Elly Financial Technologies Limited
54 Poland Street, London, W1F 7NJ
54 Poland Street, London, W1F 7NJ
Cash flow is said by some to be the lifeblood of any business. That may be so. However, it may go back a little further than that. To generate cash, we need to provide someone with something they need and are willing to pay for. And, to be able to do that we need to be in possession of those items.
Having things to sell means that we have an inventory. And we should know what we have. We cannot sell something that we don’t have or can’t get within the expected timeframe. If we are selling one item, it’s quite simple. We just have to remember how many we bought and how many we sold. The difference is what we have on hand. Assuming there was no shrinkage through theft or spoilage, of course.
This is where inventory management comes in. Even with only one product, we still have to track receipts and sales. While that only requires a little memory, it gets a lot more difficult when we’re dealing with multiple items. It gets to a point where memory alone will just not be good enough. This is when we have to start using some kind of record-keeping system.
The history of inventory management
A lot has been written about inventory management and systems. Various claims have been made about the origin of inventory management. Some believe that it dates back to around 50,000 years ago. However far back it goes, there is irrefutable evidence that inventory management has been around for a long time.
Tangible evidence, in the form of written records of the delivery of oil and linen, were found in the tomb of King Scorpion I. He was the ruler of Egypt in the predynastic period estimated to be between 3,200- and 3,300-years BC. The archaeologist, Dr. Günter Dreyer of the German Archaeological Institute believes that these items pre-date modern writing.
From human memory, images and hieroglyphics, which were all totally manual and inefficient, inventory management progressed to written ledgers. All the while, everything was manual and as businesses expanded, inventory management began to become very tedious and inefficient.
In 1889 Herman Hollerith invented the punch card. This was the first known machine-readable data capturing system. In the 1930s Harvard University took Hollerith’s invention further and developed a business application. The system allowed customers to order items by punching holes in cards. These cards could then be used to collate data on product sales and inventory statistics.
The system was slow and cumbersome and unable to keep up with ever-expanding business volumes. Eventually, in the 1960s, a group of retailers collaborated to find a better solution The result was the barcode. Several systems were developed but in 1974 they were standardized. The standardized Universal Product Code (UPC) is still widely in use today.
The ultimate invention was Radio Frequency Identification. Unlike a bar code system, this does not require a line-of-sight. This consists of a tag with an electronic circuit that transmits electromagnetic signals when triggered by a reader. The only limitation is that the tag and reader need to be within a certain distance. Although popular RFID hasn’t completely replaced barcodes due to its much higher cost.
Why is inventory management important?
Inventory management allows a seller to always have inventory on hand to fulfill customer orders. However, it goes way beyond this. Good inventory management means having the optimum amount of inventory on hand at any given time.
Inventory ties up cash and too much of it can divert funds from other key areas of a business. On the other hand, not having enough will result in orders being incomplete. That is a death sentence to almost any business. Customers have so much choice nowadays that they don’t tolerate poor service.
Inventory management helps to identify the best-selling products or those that are seasonal. Planning accordingly means capturing every possible sale. Another critical function, nowadays, is expiry date tracking. Selling expired goods can have serious legal consequences.
How to choose the best inventory management software for small businesses
When trying to choose inventory management software there are a number of significant considerations:
There are many other factors that determine what is the best inventory management software for small business, but these are the key considerations.
How can stores and restaurants benefit from inventory management?
Inventory management is one of the pillars of a successful business. In fact, it may even be critical to survival. Stores and restaurants often carry hundreds of inventory items and without a management system, things can get messy very quickly. They can both benefit greatly from inventory management software. We look at some of the possible benefits.
Elly offers all around products for payments and reporting management
Elly Manager offers comprehensive payment and sales tracking and reporting. Coupled with the handheld Elly POS device this becomes a powerful tool. The powerful combination enables you to generate a whole host of customized reports on sales and payments.