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Have you ever thought about amazon showing “Out of Stock” for the products that are finished in their warehouse, or zomato app showing “item not available”. We come across these scenarios each day where inventory management systems of those companies knowingly or unknowingly interfere with our life. In this article let’s see what is meant by inventory management, different ways to do it, and why it is necessary for business owners.
What Is An Inventory Management Database?
In accounting, the word inventory means goods that are in various stages of being made ready for sale. Inventory management includes maintaining the storage of stock, controlling the amount of product for sale, Supply chain management, warehouse management, and order fulfillment. For better management of inventory, it is mandatory to maintain a record of stocks and update it accordingly, This record is known as Inventory Management Database.
Why Inventory Management Database Is Important For Your Business?
An effective inventory management database has direct effects on the overall performance of your business. An inventory management database provides you with an accurate, up-to-date picture of stock levels for each product so that you have sufficient stock to meet customer demand without overstocking.
Inventory management databases will help you to have a better in-depth view of your business. Let’s take a brief look over some of its benefits.
|Benefits of the inventory management database||Explanation|
|1||Reduce cost||An inventory management database will help you to reduce your expenses and increase profits. It will help you identify the most selling product so that you can give more orders for that product. Also, it will help you to have a better understanding of stock availability and help you to avoid overstocking a specific product.|
|2||Optimize fulfillment||E-commerce giants like Amazon and Flipkart have set a new standard for order fulfillment. Now where days customers are having a higher expectation regarding shipping days and one-day delivery is a new standard. With good warehouse management, your product can quickly reach your customers.|
|3||Provide better Customer service||Customers are gods when it comes to business and the complete satisfaction of customers will increase the frequency of purchases and thus increase your business volume. Implementation of a better inventory management database will prevent a situation where you have to tell your customer “ITEM NOT AVAILABLE” since you have a good understanding of the stocks available.|
|4||Prevent loss from theft, spoilage, and returns||Collectively we call this inventory shrinkage. In the starting, this inventory shrinkage will be written off as business running costs, but as time progresses these losses will be accumulated and will rip your pockets someday. Warehouse Theft by employees and Return of Product due to damaged or wrong shipment contribute to the major share in inventory shrinkage.|
Design Of Inventory Management Database And Tools Used For It:
Inventory Management Database is a system that allows the user to manage and track inventory levels, orders, sales, and deliveries. In earlier days Microsoft Excel was used instead of inventory management software(some small-scale business owners still do this). But this has become a tedious process and was more prone to errors. As technology developed these systems started to get automated and became more and more efficient. Today we have tons of inventory management software available for cheap.
The four basic parameters of inventory management models are products, purchases, orders, and suppliers, along with many other critical components. At its core, inventory management works by tracking the two main functions of a warehouse: receiving (incoming) and shipping (outgoing). Raw materials are decremented and finished goods are incremented. Current inventory, or products on hand, is updated by tracking incoming shipments and outgoing orders. Order alerts will be triggered when inventory levels fall below pre-defined minimum levels.
Let’s take a look at the basic design block diagram of the Inventory management database.
The above diagram shows a basic overview of the inventory management database. Now, let’s take a deeper look into an expanded view.
Tables Used In Inventory Management Database
When it comes to DBMS(DataBase Management Systems) Tables play a fundamental role. The table is a way of storing and representing data in a database. In this section, let’s see what are tablets used in the inventory management database.
|1||User Table||Used to store user information like id, role id, name, email.etc|
|2||Product Table||Used to store product information like id, title , type .etc|
|3||Product Meta||Used to store additional information about products like product banner URL etc|
|4||Category Table and Product Category Table||Used to store the product categories and their mappings|
|5||Brand Table||Used to store brand data like title, summary.etc|
|6||Order Table||One of the most important tables. It stores data like id, shipping, tax, discounts, and everything related to payment and shipping.|
|7||Address Table||This section provides the table to manage the address of either the user or the order. It stores data like id, name, mobile number, city, Pincode. etc|
|8||Item Table||This stores the data of items stocked in the inventory and purchased from the suppliers.|
|9||Order Item Table||This table stores the data of items ordered by the customer.|
|10||Transaction Table||This table stores the data of payments made by the user, refunds initiated. etc|
Different Types Of Inventory Management Systems:
Typically there are three types of inventory management systems, they are manual, periodic, and perpetual. Technical knowledge needed, complexity, efficiency, and cost will increase as we move from manual to perpetual.
Manual Inventory System
This method is least preferred these days as they are very ineffective and subjected to more chances of errors. Today, some small businesses that carry low levels of inventory may still use a manual system. An employee essentially goes through the checklist, counts all items, writes down the results, and enters the quantities in a spreadsheet document. Traditional software like Excel is made use here.
Periodic Inventory System
It acts as the connecting rod between manual and perpetual inventory systems. Since periodic inventory systems demand more technology than manual inventory systems advanced technologies like barcode scanners are made use here. Barcodes are implemented by tagging inventory items, these barcodes are scanned periodically to track the item from its arrival to the facility, throughout to its final destination.
Perpetual Inventory System
So far this is the most sophisticated system using very modern technologies like RFID(Radio Frequency Identification) tags and much more sophisticated backend software is made use here. Active RFID tags can continuously send data and provide real-time information while passive RFID tags use electromagnetic energy from a reader to transmit data. These data are sent to CMMS(Computerized Maintenance Management Systems)
Inventory Management Apps, Software, and Systems:
When it comes to choosing the best inventory management system for your business you have to consider the following aspects
- Number of users
- Integrations(for fast-growing businesses inventory management system should be directly integrated to supply chain)
- Physical devices(physical devices like POS machines, credit card readers, barcode scanners connected)
- Customer and supplier data
- Offline access
- Complexity, now and into the future
Popular Inventory Management Softwares
|1||NetSuite ERP‘s Inventory Management Software(Oracle)||Suitable for Enterprise level business owners||The pricing is on a quote basis and customized for each business.|
|2||Vend||Flexible according to business, Suitable for small business owners||Lite version $99|
pro version $119
|3||Profit Books||Best suited for Smallcap business owners, wholesalers, and manufacturers.||Free of cost|
|4||Zoho||Best suited for Smallcap business owners.|
Country-specific versions are available. Suitable with android and ios.
|$199 per month for an annual subscription|
and $249 per month for a monthly subscription.
|5||SAP’s Business One Professional Software||Suitable for Enterprise level business owners. You can use this software either through subscription or by purchasing the license. In most cases, you have to request a quote to get started||one-time license per user costs $3213 for pro version and $1666 for limited edition.|
Why Retailers Should Consider Using Inventory Management Systems?
As we all know the retail space in India is growing at a fast rate. The giants like Reliance and Tata are doing their best to get into that space. The recent acquisition of BigBasket by tata sons and the future retail reliance deal is an example of it, even e-commerce giant Amazon has also eyed the retail space in India.
If you as a retailer get into the race it’s mandatory to be organized and aware of what’s happening in your business. It will be a tedious process if no inventory management systems are being implemented. You will slowly lose your market share and eventually fall to the floor.
But if you are a small business owner with a manageable turnover an excel sheet, time and patience are enough. If you need to take it to the next level REFER to THIS video on how to make your own inventory management system using Microsoft Access.
Here we have seen how important is inventory management for your business. In short inventory management will help you to have a better outlook over your supply chain and keep you updated about the availability of raw materials and finished products. It also helps you to generate more revenue by :
- Increasing business volume
- Avoiding overstocking
- Better fulfillment
- Better Customer service
- Preventing theft, spoilage, and returns
- Thus Inventory management database is an unavoidable part of any business irrespective of how large the business is.