Every business needs to keep track of inventory- but there are multiple ways to do it. They can keep physical records, make spreadsheets or use an inventory app. Usually, there are two ways companies use inventory tracking– manual and automated.
From the names, you can tell that the management of the two is different. So, which one should you choose for your business? Whether you do things with the help of tech tools or by hand, it requires planning and organisation.
Before choosing between manual vs automated inventory systems, we need to understand how each works.
In this guide, we’ll see what manual and automated systems are, then review the advantages and disadvantages of both.
Manual Inventory System
This type of system allows your team to update stock stock levels and inventory whereabouts. That means the team will update the inventory by hand as it comes and goes.
On the contrary, your company may not track the inventory perpetually. Instead, your business will rely on physical inventory counts to determine what’s on hand and what is running low. They need to also hand count the items that they need to reorder. Your team will not know what is on hand until they walk into the storage facility and physically count it.
This is physical inventory management.
Companies can carry out the counts for this inventory as needed or at regular intervals. Out of the two, manual vs automated inventory systems, businesses can conduct perpetual manual inventory. Your team knows what’s on hand, but they are manually updating it.
There are some benefits of such a system.
Benefits of Manual Inventory System
This system is a good choice for:
- If you are a small business that does not carry much inventory.
- For instance, if your company stocks just a few dozen products in one location, you can use this system. It is easy to track inventory by hand as it comes and goes for limited items.
- Among the manual vs automated inventory systems, the former is inexpensive. You do not require any special tools or software. You can just maintain all the inventory on a Spreadsheet and update it accordingly/
However, such advantages of manual inventory systems are of no use to most businesses. For instance, mid-size and large-sized businesses cannot use this type of inventory. Here’s why
Drawbacks of Manual Inventory System
There are reasons why in this debate of manual vs automated inventory systems, people prefer the latter.
- This system is vulnerable to human error. For instance, a few jumbled numbers or data entries can cause costly inventory shortages or stockouts. This may affect your business’s bottom line.
- Also, a manual inventory system can quickly become unmanageable. That is because as your business grows, you will have more inventory to manage. Handling an excessive amount of inventory can take up way too much of your time. Eventually, it will become so hard that there will be cracks in your inventory management.
- Even if your team maintains a manual inventory system, as your business grows, time becomes a valuable resource. It is here in this manual vs automated inventory system that you need the latter.
How do automated inventory systems help businesses? How does the latter in manual vs automated inventory systems stand out? Let’s have a look.
Automated Inventory Management System
Automation uses technology to fastrack mundane tasks. This means this inventory system enables companies to track, check and update their inventory in real-time. These days most companies use this system as they want to offer their customers items that are in stock to meet the supply chain demands.
- With the help of real-time visibility into stock levels, companies can replenish their inventory on time.
- An automated inventory tracking system allows companies to proactively manage their stock. This mitigates the risk of shortages and stockouts. Thus saving the company’s reputation and satisfying customers
- Moreover, top-tier automated inventory management software notifies relevant users about diminishing stock levels, impending expiration dates, or nearing warranty expirations.
Out of manual vs automated inventory system, that latter uses latest technologies like:
- Barcodes QR codes and
- automated inventory control systems
They streamline the process of updating inventory data for employees. For instance, when a shipment of windshield wiper blades arrives at an auto body shop, the staff can record the details and receipt by scanning the barcode on the package. This will update the inventory.
There are various advantages to introducing AI and automation in inventory tracking. It changes the whole game. Let’s see a few of them.
Benefits of Automated Inventory System
Do you want to know how the latter in this ‘manual vs automated inventory system’ debate fairs over the former? Find out below.
1. Reordering and In-Stock Information
Employees can easily see if an item is in stock or not using the cloud inventory. Inventory and sales are in sync, keeping an eye on what is in stock and what isn’t.
With the facilitation of this reordering process, the customers receive better service. The system tracks new orders placed with vendors and tracks them to see if inventory has fallen below safety stock requirements. In this way, customers will also get notifications for new product deliveries.
2. Data Insights and Cloud Backup
Automated inventory management software offers a significant advantage in forecasting and planning.
- It enables companies to monitor current inventory levels, determine reorder quantities, and identify optimal reorder timings. This system also generates reports for strategic planning based on collected data.
- Business owners leverage these insights to discern seasonal trends and tailor their product offerings accordingly. Regular data backups are crucial for safeguarding against potential data loss.
- Furthermore, cloud-based inventory management streamlines the centralisation of inventory control across multiple outlets.
This is a pivotal aspect of the ongoing debate between manual and automated inventory systems.
3. Efficient Waste Tracking System
You can increase profits by preventing expenditures and decreasing daily waste. Software that has an automated inventory can track each item that companies buy and discard in real-time.
You can use the statistics to determine which items you can replace on the list to reduce daily waste. It helps you to save money over a time period.Using an automated inventory system is an ideal way to minimise waste and maximise usage over time.
4. Multi-locational Control
Maintaining a standardised inventory spreadsheet and keeping track of stock levels becomes increasingly challenging when dealing with multiple warehouses and consignment locations.
Automated inventory management systems offer the advantage of seamlessly integrating inventory levels across all these various locations, simplifying the process significantly.
Knowing all the differences between manual vs automated inventory systems, you can choose the one you need for your company’s needs.
FAQs: Manual Vs Automated Inventory System: How to Choose the Right Inventory
What is the best way to manually track inventory?
The best way to do it is to manually count your inventory every two weeks. This is the phenomenon of periodic inventory. You can stay updated on all items in your storage.
Which system is better for having control over supply chain operations?
With the advent of new technology and AI integration, automated inventory works best. It is cost and time-efficient. This system can also streamline various supply chain processes by keeping all related parties in the loop with the status of the items.
Is the manual tracking system becoming obsolete?
These systems have become outdated. Very small-scale businesses may still use it to track inventory. But as automation becomes more accessible, even SMEs have started to shift to it.
How does automating inventory save costs?
It reduces errors, and optimal stock levels and streamlines processes. This helps businesses to free up costs that would otherwise go into rectifying these errors.
Conclusion
Having a properly managed inventory is integral to a company’s smooth operations. It prevents scenarios like stockouts and inaccurate records. In today’s highly competitive market, those who can adapt to current conditions stay on top.
Are you tracking your business’ stock movements and locations with the warehouse? You must plan inventories and follow tracking trends while doing the same. It is important to identify the features that your business needs before choosing one out of a manual vs automated inventory system. Head over to Qodenext for inventory management solutions.
