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How to Select an Inventory Management System
August 28, 2018
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How to Select an Inventory Management System

In recent years, an increased number of businesses have implemented inventory management systems to help increase efficiency in their operations. These systems have proven to be particularly valuable for restaurants, retailers, and businesses in other industries that carry significant inventory. Naturally, there are many different inventory management systems your business can choose from, so it’s crucial that to compare your options

The right inventory system for your business will depend on a variety of factors. In this post, we’ll review some of the factors you should consider when choosing an inventory management system.

4 Factors to Consider When Choosing an Inventory Management System

1. The Amount of Inventory that You Carry

The primary purpose of using an inventory management system is to avoid overstock and shortage issues throughout the business cycle. This objective is especially important in the restaurant industry, where freshness and expiration dates must be considered. Having a system that can reliably account for your volume of inventory is one of the first things you should contemplate.

In addition, having a system that is compatible with your inventory accounting strategy is very important. For example, while a large gravel company may want to use a “last in, first out (LIFO)” system, a restaurant might prefer a “first in, first out (FIFO)” strategy instead. The differences between these strategies can have a major operational impact over time.

2. Your Business’s Budget

Your budget will also be a very important component when choosing an inventory system that’s right for you. While smaller businesses selling a limited number of products won’t need as many features, larger operations will likely want to look for something that’s more extensive, especially if they have enough money in their budget to afford more sophisticated options.

The primary cost-drivers in an inventory management system will be the value of the brand, the number of features that are available, and the volumes of inventory that they’re designed to manage. Typically, these systems will have a specific target market. Understanding who these systems are designed for can help you avoid making the wrong choice.

3. Employee Access to the System

When choosing an inventory system, you should decide how many team members will need to access your inventory management system. For example, if only a few managers will be utilizing the system, then a simpler system will likely suffice.

Still, training all your employees to properly use the system may help you increase efficiency and decrease costs over time. This is especially true if your business has multiple locations, and you need employees at each location to keep you updated on how much inventory is left.

4. User Interface (UI)

The user interface (UI) of a given system should influence your decision. Before making any commitments, you should see each prospective system in use. The ones that are most intuitive from the beginning will likely be easier to implement, saving you and your employees considerable time.

There are several things you should be looking for when comparing different UIs. Factors such as consistency, clarity, responsivity, maintainability, and attractiveness will all influence the inherent quality of a system, so you should take time to determine what matters to your business.

5. Necessary Technology

Lastly, having access to the latest technology will be quite important. For example, being able to easily monitor your business’ inventory from a mobile application can be beneficial.

With the best inventory management systems, you’ll be able to complete tasks such as setting up alerts when inventory at a certain location have reached specific levels or implementing cloud technology to increase your security.

Conclusion

With seemingly countless inventory management systems to choose from, it can be difficult to know where to begin your search. The inventory system that makes the most sense for one business may not necessarily make the most sense for another. By keeping all these factors in mind, finding the system that’s right for you should be a breeze.

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Andrew Paniello
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Andrew is an experienced writer with a degree in Finance from the University of Colorado. His primary interests are investing, entrepreneurship, and economics.