The primary purpose of any company is to make a profit. An Inventory Tracking System or Inventory Management System is a tool you can use to increase the profitability of your company. This is a collection of hardware, software and procedures designed to help you better manage your inventory. It can help you avoid having too much of something (overstock) or too little of something.
An inventory management system spans the spectrum of automation from notepad and pencil to full computer integration. By increasing the level of automation, you can lower the number of errors in your data and increase your confidence in that data.
A popular automation mechanism is the use of barcodes. A barcode label is a way to identify an item so that it can be read by both a person and a computer. Placing barcode label printers and readers at strategic locations in the path of inventory allows you to automate much of the tracking process. The barcode contains an index into a database that maintains the real-time status of your inventory.
Some Inventory Management Systems provide easy integration with other business systems. Integration with order processing allows automatic order generation when inventory levels reach the reorder levels you define. Integration with production scheduling keeps a work order from reaching the production floor without adequate material to fulfill that order.
By employing an inventory management system, you have a clearer picture of inventory levels. This gives you the ability to make business decisions quickly, while increasing your productivity and profitability. In summary, the main objectives of an Inventory Management System are to:
- Maintain inventory at optimal levels.
- Track inventory as it moves between internal and external locations by providing mechanisms to receive, pick, pack and ship.
- Use the oldest inventory first to keep it from expiring if it has a defined shelf life.
- Provide a snapshot picture of all inventory through reports.
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