Retailers, wholesalers, and distributors across all industries have started integrating more automation into their inventory management processes.
Automation can help reduce the time and effort required to perform repetitive operations tasks. Companies can streamline inventory workflows and efficiently scale operations by using today's technology. By building an automated inventory control system, companies can track every component across their supply chain and easily streamline and scale operations with minimal effort.
Automated inventory management refers to utilizing software technology to reduce the manual involvement in stocking and transporting products.
When managing inventory, automation presents a wide range of possibilities. Some of the most common applications include automating reorder points, real-time inventory counts, location tracking, and purchase orders.
First, this article will explain the most significant benefits of inventory automation, then reveal some examples of automated management in action and how your business can implement automation in your operations.
How your business benefits from inventory automation
Automating inventory and supply chain management processes proves to be highly beneficial. A recent McKinsey survey of consumer packaged goods (CPG) companies showed that an automated supply chain increased revenue by up to 4%, reduced excess inventory by up to 20%, and decreased supply chain costs by up to 10%. Here are some primary ways automated inventory management systems can benefit your business processes.
Increased data accuracy
One of the apparent benefits of automated inventory management is improved accuracy. With all the movements across inventory and warehouse management, teams can quickly grow fatigued. Automations go a long way in reducing the amount of data entry and other time-consuming manual work.
Furthermore, while manual efforts only provide rough estimations, especially between stock counts, inventory management software tracks and monitors every detail in real-time, from on-hand stock levels to purchase orders. This automation enables companies to handle thousands of transactions daily while reducing opportunities for human error, and improve inventory control based on accurate, real-time data.
Maximized resources
Multiple routine tasks are required throughout the inventory and warehouse management process. For example, whenever a product is received, sold, delivered, or returned, inventory levels must be updated and reported to the appropriate teams. This work would be exhausting for teams to do manually.
An automated system can be set to perform any number of tasks instantly without any added resources. Teams no longer have to spend their time on laborious and repetitive work, which leads to faster and more efficient operations and frees them up to focus on more critical priorities.
Reduced costs
Along with increased accuracy and efficiency comes a decrease in overall costs. A major source of savings, for example, comes from optimizing stock levels so a business only purchases what it’s likely to sell and prevents overstocking. Automated inventory management means that collected metrics, like inventory turnover and sales forecasts, are more reliable in determining how much stock should be purchased for the upcoming sales cycles. This optimizes cash flow, saves on storage and carrying costs, and lessens manual workload.
Enhanced visibility
With automated inventory management software, companies gain visibility into the location and current levels of their inventory. Knowing exactly how many products are in stock, sold, or on order makes it easy to see what products are in demand and then make data-informed decisions on where to allocate your resources best. This immediate access to inventory data is critical to a company’s ability to respond to supply chain changes and shifts in customer demand, and maintain profitability in a competitive market.
Simplified scaling
As businesses grow, their inventory and warehouse requirements will change. An automated system makes it easy to detect when these changes need to be made and monitor the results of any newly implemented strategies. For example, experiencing continuous stockouts indicates that products are in higher demand than projected and order quantities or frequencies should be increased.
With inventory management solutions, companies can quickly change replenishment points and receive notifications when inventory levels fall below a particular threshold. Automated monitoring effectively reduces manual inventory tracking and optimizes stock levels. Ultimately, by creating more accurate systems and maximizing resources, automation enables companies to easily scale operations and drive more growth opportunities.
3 Examples of inventory automation in action
From logging customer data into Excel spreadsheets to tracking orders throughout fulfillment, automated systems are seeing increased usage across operations. Here are a few examples of inventory automation in action.
Customer order entries
Manufacturers and retailers typically spend significant resources to input and manage their customer orders. During peak seasons or any other fluctuations in demand, this effort can lead to strained resources and potential operation bottlenecks. Some may even resort to hiring more staff to accommodate the workload. By leveraging inventory automation for order entries and updates, companies can scale up to handle more orders and effectively save time.
Inventory and warehouse management
Inventory storage facilities deal with thousands of components, even beyond product SKUs. This includes packaging, logistics machinery, equipment, and other supplies. Traditional warehouse operations manually handle all storage and logistical functions, which becomes unmanageable as inventory count and facilities grow. Automated systems, such as mobile barcode scanning and point-of-sale (POS) systems, can track every product that passes through the warehouse and consolidate information on a single platform.
Customer order fulfillment
Even beyond tracking inventory items from supplier to warehouse, automations can be used to enable customer order tracking. Real-time inventory levels not only help companies set reorder points based on sales data, they can also be used to update product availability on ecommerce businesses so customers are only able to order what’s actually in stock.
Automation can also be used to notify customers about their order at every delivery step. This attention to detail ensures both companies and customers are updated on the order process and improves overall customer satisfaction.
How QuickBooks Enterprise automates your inventory management
QuickBooks Enterprise brings together all the necessary tools to automate your inventory management. You can scan and automatically upload inventory counts from different warehouses to a central inventory dashboard without shutting down your facilities.
For each warehousing location, you can see how many inventory items are on hand, on sales order, or on purchase order, and automatically calculate how many items need to be restocked. Automated inventory rules can also be set to generate purchase orders with one click, so companies can instantly order the right amount of inventory to minimize stock-outs and missed sales.
Inventory levels are updated for every warehouse or truck directly in QuickBooks. This allows you to determine which warehouse is the best to fulfill from, or split an order between multichannel inventory to fulfill it more quickly.
Automations help reduce errors that can cut your margins, while maintaining one true source of data helps improve your inventory and order management processing.
Final thoughts
By automating key areas using inventory management systems, companies can gain significant benefits in increased operational accuracy and efficiency. Taking proactive steps to minimize the number of manual processes and maximize resources enables a company to scale and reach more markets easily.
