Technology has been accumulating the professional wisdom and experience of warehouse managers for decades now. The inventory inventory software of 2024 is nothing less than the playbook of efficient inventory control for small businesses. Though terminology may differ from app to app, there is a lot you can pick up from inventory management systems. This blog post will delve into the key terms and best practices of warehouse inventory management software.
What is inventory?
Inventory is the tangible assets of a company in the form of finished goods or raw materials that are meant for sale, resale, or production. Such items have to be tracked and accounted for through consistent record-keeping. Generally, four types of inventory are recognized:
- Raw materials
- Work-in-progress goods
- Finished goods
- Maintenance, repair, and operation inventory (MRO)
Raw materials are the materials used during production or manufacturing.
Work-in-progress goods are partially finished goods that are still in production.
Finished goods are the end-products of the manufacturing process or simply items that you purchase from vendors to be sold to your customers.
MROs are the items that support your operations, like supplies, spare parts, etc. These are called Non-inventory items in HandiFox Online and their quantities aren’t logged.
If your company is a field service business, it’s essential that you keep track of your intangible products - your services. To this end, HandiFox Online introduces Service items that you can add to transactions but, just like with Non-Inventory items, there’s no way of tracking their quantities. All in all, HandiFox allows working with Inventory, Non-inventory, and Service items.
The key terms of inventory management
An SKU, or Stock Keeping Unit, is a unique identifier assigned to a product that helps in organizing and cataloging items. SKUs are used to distinguish between different products, variants, or versions. Normally, they are alphanumeric or numeric.
Reorder point is the minimum quantity that you would like to have in stock at all times. HandiFox makes sure to track items whose quantity is below their Reorder Points and include them on the next purchase order. HandiFox allows setting up Reorder Points for individual or all items at once across several sites.
Cycle counting is a method of regularly auditing and counting a subset of inventory items on a frequent and ongoing basis. HandiFox allows counting from the web and mobile app with equal efficiency thanks to the barcode-scanning feature.
Physical inventory is the process of physically counting and verifying the actual quantity of goods or products in a company's inventory at a specific point in time. This involves counting all items on hand. In HandiFox Online, it goes by Full Inventory Count. What it does first is it brings all the quantities back to zero to let you enter the new quantities that reflect what you really have on hand.
FIFO (First In - First Out) is a valuation method where goods produced or acquired first get disposed of before all the others do. FEFO (First Expired - First Out) makes sure products that expire sooner get sold first. HandiFox allows selecting either one while you’re filling out the data on lot-tracked items - this way the system will know which lots should go first on sales transactions.
Batch tracking or lot number tracking is a practice of tracking groups of items with similar properties like date of production, expiry, etc. to ensure a smoother recall process. HandiFox Online allows assigning lots and serials to items and tracking their expiration dates.
A Bill of Materials (BOM) is a list of raw materials, components, sub-assemblies, and quantities needed to manufacture or assemble a product. In HandiFox Online, Manufacturing presets serve as BOMs and help users navigate faster through the production or assembly process.
Price levels are a pricing strategy that helps businesses categorize and assign different prices to products or services based on certain criteria. This allows you to manage your pricing structures and tailor them to different customer segments.
Inventory management software best practices
Not all businesses know what’s best for them from day one. Nor do all practices work equally well for everyone. These 7 inventory control principles have a proven effect individually and even more so if applied together.
- Per location tracking. Per location or Multi-location inventory tracking is a method of monitoring and managing inventory levels separately for each physical or virtual location within a business. This is particularly important for companies that have multiple warehouses, stores, or distribution centers. The goal is to have a detailed understanding of the quantity and status of inventory at each specific location.HandiFox Online is warehouse management software whose multi-location tracking feature lets you in on what’s going on within one storage location as well as allows seeing the bigger picture and moving inventory freely between storage facilities.
- Barcoded inventory. Barcoding is widely adopted in various industries but is still underused by small businesses. Efficient data capture and verification are inconceivable without barcode scanning software. So is accurate inventory management.HandiFox Online allows scanning, recording, generating, and printing barcodes, which ensures fewer errors, streamlined processes, and that stock levels and item locations are always up-to-date.
- Demand forecasting. By accurately predicting future demand, businesses can maintain optimal inventory levels, avoiding excess stock that ties up capital or shortages that result in lost sales.HandiFox Online provides estimates as to how long the current inventory will last based on the average sales rate for the chosen period.
You can also learn more about the seasonal trends and peak demand periods by checking out the Sales reports.
- Regular audits
- Regular audits. Auditing ensures that the recorded inventory levels match the actual physical inventory on hand. Discrepancies can be identified and corrected promptly, preventing errors in financial reporting and misallocation of resources.HandiFox Online offers the Counting Sessions procedure that works as a cycle counting or physical inventory process based on your needs.
- On-time replenishment. On-time replenishment enables businesses to maintain optimal inventory levels, balancing the costs of carrying excess inventory against the risks of stockouts. It provides accurate data for demand forecasting and inventory planning. HandiFox Online’s Reordering lets you determine your replenishment triggers that prompt actions when these thresholds are reached. The software introduces Reorder Point and Desired Quantity on hand settings for that purchase.
- Checking analytics. Analytics provide insights into inventory trends, customer behavior, and sales patterns. By analyzing this data, businesses can make informed decisions about inventory levels, reorder points, and product assortment.HandiFox Online offers a range of reports accumulating data on purchasing decisions, sales, serial/lot number tracked transactions, manufacturing processes, transactions by item, and counting sessions.
- Third-party integrations. Integrating inventory software with other business systems streamlines workflows by eliminating manual data entry and reducing the need to switch between multiple applications. For example, integrating an online inventory management system with accounting software automates the transfer of financial data such as sales transactions and inventory valuation, saving time and reducing errors.HandiFox Online is integrated with QuickBooks Online to facilitate your bookkeeping process and integrates with Shopify to make sure your online orders get processed and packed in a timely manner.
See these inventory management practices in action
Inventory management software solutions are a GPS guiding you through the intricacies of running an inventory-centric business. Make sure you get your navigation system - take a free 14-day trial now.
