Smart business owners intrinsically understand staying on top of inventory is a crucial part of scaling the company up. Knowing what’s in stock and which orders you can fill immediately is essential as you gain additional customers. An upgraded inventory management system also allows you to reorder supplies or products when you need them without keeping too much in stock.

Even though company leaders often understand the importance of good inventory management, it’s easy to get into old habits with the software used and systems in place. Upgrading costs money and time as people must train on new equipment and computer programs. Statista estimates supply chain management software will reach $9.46 billion this year, with an annual growth rate of 4.09% through 2027.

To keep up with suppliers, logistics and other supply chain elements, you may need to upgrade your inventory management systems sooner rather than later. Some of the reasons you may want to add new features include the many benefits of modern software.

1. Prevent Product Loss

When products don’t go in the correct place or get moved around during returns or cancellations, they might become lost in the depths of the warehouse. While they may or may not turn up later, you won’t have them when you need to fill a customer’s order.

It’s also much easier to handle employee theft if you know what is in stock, where it’s located and how many orders you receive in a week. Inventory management systems can be as simple as software and bin locations or as complex as machines that store the products and pull them out when you punch in a number.

2. Improve Customer Relationships

Keeping inventory levels steady improves interactions with customers, who know they can count on you to have their favorite products when they want them. Using software, you can even automatically order popular items when stock runs low, ensuring you never run out of a favorite item again.

The more organized your systems, the faster you’ll fill orders and be able to stay on top of your consumers’ pain points and the best ways to solve them. While retaining buyers involves various factors, inventory management plays a role in customer satisfaction.

3. Fill Orders Faster

Companies such as Walmart and Amazon have perfected the two-day shipping process. Unfortunately, consumers expect the same speed and efficiency — even from smaller brands. Inventory systems let you fill orders more efficiently and compete better with the big guys.

Much of the work starts with an organizational system — such as placing similar products in the same area and numbering bins and individual products — so everything has a marker in the system. Ideally, your inventory system also integrates with your online store, so people can’t order if you’re out of an item.

4. Help New Employees

As your company grows, you’ll need additional pickers and packers. Inventory software can be so intuitive that it makes training new employees easier. They must learn how the system works and complete some training with the software. Then, they can hit the ground running and begin filling orders soon after they’re hired. Such speed in training is particularly beneficial during busy seasonal times or when you need to take inventory for tax time.

5. Manage Reverse Supply Chain

Around 57% of people will walk away from a brand after a bad experience with an order. Fortunately, you can also use the software for returns or reverse supply chain management. One of your staff will have to inspect any returns to ensure the item is still in working condition and relist it as either used, refurbished or open box, depending on the reason for the return and the product's condition.

Rather than simply scrapping returns, you can offer customers a discount and still recoup some of your costs on items someone didn’t want. You’ll also not confuse returns with new inventory. Some products can’t be resold, such as any opened food or used items for personal hygiene, like glucose monitors.

What type of products you sell impacts how often you can resell returned items. The system, however, can also let you know if there was a manufacturer defect. You may need to request refunds or replacements should you get a bad batch of products from one of your suppliers.

6. Make Taking Inventory Easier

Keeping a handle on your inventory’s value and amount is smart. Not only will it make counting for tax time more manageable, but you’ll have an idea of how much you need to insure your warehouse for, if you’re low in certain areas or if you’ll need more space as your business grows.

Software can look at what you have in stock and spit out reports. It can even spot any inconsistencies so you can do a physical audit and ensure the items are still there. If your current system doesn’t cross-check numbers with sales figures and purchase invoices, you could probably use an upgrade to simplify the process.

7. Combine Inventory Across Warehouses

Perhaps you have more than one warehouse in multiple cities or across different branches of your company. One of the fantastic things about software that links up to the cloud is that you can cross-check inventory in more than one location with a few clicks of the mouse. During tax time, combining locations and getting a complete look at expenses versus income is much easier.

Around 70% of stores deal with supply chain issues. Choosing the proper inventory management system can help e-commerce stores ease the process between customers and suppliers, so you serve as a trustworthy middleman without the typical glitches.

Look for Software That Simplifies

A new inventory management system should make processes easier and more efficient. The goal is to invest money so you gain time and data that improves your bottom line. You may want to test a few options and see what works best for your business. If your software systems are over a few years old, it’s likely time to upgrade your inventory management and take advantage of new features and technological advances.