| If you have used or researched inventory | | | | software when necessary. The ability to view |
| management software, surely you've come across a | | | | inventory by location keeps you more organized and |
| wide range of buzzwords that detail the areas of the | | | | allows you to get the inventory you need more quickly. |
| software that can help your business manage | | | | Physical Inventory |
| inventory better. Sometimes those who use such | | | | This is the process of counting the actual number of |
| buzzwords forget that not everybody is knee-deep in | | | | items in inventory, entering it into your software |
| inventory management on a daily basis, and they might | | | | system and getting the two sets of numbers to agree. |
| need a better explanation. Here are some key | | | | This process helps keep your inventory numbers |
| inventory management terms, and a brief explanation | | | | accurate. Software can help with this process by |
| of how they help you and your business. While some | | | | printing a working file and providing a place to enter a |
| of the terms may be familiar, their definition in relation | | | | physical count from the printed count sheets. |
| to inventory management software is more specific to | | | | Serial / Lot Number Tracking |
| that application. | | | | Many businesses have items for which they must |
| ABC Analysis | | | | track serial or lot numbers. In times of item recall, it is |
| This analysis shows which of your inventory items are | | | | crucial that the number tracking system is up to date |
| responsible for the majority of your Cost of Goods | | | | and quickly accessible. Software programs can keep |
| Sold ("COGS") based on the 80/20 rule: 80% of | | | | track of inventory serial and lot numbers upon receipt |
| inventory sales come from 20% of your items. This | | | | into inventory. When an item is sold, the number can |
| analysis can help control your inventory, increasing the | | | | be selected and will be tied to the customer. If there is |
| items you need in stock, and reducing the items you | | | | a recall or issue, you can then run reports to see which |
| don't need. This in turn, can increase your capital, since | | | | customers got items from a certain range of numbers, |
| less money is tied up in inventory. | | | | making this process much faster than looking back at |
| Assemblies | | | | sheets of paper. |
| Assemblies are a set of component parts that make | | | | Turnover |
| up an inventory item. By setting up items as | | | | Turnover is defined as the number of times the |
| assemblies in a software system, removing the | | | | average inventory on hand is sold and replaced during |
| components from inventory becomes easier, and | | | | a period of time. A higher turnover rate indicates your |
| costing of an item can also be automated within the | | | | inventory is not just sitting on the shelf getting "stale". |
| assembly. You eliminate the need to remove (and | | | | Inventory management software can help clarify what |
| replace if needed) every single component individually | | | | your company's turnover is by product, which can help |
| in your software during the production process. | | | | identify which items you are purchasing too seldom, |
| Bill of Materials | | | | too often, too many, etc. which can have a drastic |
| The bill of materials shows all the information about a | | | | impact on your cash flow. |
| production plan, including its assemblies and required | | | | Unit of Measure "UOM" |
| components. This helps you plan for which items need | | | | Inventory items must be measured somehow, and that |
| to be produced, and what components to pull from | | | | is why we have units of measure. We can measure |
| inventory for that production plan. It also helps you | | | | items by the pallet, the box, the bag, the gram, the |
| realize more quickly which components are in stock or | | | | pound, and much more. Where it becomes difficult is |
| need to be ordered for that production plan, saving | | | | when you need to purchase items in one unit of |
| significant time compared to managing the process by | | | | measure, and then sell in another. Software can help |
| hand. | | | | out with this by allowing you to set up your own units |
| Multiple Warehouse Management | | | | within the system. You can also use the software to |
| Many companies that manage an inventory grow such | | | | set up the pricing per unit, so that when you sell an |
| that their products are stored in more than one | | | | item, the correct amount is taken out of stock, and the |
| location, whether it's another warehouse or even on a | | | | correct price is charged for that unit. |
| truck or trailer. The ability to see which items are | | | | These inventory management tools can help keep |
| located by warehouse is extremely helpful. Some | | | | your inventory running smoothly, and increase the |
| systems allow you to manage inventory in multiple | | | | profitability of your business. |
| locations, and even let you make transfers within the | | | | |