Written by:
Megan Marsh

Unsure if you need an inventory management system? We’re spelling out why every business needs an IMS with key benefits and insights.

An inventory management system (IMS) tracks inventory through purchasing, storage, sales, and shipping. An IMS provides real-time visibility into where stock is at all times, which has implications for improving operational efficiency, meeting end-user demand, and saving costs. Fast, accurate inventory tracking helps businesses that rely on product availability, such as healthcare and maintenance companies, mitigate risk and remain competitive.

Technology-driven IMS solutions, including WA’s IMS, not only help customers track inventory but also include tools for managing orders and consignments for a seamless experience. Here, we’ll cover:

• The origins of the modern IMS
• How an IMS helps businesses overcome logistics challenges
• How to find the right IMS for your business
• What the future may hold for inventory management systems

The Evolution of Inventory Management

People have created systems for recording inventory flow for a long time. Over 50,000 years ago, people counted goods using tally sticks. Millennia later, in the 3^rd century BC, people recorded distributions and deliveries on clay tablets. More complex methods for counting stock arrived with the invention of bookkeeping systems by medieval European merchants. In the 1800s, inventors created the first mechanical data storage system using punch cards, paving the way for automated data processing.

The 1950s saw the creation of the precursor to the modern barcode based on Morse code, and magnetic tapes replaced punch cards for more efficient data storage. In 1963, IBM created the first computerized inventory management system for NASA, and in 1975, JC Penney implemented the first warehouse management system. Computer scientists developed relational databases capable of storing and retrieving large amounts of data in the 1970s, and engineers patented the first radio-frequency identification technology (RFID), paving the way for automated inventory tracking.

By the 1980s, many companies could afford computers to build proprietary databases. IMS evolved with the mainstream adoption of enterprise resource planning (ERP) software in the 1990s, where inventory could be tracked across systems, and cloud computing in the 2000s enabled virtual inventory access. Today, intelligent computer systems augment IMS—providing visibility throughout the supply chain and giving logistics companies tools to predict consumer demand.

Key Features and Functions of an IMS

Inventory management systems track movement for every type of inventory, from raw materials to work-in-progress products, maintenance, repair, and operations (MRO) goods, and more. Although the functions of an IMS vary, employees typically use an IMS to:

• Manage orders
• Receive notifications when stock is low
• Track stock through the supply chain
• Locate stock in the warehouse
• Create reports
• Analyze trends in customer demand

WA’s tech-driven IMS is designed to manage and optimize inventory tracking, storage, and flow across various stages of a business’s operations. The system uses real-time tracking to monitor stock levels continuously and allows detailed tracking by lot or serial number. Users can also integrate WA’s IMS with Bluetooth, barcoding, or RFID scanning. Through the IMS, users can set stock thresholds and create alerts for reorders or overstocks, automate re-ordering, and identify stock that is not moving through the chain.  

Regarding warehouse management, WA’s IMS allows users to track inventory location down to the aisle, shelf, or bin. Businesses can pick, pack, and ship orders through the system and conduct periodic inventory checks without halting operations. Reporting and analytics features include predicting future inventory needs based on historical data and trends, monitoring performance metrics like inventory turnover and shrinkage, and generating custom reports.

WA’s IMS integrates directly with multiple platforms to simplify data sharing. Users can manage incoming and outgoing orders through the system and track and fulfill back-ordered items. The IMS includes the ability to monitor inventory costs and valuation methods, such as first-in-first-out (FIFO), last-in-first-out (LIFO), and weighted average costing.

Some businesses, like medtech companies, must follow strict guidelines for shipping, storing, and handling stock. WA’s IMS ensures adherence to industry regulations and maintains strict quality assurance standards. WA’s IMS also maintains records of inventory transactions for audits and includes role-based access for security. Users can manage inventory across multiple locations and handle multiple currencies, tax codes, and language preferences for multinational companies. The system is easy to use, with both a desktop and mobile app for remote inventory tracking and management and a scanning feature users can access on personal or company devices for real-time updates.

Industry-Specific Benefits of IMS Solutions

Controlling Costs in Healthcare, Pharma, and Medical Device Industries

Inventory accuracy is critical for medical device and pharmaceutical companies that consign inventory to hospitals, surgical centers, and clinics. If products are unavailable when needed, patients can be directly affected. Limited onsite storage complicates dealing with the overstocks. Since physicians and surgeons often order extra products in case something goes wrong in a procedure, they need simple, quick ways of tracking and returning unused products.

Reducing unnecessary supply chain spending and inventory waste could save hospitals $25.7 billion annually. Medical device companies are also poised to minimize expenditure on waste and avoid over- or understocks through better inventory control. An IMS provides:

• Real-time views into inventory for accurate product estimates
• Device tracking throughout the supply chain in case of a recall
• A single system for placing orders, managing stock, and making returns     

Improving inventory management helps healthcare companies control costs. For example, Vanderbilt University Medical Center formed a team of clinicians and supply chain executives to review supply chain vendors. They found that the center’s healthcare providers often ordered devices and pharmaceuticals with higher price points than recommended. Implementing vendors with better pricing selections saves the center $4 – $5 million annually. Increased supply chain visibility, whether through a committee or an IMS, has enormous opportunities for cost savings.   

Enhancing Efficiency in the Field Service Industry 

Field service companies provide on-site customer support, including maintenance and repairs. Having the right stock available for repairs is essential for meeting customer requirements. Inaccurate inventory counts may lead to situations where essential products are out-of-stock, delaying response times and reducing customer satisfaction. Also, a lack of visibility into product availability can cause discrepancies between what customer service representatives and field service employees relay to customers.

Research by the IHL group found that inventory distortion, the costs of overstocks and out-of-stocks, totaled $1.9 trillion in 2022. Although this figure includes all businesses, not just field service companies, it shows that discrepancies in inventory can negatively impact revenue across the board. IMS solutions control product flow to mitigate overstock and out-of-stock risks. They also provide all staff visibility into product availability and create more efficient workflows for field service technicians by automating stock counts, conducting audits, and streamlining order management.

Automating inventory management also leads to increases in accuracy, helping field service companies meet customer service-level agreements (SLAs). For example, financial technology company Diebold Nixdorf used WA’s technology solutions to replace the manual processes field technicians used to track and manage inventory. The new system helped the company meet SLAs and freed technicians to focus on repair and maintenance instead of searching for stock.

“We were looking for a better way to identify inventory that wasn’t available while increasing accuracy in the field,” said Joe Sponseller, Diebold’s Regional Director, “I can honestly say that WA played a significant role in improving our SLA performance in the California market for all customers.”

How to Choose the Right Inventory Management System

Choosing the right IMS solution for your business depends on your needs and goals. For example, grocers may prioritize traceability to instantly locate recalled products, whereas medtech companies may put managing consignments at the top of their list. Critical qualities for every IMS solution include:

• Real-time inventory tracking
• Integration with existing software
• Scalability for fluctuations in growth
• Data security to prevent breaches from malicious actors
• Dashboards to track inventory and manage orders
• Automatic billing and invoicing

WA’s tech-driven IMS is ideal for businesses seeking a solution that can scale to accommodate growth. The sourcing matrix, consignment, and trunk stock inventory management features support businesses that depend on accurate product locations and on-hand inventory counts, such as medical device, pharma, and field service companies. Simplified audits, order placement, automated billing, and built-in pricing help smaller teams accomplish more.  

The Future of Inventory Management Systems

Although the modern IMS has been around since the 1960s, emerging technology is changing its scope. Today’s Industry 4.0 moves beyond electronics and information technology into cyber-physical systems, where human-made systems exist harmoniously with advanced technology, such as artificial intelligence (AI) and machine learning algorithms.

Inventory management systems are beginning to incorporate intelligent technology to increase supply chain visibility, resilience, and efficiency. For example, some logistics companies use the Internet of Things (IoT), mixing sensors, analytics, and software to optimize cargo container temperature.

In the future, companies may rely on AI-supported predictive analytics to more accurately forecast customer demands. Knowing exactly which products are needed, when, and where helps companies meet SLAs and prevents costly inventory distortion. In the case of increasingly common supply chain disruptions, AI tools can instantly incorporate new lead times and automatically update ordering plans. AI applications for IMS include everything from supplier relations to after-sales services.  

AI Applications for Inventory Management

As a technology-driven solution, WA is positioned to strategically incorporate intelligent algorithms, advanced data analytics, and IoT when the time is right. Emerging technology holds the promise of an even more efficient and effective IMS. The key is incorporating tech securely, with human oversight and other parameters in place.

Partnering with WA for IMS  

Companies working to thrive in competitive, unpredictable markets need an IMS solution that meets their needs today and can adapt to future developments. WA’s IMS provides real-time visibility for tracking stock, warehouse sourcing matrices, billing automation, pricing, and inventory and order management tools. It’s a future-focused, scalable solution for companies looking to optimize their inventory.  

Interested in a tech-driven IMS for your company? Speak with one of WA’s experts for more information or a demo.se don’t hesitate to connect with me on LinkedIn or contact us online today.