Automated Inventory Management: What It Is and How to Implement It

An automated inventory management system is software capable of doing many repetitive inventory management tasks on its own with little human effort. 

Automated inventory management systems are used by retailers, wholesalers, distributors, and other businesses that have to track inventory. These systems were originally only for companies with budgets and inventory that warranted the help. 

However, inventory management systems have become much more accessible for SMBs. Now, even companies with a small amount of stock can find them useful. Despite this, 43% of SMBs don’t track their inventory at all. Let’s talk about why you need an automated inventory management system.

What are the benefits of an automated inventory management system?

There are many benefits to automating your inventory management. These benefits affect not only your inventory control team but your entire company. Automated inventory management helps your sales teams know what stock they have in-store, your marketing team to see what’s selling well, and gives your C-suite easy access to important inventory data.

1. Real-time inventory visibility

Automated inventory management systems provide accurate real-time inventory counts of your stock. 

With manual inventory management, it’s only possible to have an estimation of how much stock you have on hand between counts. However, because automated systems are constantly updating and in contact with your POS software, they can keep a highly accurate count at all times. 

Because the count is always highly accurate, this visibility reduces the need for physical counts. As such, manual stock counts should be performed mostly to check for loss, rather than to update your knowledge of how much stock you have on hand.

An automated system also gives you real-time visibility into the location of all your inventory. You can see whether an item is in the warehouse or on a truck for delivery.

2. Reduces human error

Automated inventory management greatly reduces human error by removing the human element from everything except the actual handling of the items. 

This means there are no entry errors, et cetera. The software imports data from the systems that handle inventory to keep things up-to-date for you.

3. Time savings

Automating your inventory management saves a lot of time. Your inventory management team gets completely freed up from a life in spreadsheets. They can instead improve your other inventory systems or purchasing methods.

Moreover, an automated inventory management system makes certain tasks and analytics possible that a human team would simply never have the time to get to, like deep reporting.

What are the features of automated inventory management?

The abilities of inventory management systems vary by software, as well as by plans. Yet there are some features you should expect to see in a given inventory management system.

Stock reordering 

The right solution will enable you to set thresholds of what you consider to be low stock for any or all of your items. Anytime that item’s count reaches that threshold, the system will automatically place an order with your vendor for your preferred restock amount.

Tasks you can automate with this feature:

  • Set up a workflow to notify you whenever an item hits the threshold you consider to be a reorder point, also known as “safety stock”, or “presentation minimums” for brick and mortar stores. Even if you don’t want to automatically reorder the item, the visibility can help you see if an item is selling out quicker than expected or if there is a potential loss issue.

Barcode scanning 

As mentioned, when your staff needs to run an inventory count to check for loss or manually add in an item for whatever reason, the inventory software can take all the item’s SKU and other data from a barcode scan, rather than by having a person manually enter all the data.

Tasks you can automate with this feature:

  • Stock takes should be done with barcode scanning instead of manually recording counts using pen and paper. By using a solution like Scanner, you can automatically send your stock count data to your point of sale system, so inventory levels are updated with minimum human intervention.

Real-time data monitoring and forecasting 

An automated inventory management system can create many reports that help you understand what’s happening with your inventory, what items are selling well, what items are getting old, etc. Analysis that previously would have taken hours to squeeze out of an Excel sheet takes seconds. 

Moreover, inventory management software can also display your key reports and KPIs right on a single dashboard so you can always keep the real-time data top of mind. 

All this data can be used to make forecasts for what inventory you should buy going forward. (Some systems can actually do the forecasting for you, as well.)

Taylor Daniel, retail merchandising veteran and inventory strategy consultant at FOMO agency, says “accurate forecasting is critical in avoiding both excess inventory and stock-outs. While custom spreadsheets can still be useful in many regards, having an inventory management system that calculates your KPIs helps ensure you’re making an accurate product plan.”

Regardless of what inventory planning approach you take, automating the bulk of your reporting will result in fewer markdowns, fewer stock-outs, and ultimately, increased profitability.

Reports you should automate:

  • Product performance reports to tell you how much merchandise has been sold during a time period
  • Low stock level reports alerting you which items need replenishment to help prevent stock-outs and backorders
  • Purchase order reports to track your incoming inventory

Vend Tip

Vend automates that most tedious inventory management tasks in your retail business. Wether you’re looking to streamline your stock counts or improve your order magement and fulfillment, Vend’s automated inventory controls have you covered.

Learn More

Run multichannel inventory tasks

An automated inventory management system will connect with any other sales channels that handle your inventory, like your point-of-sale and eCommerce systems. As you make sales, record returns, ship items, and more, your inventory management system will be constantly logging the location of, addition, and reductions in inventory.

Tasks you can automate with this feature:

  • Track your inventory levels across your eCommerce and brick-and-mortar locations. Kate Sheridan saves hours each week using her automated inventory management system to do so. In fact, she says since she switched to automation, she’ll never have to do a manual stock check again.
  • Have your inventory management system send shipping notifications to your customers. (Or have it trigger your marketing automation system to do so.)

Manage inventory control at multiple locations 

An automated system can not only provide inventory tracking across your sales platforms, it can track your inventory in all it’s various locations, like your warehouse and store locations, and through various points of your supply chain. You’ll be able to see your total inventory, and then break it down by location. 

Tasks you can automate with this feature:

  • Set up notifications for when stock gets low at a certain location.
  • Automate stock transfers between locations if one hits a low-stock threshold. Shooshoos, a South African brand, for instance, says that stock transfers were a game-changer for their store.

Bonus: Order fulfillment automation 

Some inventory management systems also serve as an order management system. These systems can automatically assign fulfillment tasks to your team, print out shipping labels, and perform other fulfillment tasks.

What solutions should retailers use to implement automated inventory?

There are a wide variety of inventory management systems available today, from enterprise-level behemoths that can even run robotic pickers to very cost-effective systems meant to help SMBs improve their business processes.

At Vend, our inventory management system is built right into your POS system. It’s light enough for any retailer to get comfortable with using automation in their inventory management but robust enough to scale up with you. Try Vend free today.

Vend Tip

Vend automates that most tedious inventory management tasks in your retail business. Wether you’re looking to streamline your stock counts or improve your order magement and fulfillment, Vend’s automated inventory controls have you covered.

Learn More

About Francesca Nicasio

Francesca Nicasio is Vend’s Retail Expert and Content Strategist. She writes about trends, tips, and other cool things that enable retailers to increase sales, serve customers better, and be more awesome overall. She’s also the author of Retail Survival of the Fittest, a free eBook to help retailers future-proof their stores. Connect with her on LinkedIn, Twitter, or Google+.



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