When asked what inventory management is, business owners often say it’s about keeping control over stock levels: optimising how much inventory your business holds, to minimise costs associated with inventory handling, obsolete stock, and logistics. While inventory management assists with all of these things, its benefits to a business extend far beyond this. With the software available today, a good stock management system can help with making better sales, customer retention, business data analytics, security, and cash flow.


One critical aspect of inventory management is its ability to help staff make sales. With good inventory management, sales staff will know exactly where an out-of-stock item is being held (for example in a warehouse or other store), and how long it will take to get this item in store or out to the customer. This makes it much easier for staff to close a sale, as they can provide the customer with definitive information about the products they want.

A related benefit is improved customer retention. Past stock data can be analysed to predict the optimal levels of inventory to be held in store at different times of the year, adjusting for seasonal trends in demand. Further, a robust inventory management system allows a business to make good on their commitments to the customer in regards to when certain products will arrive in stock, or be delivered to them. Customers will continue their patronage at a business because the products they want are more likely to be available in store – and if they are not, then these customers can at least be certain about when they will receive the product.

The benefits of inventory management data analysis do not end there. Inventory management software can tell a business what products are most in demand – nationwide or internationally. It can even show whether certain products are more popular in certain regional locations, and if certain common features of products are more popular than others. This can help with strategic decision-making and future product development, as well as more logistical decisions such as warehouse organisation.

or example, the most popular products can be put at the front of the warehouse to optimise collection time, and products often bought in combination can be placed together. Data analysis can tell a business about returns for different products, so that defects or other problems can be detected quickly. It can also give information about mark-ups of different products in relation to sales made, so that pricing decisions can be optimised.

Inventory management can also help with security. Shock events such as theft can disrupt a business greatly, and need to be identified as soon as possible. An inventory management system allows for early theft detection, as stock levels can be viewed in real-time, and then investigations can be started with minimal disruption.

Finally, inventory management can improve business cash flows. It allows businesses to purchase the right levels of stock so that they do not suffer from large cash shortages or surpluses. It can also make management aware of when larger amounts of inventory need to be purchased, so that other purchases such as property and equipment can be timed accordingly.