Role of Inventory Management in Small Enterprises

The SMEs should consider seriously Inventory Management as a strategic concept simply because effective IM leaves immense positive influences on productivity.

The SMEs should consider seriously Inventory Management as a strategic concept simply because effective IM leaves immense positive influences on productivity. There is great scope for improving the operations and performance of SMEs through the application of quality practices in Inventory Management.

The growth of Small and Medium Enterprises is a major source for employment generation, exports, poverty alleviation and ensure rapid industrialization of the country. However, SMEs, particularly in developing countries like India, face constraints in key areas such as technology, finance, Inventory Management, marketing and human resources.

It is observed that pursuing proper Inventory Management practice is one of the major ways of acquiring competitiveness among others, by effectively managing and mitigating inventory investment. It can therefore be one of the important determinants of competitiveness as well as efficiency of operational performance of SMEs in inventory intensive manufacturing industries. Let us take a quick look of the benefits of the Inventory Management Software:

Benefits of the Inventory Management Software:

Decrease in Expenditure: SMEs do not like to spend on outsourcing to a specialists; Inventory Management allows you to work by yourself instead of outsourcing.  Much ERP software provides functional products free from annual license fees that even include training, support and self-help services. Moreover, printing and paper cost is also mitigated.

Data Security: Security is a top priority for ERP   software companies. In addition, the online connection makes it easy to invoice clients, link up with bank information, and assess your business' financial health wherever you are.

Increase in Productivity:  When all important data is easily accessible to different departments of the organization, It results in better collaboration, increases in efficiency and speed which means increase in overall productivity of the organization. 

Better Invoicing Process: It effectively manages cash flow results automating and standardizing your invoicing process. Fast and efficient invoicing reduces errors of traditional hand operated processing invoices from scratch, and saves valuable time that can be invested into other areas of the business.  Good invoicing systems automatically arranges costs and quotes, produces invoices from this data. This greatly reduces the workforce required to produce invoices and the chance for human error. 

Centralization ERP software centralizes various aspects of your business's financial management, helps  you in dealing with tasks such as inventory management, invoicing, payroll and even some facet of customer relationship management all from within your ERP software program. It saves you time and money for you don't need to purchase separate software programs to do things such as invoice customers.

Analysis:Having good ERP software is like having an in-house financial advisor. The customizable reports allow you to analyze different aspects of your business, providing the data you need to take better financial decisions.  Various reports such as Balance Sheet Summaries etc. show precisely how well your business is performing at the moment while reports such as clients Who Owe Money let you manage your Accounts Receivable more easily.

Accuracy: In manual process when data inputting is done by several different people and in pen and paper record there is always chance of mistakes. Software provides high level accuracy. It also makes it easier to access and provide accurate information.

Main bottlenecks preventing SMEs from adopting this technology:

Expense Large enterprises use inventory management software, but SMEs find it difficult to afford it. The basic reason is lack of digitalization and high cost hardware and cost of hiring skilled person. Moreover, annual renewal and service cost ERP software also create issue for small companies.  

Complexity:   Inventory management software is not always very simple or easy to learn. The management of the company must dedicate a certain amount of time to learn the new system, including both software and hardware, in order to efficiently use it. To handle this whole inventory management dedicated personnel are to be employed depending upon the size of the organization.

These Things are to be considered before buying ERP Software:

What type of company are you?

With inventory tracking software, there are many of important factors to take into account in selecting your software:

Industry:Retail ERP Software is very different than manufacturing software, which is very different than distribution software. Each of these is designed to address the unique needs of that industry. And even within a particular industry, your specialty can make a huge difference—e.g., there are retail inventory solutions that deal exclusively with auto parts, or restaurants, or gas stations, while other solutions are set up to operate across any retail market. Therefore, you need to be trade specific.

Company size: Controlling inventory in a small store is not nearly as complex as controlling it across four or five different locations, which is not as complex as maintaining inventory control across a hundred-unit franchise. Ensure to select a system that fits your company size.

Software needs: Some businesses need only inventory management, while others are looking for a full-suite solution that includes lots of other essential features—these features could include accounting, estimating, project and supply chain management, business intelligence, tool management and etc.

Pramod Chandraker worked in Business development at OS Digital a digital marketing company, a web designing company in Delhi, specialised in messaging, voice, digital marketing and web designing, bulk sms service provider company, voice call service provider, missed call service provider, OTP sms service, voice OTP service, SEO service, PPC and other paid advertising service in India as well as International.

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