service, resulting in mutual business growth.

 For a client who gives its inventory management to a vendor, there are four major benefits.

1. Company’s financial resources that would have been occupied by stocked material and parts, can be put to use elsewhere.

2. Significant cost cuts on sourcing the materials and parts needed for manufacturing. It takes less work, time and transport costs, and most probably the vendor can offer favorable pricing.

3. Real time reports on all the materials and parts, orders, bills, expenditures and stock levels.

4. Comfortable billing, payment automation, and financing by factoring as an option.

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ERPLY Inventory Management Launch Guide

  • Inventory Module
    This module is where you can manage your inventory list, and your stock levels. Becoming familiar with the tools in this module will help you get the most out of ERPLY’s inventory tracking features.
  • The Product Card Each item on your inventory list has it’s own product card which details all of the information you need on your items. Track the suppliers, purchases, sales, prices, and organization of your products using this screen.
  • Inventory Module settings The inventory module works well out of the box, but if you want to use advanced features, or categorization, you should check out the settings you can adjust here.
  • Creating product and service groups, Adding products
    Organizing your items into product groups can help with managing rotation of stock, physical stocktaking, price changes, promotions, and pretty well anything you want to do with your items. Read this guide to understand how to get the most out of your product groups.
  • Import Product List Your inventory list, and stock levels, can be imported through our import tool. In your inventory module, under the More button, you can find this tool, and its accompanying tutorial. If you subscribe, you can have an ERPLY staffer do your initial imports (Customers, Suppliers, and Inventory!) for you!

About the author
Kristjan Hiiemaa
Entrepreneur building better POS and cloud-based retail management suite . Product guy. CEO & Founder of Erply.