How do I Choose the Best Inventory Management System?

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  • Written By: Malcolm Tatum
  • Edited By: Bronwyn Harris
  • Last Modified Date: 18 February 2018
  • Copyright Protected:
    Conjecture Corporation
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Settling on the right inventory management system for your business is more complicated than many people realize. This is because there are inventory systems designed to fit a wide range of needs, from a local mom and pop store all the way through to a multinational corporation. Fortunately, there are a few basic considerations that can be used to narrow the search for the ideal inventory management system and provide your business with an effective tool it can use for many years to come.

One of the first tasks in evaluating any inventory management system is to determine how well the tool complies with any governmental standards that apply to the reporting of inventory values and the subsequent taxation. Ideally, you want to automate this type of tracking as much as possible. For this reason, it is important to make sure the software used to drive the system is up to date, has the ability to adjust inventory automatically when any type of receipts or disbursals take place, and generally provide you with a running tally of the overall value of the inventory, including a breakdown between taxable items and non-taxable items. If the nation in which the business operates uses different tables for different types of inventory items, make sure the system is intuitive enough to note the difference and calculate the values properly.

Usability is another important aspect of choosing the right inventory management system. Complicated systems for the process of receiving a shipment of wood screws or issuing those screws to various departments do nothing more than waste time and enhance the possibility of error. By keeping the receiving and disbursal process as clean as possible, while also allowing for easy tracking of past transactions, keeping the inventory accurate is much easier, and less likely to frustrate purchasing agents, shopkeepers, or anyone else that is involved in the process of inventory management.

Capacity is another point to keep in mind when choosing the best inventory management system. The needs of a small company many be minimal at first, but will become more comprehensive as the business expands. A larger business that is getting by with a lean inventory now may find it necessary to expand that inventory in order to take advantage of an upcoming opportunity. If the inventory management system is able to accommodate increased usage and track a wider range of goods as a business grows, the need to replace the system in order to keep up with increasing demands is minimized. As a result, the company is able to enjoy more returns from the original investment in the inventory management system while also avoiding the expense of having to evaluate, purchase, and learn a new system every few years.

Cost must also be considered when purchasing and implementing any of the components associated with a given inventory management system. Take into consideration how much the system will save in terms of time and expense over the course of each year of use. Doing so makes it easier to justify the cost of a more expensive system that has a greater ability to adapt to changing conditions within your business. At the same time, make it a point to compare enough systems so that you do get the most for your money. While this does mean an investment of time up front, making the most practical choice will save a great deal of time and money over the long-term.



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Post 1

And I would like to add to that last paragraph that it's important to allocate the required resources, i.e., people and and their time for a new system implementation to be successful. In my experience, this is a common pitfall for smaller, inexperienced companies.

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