ANABELLE M.

ESULA BSBA 1-A

I. Based on your own analysis, just provide and discuss 10 advantages and 10
disadvantages of the Inventory Management System.

ADVANTAGES:
Happy costumers-A decent stock management methodology keeps your clients
returning for more. Good stock management can lead to exactly what are you
aiming for – repeat clients. If you need your clients to return for your services &
items, you should be able to meet the requirement of customers & satisfy them.
This assists you in making a good image, great service & a brand.
Reducing inaccuracies -Inventory & Stock Management consist of an array of
internal management processes. When you do all these tasks manually then there
are chances for inaccuracies such as doing data duplicity.
Once you adopt an inventory management software, it will automate all the data
recording and tracking processes leaving no room for errors.
Enhanced productivity in Operations -Analytics and reports can enable you to
perceive what items are selling quickly via your business channels. This assists you
to settle on making more intelligent business decisions and you may detect a
pattern for e.g. Do you have to manage item and their expiry dates? This can be
significant for wellbeing, beauty & medical businesses. Amazing, right? This can
be achieved with proper stock management.
No more manual work -When you work manually you are prone to make mistake,
or we should call them as human errors. You don’t want to make those complex
calculations by yourself. Without inventory management software you will be
wasting lots of man-hours. The team will be recording what items are used for
each transaction and so on. Inventory management software can do these tasks
for you very easily and efficiently.
Cost-saving -You can avoid deadstock & overstock situations with the assistance
of an inventory management System. Inefficient management of inventory can
lead to revenue loss, over-spending money, etc.
When you streamline your inventory management you not only just eliminate the
stock expenses associated with the human mistake, but also can earn profit by
further cost-savings. You can also calculate what is your safety stock! Most
importantly it can get your product history through which you can refill your stock
& manage inventory accordingly.
For one customer comes to your shop & willing to buy a specific product which is
not available in your shop. You would not want that, would you? So, in this
illustration, you lost a potential client and business. But if you have the software
you would have received a notification informing about the low or finished stock.

Data Security -In the inventory management system, you can restrict the user as
per your requirement. You can restrict every user & give them rights so that, no
mistake take place. Another benefit and most importantly it provides security at
all levels.
For a worker can write data about items & manager will approve them if
everything is in the correct order. Overall you can give rights to a user who can
see what data, who can retrieve & access what data information. Every user is
restrained, so there is no chance for data loss or leakage.

Cut Costs and Increase Profits -It also that well-maintenance of inventory and
stock management can enable you to cut expenses and enhance your benefit
ratio. It can save your unnecessary expenses & through data analytics, you can
know in advance that which item will be in more demand in which season.
Through which you plan according to that information. We must keep in mind
that, after all, this is what business is all about.
Automate Time-Consuming Manual Tasks-Businesses are always looking for ways
to save time and decrease labor costs. Inventory management provides one of
the best ways to accomplish that.
Many of the best systems involve barcode scanning or other agile inventory
processing features. This can eliminate labor-intensive and manual processes like
individually typing in product numbers or box numbers. With this type of
technology integrated into your inventory management processes, employees or
robotics can drastically up the number of scans they complete.
As you free up resources and automate more tasks, your employees can spend
their time working on more important work or doing what humans do best,
planning for the future.

Accuracy and Efficiencies-This is a pretty low number when you realize how
damaging an inaccurate order can be.
One of the most fundamental benefits of inventory tracking is that it reduces the
amount of inventory that companies have to keep on hand while improving order
accuracy.
By decreasing held inventory, companies can save massive amounts of cost and
effort. Some companies that use modern inventory management can actually
close down one or more warehouse locations, and save money associated with
these cost centers.
Along with the emergence of new inventory tracking software, there is the idea of
just-in-time inventory. A just-in-time or lean inventory.
DISADVANTAGES:
Obsolete -Overstocking on products runs the risk of the product becoming
obsolete. This is true especially in technology sectors such as smartphones and
televisions, but no industry is exempt. Even the latest kid's game craze might
inspire you to place a large order. If the buzz dissipates quickly and kids aren't
looking for the game, you'll be left holding a lot of inventory you can't move.

Storage Costs -The more stuff you have, the more space you need. Commercial
space is leased per square foot. Consider the costs to store excess inventory
compared to the savings on wholesale orders. It also costs to do more inventory
control and audits, potentially requiring additional manpower to work the
warehouse.

Potential Insurance Costs and Loss-Insurance costs go up with larger storage

areas and larger inventory values. This factor needs to be considered and
compared to wholesale savings. If there is a fire, theft or another natural disaster,
not only will the business be recuperating, it will need to pay higher premiums as
insurance rates go up.

Tying Up Capital-When you have excess inventory, you pay for the order, the
storage and insurance. You can't get around this. For businesses that are working
with small margins and on tight monthly budgets, this can hamper business
development decisions because they don't have cash on hand.
Business owners might examine the disadvantages pertinent to the business and
then decide whether carrying excess inventory makes sense. It is up to each
business owner to review the financial health of his company. Inventory is one
key factor in that.
Expensive-Extremely beneficial in many aspects, this management software is
available in the market at a high cost.
Although the system provides such great features and makes the entire business a
lot better and efficient, all this comes at a cost.
Big time businesses can cover up the cost or the one time investment in some
time but in the case of small or medium-sized businesses, it is at times not
feasible to maintain such software.

Complexity-Although the use of an inventory management system makes

handling the inventory quite easy but learning how to operate it is quite a task.
Special training sessions and manuals should be adhered to, to successfully
operate the system.
Learning how to operate the system can be lengthy, cumbersome as well as
complex.
But once successfully installed and training completed, it can prove to be a
blessing for the business and it helps a great deal in the smooth operation.

Limited elimination of business risk-Although the management system helps the

business in eliminating many kinds of risk, even after using the system, the
business is open to many other risks.
The system helps in controlling many risks but the fear of facing and encountering
many others is still open. Hence, with this system in use, many kinds of risks
restricted but fail to make the entire process risk proof.
After considering the pros and cons of the inventory management system, it is
always advisable to install the software in the organization as it finally leads to
many benefits. Although there are few disadvantages associated with it the
benefits turn out to be more in number.
System vulnerability-Online systems are also vulnerable to the risk of system
crash, power failure, or hacking from unscrupulous individuals. To an extent, this
is probably why manual inventory management has not become obsolete. If you
are to install a completely new software system to be used across all your
business sites, you have to make sure that the installation covers the necessary
security measures.

Additional expenses-the cost may be something for fledgling retailers to balk at.
As such, investing in a new online inventory management system is a probably a
matter of good timing. Roll out the software once your business has hit important
growth milestones or if it’s anticipating expansion in the near future. That way,
the upgrade will pay itself off sooner than later.

Reduced Physical Audits-When everything is automated, it is easy to forego time-

consuming physical inventory audits. They may no longer seem necessary when
the computers are doing their work. However, it is important to continue to do
regular audits to identify loss such as spoilage or breakage. Audits also help
business owners identify potential internal theft and manipulation of the
computerized inventory system.