Inventory Optimization Software

In a complex business environment where companies support many sales and purchase channels at multiple locations, accurate planning and forecasting of inventory can be challenging. Without proper management, excess inventory can obstruct your supply chain and working capital.

If you're still using manual methods to estimate the items and their quantities for your inventory, you need to look to automation to optimize your inventory.

Inventory optimization is the process of calculating and determining the right inventory levels across your organization's supply chain. This lets you satisfy customers—who expect a quick delivery time—as well as reduce the high costs of stocking large quantities.

After all, keeping materials and products on the shelf for longer than required drives up your costs. With inventory optimization software, you can increase your visibility across your whole supply chain and ensure that your products stay on the shelf only for the requisite time.

We wrote this buyer's guide to help you understand how inventory optimization software works. This guide provides details on everything you need to know, from benefits to features, before purchasing an inventory optimization solution.

Here's what we'll cover:

What Is Inventory Optimization Software?
Common Features of Inventory Optimization Software
What Type of Buyer Are You?
Benefits of Inventory Optimization Software
Key Considerations
Popular Inventory Optimization Software Comparisons

What Is Inventory Optimization Software?

Inventory optimization software helps businesses control and optimize inventory levels across different warehouse locations. It keeps track of the different products and materials in stock and analyzes the items, as well as the quantities, that need to be reordered.

This software serves as a critical tool for managing perishable inventory, such as food items and medicines. It also analyzes an organization's historical sales and demand data to generate insights on how to optimally utilize and maintain your warehouse operations.

Inventory optimization graph in EazyStock software

As with most complex challenges, selecting the best inventory optimization software tool for your business is easier when you break it down into parts. In the next section, we break down the most common applications and features of this software.

 

Common Features of Inventory Optimization Software

Vendors offer a variety of functional breadth and depth in their inventory optimization solutions. Most inventory optimization software vendors offer some or all of the following capabilities:

Demand forecast	Review historical sales and demand data to automatically select the right statistical model for calculating future demand. Users can also modify and re-evaluate the demand forecast based on additional information from the key management team, suppliers or vendors.
Projected inventory levels	Calculate and display accurate inventory levels for future periods. The projected inventory levels are calculated based on the organization's current inventory, demand forecast and incoming supply.
Order planning	Get replenishment suggestions and create an order plan by analyzing when, which and how much of an item to order. Upload the order proposal data to your connected purchasing system (e.g., material requirements planning system) for further action.
Stock-out and overstock alerts	Alert your organization in case any product is in short supply, or in excess, in your inventory.
KPIs and reports	Monitor business performance with a customizable dashboard that includes operational key performance indicators (KPIs), graphical reports and various filters. These will help users make informed decisions about inventory optimization.
Integrations	Integrate the software with your existing systems such as material requirements planning (MRP), enterprise resource planning (ERP) and warehouse management software (WMS) systems.

To further understand these features and the vendors in this category, call our advisors at (844) 687-6771 for free, no-obligation help. They'll help you narrow down your options by understanding your requirements and recommending the best-suited solutions for your business.

As you begin shortlisting solutions, you need to understand the type of buyer you are, to better narrow down your requirements. The next section breaks down the most common buyer types.

What Type of Buyer Are You?

Inventory optimization software is used by businesses of all sizes, across a variety of industries. Before you start evaluating different inventory optimization software, you should know your buyer category. We believe most buyers of this software fall into one of the following categories:

• Small businesses. These buyers have simple requirements; they're looking to improve their inventory demand forecast and order planning. Most are currently using manual methods, so the transition to automated systems should be slow and methodical. They should start with the basic inventory optimization features so employees have time to learn the solution.
• Midsize businesses. These buyers require additional features because they deal with a relatively higher volume of customers, suppliers and vendors. They're operating from multiple facilities and require additional features such as projected inventory levels, as well as stock-out and overstock alerts.
• Large businesses. These buyers typically use the inventory optimization functionality offered in an ERP software suite. They need a single system that controls all their manufacturing and inventory functions in order to centralize the exchange of information between different applications.

Benefits of Inventory Optimization Software

While some of the benefits of inventory optimization software should be clear from our discussion above, we've called out the most important ones below:

• Improved cash flow. Accurate demand forecasting and projected inventory levels help organizations reorder only the required products. This results in lower handling and storing costs, thus improving the overall cash flow.
• Enhanced customer service, satisfaction and loyalty. High customer satisfaction is an obvious market advantage. Product availability at all times will lead to higher satisfaction rates among customers, helping you ensure better customer retention rates and greater customer loyalty.

Key Considerations

To conclude this buyer's guide, here are some important questions to consider before you purchase and implement inventory optimization software:

• Is the software scalable? Ask your shortlisted vendors about the scalability of their inventory optimization software. Scalability is essential when your organization grows—the software should be capable of efficiently handling your expanding business needs. For instance, it should be able to support multiple warehouses and distribution centers at various locations.
• Does the software support integrations? Check with the vendor whether the solution supports integrations with your existing systems, such as MRP, ERP or WMS. Quick and seamless integration will help you efficiently import and export data.
• Does the vendor offer customer support? Find out whether the vendor offers support 24/7, only during business hours or not at all. In addition, ask about available support options such as email, phone or live chat.

Popular Inventory Optimization Software Comparisons

• Tradegecko vs Fishbowl
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• Asset Panda vs Zoho Inventory
• Fishbowl Inventory vs inFlow Inventory