Inventory management systems track inventory from the time it enters the retail establishment to the time each item is purchased. Profits are contingent on how successfully inventory is managed. Inventions like bar codes help determine how many units have been sold in any given period of time. This enables retail buyers to know how well an item is selling or if more inventory should be ordered. Some inventory management systems automatically reorder items based on how many items have been sold. Inventory management systems also track how much of any given product remains unsold in a particular period of time.
Effective inventory management systems keep customers coming back to the retail establishment because the products customers are looking for are always in stock. Shoppers are loyal to retail stores that have the items customers want to purchase as time is one of a consumer's most valuable resources. In addition, the good inventory management systems minimize the frustration of shopping for an item that isn't available.
Inventory management systems identify exactly how much revenue has been generated from the sale of any given product in a specific period of time. This is important because sales forecast can be created based on the past sales performance in a given period of them. The accurate sales forecasting of anticipated profits due to an effective inventory management system allow for better future planning. Many companies have been doomed for failing to accurately forecast sales. Without being able to accurately forecast future sales, too much inventory or too little inventory is manufactured and ordered.
Computer software programs drive inventory management systems. A recent advancement in inventory management systems is technology that utilizes radio frequency to identify more information about an item than a bar code. Radio frequency technology or RFID is designed with a microchip that sends product information to an inventory device
The advantage to using RFID is that an item can be scanned that is many feet or even yards away from the device tracking the inventory. Inventory that is kept in warehouses far above eye level can be tracked and counted without moving the item or traveling to the item using RFID. An accurate count is important because retail organizations need to know how much supply and demand there is for a product based on how much is on hand and how much has sold.
Inventory management systems are developed and designed by people. When a retail manager is aware of a planned promotion of a specific item or product line, she can order additional inventory. In store promotions planned in advance should result in an increase in sales. An effective inventory management system should be adjusted during any in store promotion period to account for the boost in sales. Inventory management systems then work to meet the demands of an anticipated increase in sales and ensure that the anticipated supply will meet the demand.