“One of the great responsibilities that I have is to manage my assets wisely so that they create value.”
– Alice Walton.
Many business owners spend hours making inventory decision such as when to order inventory and at what quantities. In order to arrive at the right decision, accurate data, estimates and even computations are necessary. Luckily, technology has been improving at such a rapid rate and the development of inventory management apps such as Cin7, Dear Inventory, Unleashed etc. which automatically sync and provide the required data has made our lives so much easier.
But with many inventory management apps in the market, you may need to make sure that your software of choice not only stores inventory data but also provides you with relevant inventory forecasting and metrics information to help you make informed decisions. With inventory forecasting assistance such as data, trends, and so on coming from these apps, you are able to estimate the next period sales, inventories and other cost involved such as shipping cost. This helps avoid unexpected losses such as missing a sale due to shortage and expiry loss due to overstocking.
Similarly, good software should provide inventory metrics or key performance indicators (KPI) showing how your inventory is performing. Inventory accuracy, inventory turnover, customer loyalty and retention, sales revenue, sales margin, and operation productivity are just some of the important metrics that show the measure performance and with them, you will be able to make decisions toward improvement. For example, inventory turnover shows how long you are taking to sell your products. With that data, you will now be able to determine if you would need to find more or faster ways to sell your products or would need to stock more at certain times.
So, being an inventory specialist and an app advisor, I was wanting to have a full understanding of what could go wrong without inventory forecasting and inventory metrics information and decided to do some research. I did a study on the three best-known inventory management apps. Cin7, Dear Inventory, and Unleashed offer inventory forecasting and metrics services to their clients.
Here are my observations and how you can benefit from them.
Cin7 is popular for its ability to offer the point of inventory management services to businesses regardless of their size. Right from the dashboard, a graph on sales by month caught my eye. Subsequently, one is able to access many sales related reports sales by customer analysis, sales by product, sales by the sales rep and sales by sales rep per product. All these reports are important inventory metrics and can also be used to estimate sales for the next period. Also directly related to inventory, you are able to access stock on hand, stock availability, stock aging report and cost of goods sold.
Here’s how they assist in forecasting and improving performance.
- Sales by month – show the trend by month whether sales are increasing or decreasing. The trends can push for a decision to be made on whether it is a necessity to increase or decrease stock quantity on certain seasons. Also, they can be used to predict sales for the following month.
- Sales by the customer – this analysis can be used to show customer loyalty and retention, thereby letting you know if your customers are making repeat purchases or not. It’s important to note that returning customers always mean more profit and they will always market your business via word of mouth.
- Sales by product – this shows the performance of different products. It can be used to decide whether to continue selling certain products and if actions should be taken to improve the sales of another product. The sales by product report can also be used to forecast the inventory required per product, thus ensuring that we are buying the right quantities.
- Sales by sales rep – the analysis can be used to show how well their employees are performing and can also be used in calculating performance bonuses. Similarly, sales by sales rep per product can be used to show the employees’ strength in selling certain products. One can make crucial decisions such as letting the employees concentrate on the product they sell best to increase productivity or if they should let go of unproductive staff.
- Stock on hand and stock availability – Having accurate inventory data are vital to be able to maintain a certain quantity of products that is neither short or in excess of what is needed. It helps business owners plan restock times so no sales are lost due to the shortage.
- Stock aging report – shows how long a business is taking to sell its inventory. By referencing inventory decisions on this report, businesses avoid having expired or obsolete inventory caused by overstocking.
- Cost of goods sold – shows you the cost you are incurring to acquire inventory. This is important in calculating the actual gross profit. Also, by knowing the actual cost, business owners are able to look for options that can lead to lower costs thus increasing profits.
Dear Inventory is popular for its ability to offer both inventory and employee management services. By clicking at reports tab from the dashboard, I was able to access many reports categorized under purchases, sales, inventory and other financial categories. There are specific reports that help business owners to forecast and make decisions based on the metrics they offer.
Here are the reports and their benefits.
- Product availability report – which further categorizes stock as available, on hand, allocated and on order. This gives you the accurate stock level and to which category it belongs to. As mentioned earlier, accurate stock is important to be able to gauge when to restock.
- Inventory aging report – shows how long the stock stays before it is sold. This report assists in decision making regarding slow-moving products to avoid losses such as offering products at a discount and on having enough inventory for the fast moving products to avoid missing a sale.
- Inventory Velocity report – data on this report is taken using lead time, safety stock and velocity parameter and is able to suggest reorder dates and quantity. This alerts business owners when to order more inventory and ensure there is no inventory shortage.
- Product low on the stock report – this available if the business owner does not purchase inventory on suggested reorder dates, which means that inventory is below-reordered points.
- Sale overview report sales by order date – This report shows sales performance. It can be used to make decisions on how to improve sales such as marketing, advertising and offering products at a discount. It can also be used to forecast the next sales and buy inventories accordingly to avoid losses.
- Sales by product report – shows how different product is selling. With this business owners are able to take necessary steps toward improving certain product sales as well as forecasting the products sales and restocking the right quantities
- Sales profits summary – shows the overall profits you are getting from all sales. If the profits are too low, business owners can take measures to improve sales and increase profit margins.
Popular for its ability to manage inventory in different warehouses and its availability in over 80 countries, Unleashed dashboard also welcomed me with performance percentages and sales margins and revenue graphs. Furthermore, there is plenty of other information which can be used in forecasting and making inventory decisions based on metrics.
Here are the information and how you can benefit from it.
- Profitability percentage- Right on the first page, it shows the sales profits compared to other periods. This data shows an increase or decrease in sales to facilitate decisions on whether marketing strategies should be improved to boost sales.
- Activity performance percentages- shows the productivity of business activities and if it is necessary to incur them. All businesses have both revenue generating departments and non-revenue generating departments, the purpose of this report is to determine whether such departments are necessary and if there is a need to allocate more or fewer funds to them.
- Sales margin and sales revenue graph – The graph curve shows a trend, which shows the performance of both sales margins and sales revenue on the given period such weekly, monthly or yearly curve. This helps in making decisions on how to improve sales revenue. The curve can also be used to forecast the sales for the next period.
- Stock count – shows accurate stock count in different warehouses. This is especially helpful to those businesses with warehouses in different locations. You can monitor which product needs to be ordered for each warehouse, saving you time and money going back and forth checking the inventory of each location.
- Annual stock turns and the average days to sell – shows how long you taking to sell the inventory. The data helps determine how much stock is needed for certain products and shows any slow-moving ones so businesses can take steps necessary to improve sales strategies.
- Customer information enables business owners to see if your customers are returning. Positive customer loyalty and retention means that the strategy being used is working and a negative report will alert us that there are things that need to be changed or done in a better way.
- Costing analysis report – The data shows which part of the operations are generating profit and which parts are not. It is helpful in determining how much of the budget goes to which department.
In conclusion, all three apps are both similar and different in their own ways. Each app has its own way of helping businesses make informed decisions. They are all quite strong from an operational point of view, giving very detailed reports on sales, and so forth. The dashboards, in all honesty, look quite cool, but might not be super useful. What they are useful in is giving a very quick snapshot of the most recent activities. Further, it is worth noting that the information in the dashboards takes a little while to refresh and therefore is not necessarily the most up to date information.
When it comes to forecasting each try’s there hand at forecasting. But the forecasting functionality is not that strong. Cin7 has a useful smart buyer functionality, but similarly DEAR and Unleashed have the same type feature. If you want more powerful dashboards that allow for scenario analysis from the dashboard, or even just more detailed and useful information, you will need to use a more custom solution, like WAO Connect. For forecasting software such as Inventory planner, are awesome, and can be set up quite quickly. Next month we will be writing a full review on Inventory Planner.
If you have any other questions regarding Cin7, Dear Inventory, or Unleashed, please feel free to contact us or book a free discovery call.