Automated Inventory Control | 2 mins read

Automated Inventory Control- How It Works & How It Can help

automated inventory control how it works how it can help
Chloe Henderson

By Chloe Henderson

Businesses with automated inventory control can streamline operations such as stock counting, purchase orders, fulfillment, and shipping.

Successfully implementing inventory management technology is a significant step towards complete business process automation. Managing inventory, especially across multiple locations, can quickly become overwhelming and time-consuming when using manual methods. However, a cloud-based inventory management system uses modern software to reduce time spent on routine stock counts and tracking.

What is Automated Inventory Control?

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Automated inventory control is a modern process that uses advanced technology to manage inventory within the supply chain. With software automation and integrated hardware, such as barcodes and scanners, warehouse management can efficiently monitor stock levels. This control system can also perform other essential tasks, including-

  • Determining and maintaining reorder points
  • Managing customer order deliveries
  • Inventory item fulfillment
  • Inventory tracking
  • Integrating established systems
  • Monitoring real-time data
These tedious processes can be completed solely by an inventory system, enhancing supply chain management and efficiency with increased operation speed and accuracy.

Aside from optimizing operational efficiency, an automated inventory system provides companies with multiple benefits, including-

1. Promoted Scalability
Business expansion relies heavily on the capabilities of the established technology. If a company has an outdated inventory control system, it significantly limits its scalability. For example, if an organization still uses manual management processes, it is unrealistic to open multiple warehouse locations. Each location would need staff to track inventory, collaborate data, complete purchase orders, and complete other necessary tasks. This would require too much time, labor, and capital to operate successfully and remain profitable.

Automated inventory management streamlines standard stock procedures using advanced software, requiring less employee intervention and time investment. This solution also gives warehouse management access to real-time inventory data when integrated with the other management systems. With this broader scope of warehouse performance, a business owner can make accurate data-based decisions for expansion.

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2. Minimized Human Error

Companies that are still using traditional inventory tracking methods, such as spreadsheets and tallies are more exposed to human errors. Employees can miscount, miscalculate, or forget to aggregate data. These simple mistakes can cause a warehouse to overstock or understock a product, significantly affecting their bottom line.

Since automated inventory management software is able to conduct standard processes with minimal human intervention, human error is significantly reduced. For example, when an employee completes an inventory count utilizing software and scanners, the quantities are automatically sent to the management system and any integrated solutions. This function eliminates the need to enter and calculate item stock manually.

Automated inventory management software not only provides real-time stock levels but enables users to track inventory location as well. Whether an item needs to be transferred between warehouses or a shipment is expedited to prevent back orders, software users can monitor product movement. This ensures that a company is updated on all logistical information to prevent misinterpreted discrepancies due to a lack of efficient data exchange.

3. Saved Time
Manual inventory management tactics are quickly becoming obsolete due to its inefficiency. The time it takes to pull information from various systems, calculate stock levels, and generate reports is exponentially longer than if a business used software solutions.

Automated inventory control continually updates inventory levels within the solution and other integrated services, such as point-of-sale and demand forecasting systems. This saves the company time on data sharing and increases service speed when a discrepancy occurs. When information filters through the software, the system will alert users if an error has occurred, allowing management to reconcile the issue quickly.

How Does Automated Inventory Control Work?

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An advanced inventory management system will go beyond standard procedures. Automated software should integrate existing systems to analyze sales data, forecast consumer demand, and alert users when the stock volume reaches the reorder point.

By integrating inventory software with the point-of-sale (POS), ordering, and demand forecasting systems, management can gain insight into all operations with one interface. Collecting information from a POS system allows the solution to generate detailed reports on item turnover rate, promotion performance, and profit margins.

This gives the marketing team insights on what items are underselling and overselling, along with their profit margins. It also outlines how each promotion is performing, so the team can develop more effective campaigns and discounts to maximize sales.

This information can also be integrated with a demand forecasting service to better estimate future customer demand and sales trends. The solution can also enhance risk management by cross-examining cash flow, profit margins, and turnover rates to determine what stock significantly contributes to the bottom line. This allows management to determine what goods need to be reordered so they can begin the purchasing process with vendors before it's too late.

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Some software can even be programmed to automatically submit reorders by tracking inventory levels, preventing stockouts. Automatic stock replenishment also limits waste when dealing with perishable raw materials. Without accurate reorder points based on inventory levels, goods can expire due to lack of rotation or over-ordering. Any wasted stock is wasted time and capital.

The solution can also project lead and delivery times so management can create shipment schedules and avoid expediting customer orders due to late arrivals. This is especially helpful when taking demand forecasting data into account, so customers are not frustrated with back orders or stockouts.

Overall, implementing automated inventory control streamlines daily processes such as cycle counts and item transfers, saving businesses time and money. This system can be further enhanced by integrating like software to optimize data sharing, reporting, and analytics to promote business expansion.

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