Definition:

• • An inventory management system is the process by which goods are monitored from purchasing to production and finally to end sales.
  • It governs how businesses approach inventory management, ensuring that they maintain healthy margins while efficiently managing their inventory.

Why You Need an Inventory Management System:

• • • Accurate Tracking: Without an IMS, businesses operate on an ad-hoc basis, leading to situations of overstocking or understocking.
    • Cost Reduction: Automated inventory management systems can significantly reduce labor costs associated with manual stock audits.
    • Visibility: IMS allows you to track inventory movements, know stock levels, locations, and reorder points.
    • Meeting Customer Demand: Accurate systems help reduce stockouts, ensuring you never miss potential sales.

Profitability Insights: By recording inventory data, you can analyze production and selling costs, understanding overall inventory value and profitability.

Types of Inventory Management Systems:

• • • • Manual Systems: Basic systems using spreadsheets (e.g., Excel or Google Sheets).
      • Dedicated Software: Purpose-built inventory management software designed to enhance efficiency and reduce costs.
      • Factors Influencing Choice:
        • Business size
        • Complexity

Benefits of Inventory Management Systems:

• • • • • • Greater Visibility: Track inventory movements, stock levels, and reorder points.
          • Meeting Customer Demand: Avoid stockouts, provide good customer service.
          • Profitability Insights: Understand costs and profitability at product and business levels.
          • Workflow Efficiency: Eliminate manual stock checks.
          • Accurate Financial Reporting: Crucial for accounting purposes.