From Chaos to Order: 10 Ways a Tool Can Help You Manage Inventory Like a Pro

I'm Brittany Brown, the CEO and founder of LedgerGurus, and I'm very passionate about inventory and the solutions around it. Don't forget to stay till the end of this video so you can hear my personal recommendations on the tools that I like the best.

0:35 Visibility and forecasting

The first thing I want to talk about is visibility. A lot of ecommerce brands struggle to kind of just keep a handle on their inventory. Where it is, what's on order, what's in stock, what's available, what's already been committed to existing orders, what's in which warehouse, all those kinds of things. So an inventory management solution will give you great visibility on all of those things.

The second one is forecasting. An inventory management software will often be able to help with the forecasting process. Now this is not a true forecasting tool, where it's typically like looking at what your sales are going to be in the future and helping you understand like how much inventory you're going to need for those sales. However, it will help you manage things like lead times, and understanding what you have on stock, and understanding what your reorder points should be. And some tools even have the ability to take into consideration things like velocity when helping you manage that reorder point. Velocity is basically the speed at which your products are selling. And so if suddenly your product begins selling much more quickly, it can give you notifications letting you know you probably need to move your reorder point up more quickly.

1:31 Product cost accuracy

Third thing I want to talk about, and probably my favorite as an accountant, is product cost. And we do have the ability to help our clients manage their product costs outside of an inventory management system. However, it will never have the level of accuracy or the level of visibility or the level of flexibility that you will get inside of an inventory management system, as opposed to a spreadsheet that can only be updated.

So often an inventory management tool will allow you to update your product costs every single time a new purchase order is placed and that inventory is received, keeping your inventory costs as up to date as they can possibly be. This makes things like calculating cost of goods sold and evaluating the ending balance of your inventory much easier to do and much more accurate.

2:10 Process change and the product master

The fourth thing is process change. So particularly if you're trying to move from a periodic to a more perpetual inventory system, allowing you to see what's going on in more real time, an inventory management software will facilitate those changes and help you develop the processes that you need to have in place in order to help this happen more seamlessly.

Fifth is that it will act as a product master. So this is particularly useful when you have multiple channels that you're selling on. Basically this means that your inventory management system will be able to update all of the channels that you're selling on in real time. So if you're selling over here in Amazon and you sell out of a product, then Shopify will be updated right away that the availability of that product is gone. This can really help with overselling, as well as just save you a lot of time with just having to update channel quantities constantly.

2:56 Purchasing precision and pick, pack, ship

Number six, an inventory management tool will help you with precision. It gives you the ability to execute the sales and the purchasing process and tasks with more control and precision, particularly around placing purchase orders and paying those bills. It gives you a great audit trail of what's happening, because it also holds all of your products and all of their pricing and all of their vendors and all of those other things right inside the system. When you are ordering, you don't have to spend as much time looking things up, and because many of those things prepopulate, it gives you much better control around making sure you don't have as much human error as you otherwise would.

3:28

Number seven is an inventory management solution will help streamline processes, increasing efficiencies. For example, the pick, pack and ship process. Inventory solutions not only help track costs, but it can also be a huge help with warehouse management and fulfillment if you're trying to do that yourself. If you are using 3PL instead, it can often integrate with those 3PL solutions, helping you have better visibility into the sales orders being fulfilled on your behalf and see exactly what's going on at any given time. Taking me back to perk number one, visibility.

3:54 Operational support and better reporting

Number eight. It just gives overall good operational support. I mentioned in this last one warehousing fulfillment, but it helps with operational support around all processes, from the purchasing to the receiving into the warehouse, to understanding exactly what you have where, to understanding what's happening on your sales channels, giving those sales channels better visibility into what's actually available when those sales orders come in, giving you better visibility and controls around the pick, pack and ship functionality, as well as helping you just manage every aspect of it better. So an inventory management solution helps streamline the key processes both operationally.

4:33

Number nine, it helps with reporting, so you have significantly better and upgraded reporting capabilities within an inventory management software over and above, say, like QuickBooks or even just spreadsheets. And the reason why is because that inventory management solution is gathering all data around the sales process, as well as capturing the cost of goods sold associated with those orders.

So some of the things that you can see uniquely in an inventory management system that's not really available anywhere else is profitability by sales order, profitability by SKU, profitability by channel. All those things are uniquely available inside inventory management softwares that's not really available anywhere else. This better reporting helps to guide you making better operational and business decisions.

5:14 Fewer manual errors and my two favorite tools

Number 10, a system for inventory management increases your efficiencies and decreases the inaccuracies. When you're operating entirely out of spreadsheets and other things like that, all of your processes are very prone to human error. Inside an inventory management solution, all of your data, your product data, your SKUs, the costs, the vendors, all of those other things, the sales orders, all of that stuff is being pulled in automatically, and so you're no longer relying on the data entry of your personnel. So not only are you saving yourself those manual, time consuming, inefficient tasks, but you're also reducing the risk of human error when all of these things have to be added manually instead.

5:50

Now I mentioned if you stayed until the end of this video, I was going to tell you what my two favorite inventory solutions are here at LedgerGurus. We've worked hard to vet inventory tools and I do have a couple of favorites, and I'm just going to mention them right now. So I particularly like Finale and another tool called Dear, which was recently rebranded as Cin7 Core.

There's a lot of reasons why I like both of those tools. We do happen to now implement both of those tools as well as support them. So if you're interested in any of those discussions, if understanding if either of those tools would be a good fit for your business, or if you're looking for overall accounting support in general, please feel free to reach out through our website. We'd love to talk to you.

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