When You Should (and Shouldn’t) Use Automation in Inventory Management

Tools for automating business processes can be a blessing and a curse. On one hand, the concept of reducing (or outright removing) human intervention is tantalizing: Doing so can expedite your workflow and reduce the risk of human error. On the other, it can cause you to make bigger, potentially catastrophic mistakes. Smart inventory management requires discretion when it comes to implementing automation tools. Sometimes, the human element is required. Let’s dive into when you should and shouldn’t use these tools.

When to Automate

There are key processes in inventory management that should be automated when possible. Fishbowl Warehouse is a business automation platform designed for optimal inventory management. It gives you a comprehensive set of tools to track your orders, sales and purchasing, shipping, reporting, and more. If your business operates from multiple warehouses, a tool like this is essential. One of the most important automation features of this platform is its ability to sync up data across multiple locations. Because it puts all of your information in one easy-to-use location, you can avoid redundancies, lost inventory, and other common errors. Furthermore, accounts payable errors can cause a lot of headache (and financial cost) to a business. From batch invoicing mistakes to late payments, there are a wide range of hurdles that can complicate matters. Luckily, there are tools available that can streamline the process, nearly removing the need for human intervention completely. Some software developers look to automate your accounts payable workload as much as possible with Tipalti, including invoicing, payment, and reconciliation processes. By streamlining supplier management, collecting tax-related documents, processing and approving invoices, and automatically communicating payment status to suppliers, these applications can result in a lot of saved time. Some additional tools and features you’ll want to look for include:

• Data capture/recognition software: Instead of hiring workers to tediously enter data manually (which can lead to bad data due to human error), seek out software that can automatically scan and recognize handwriting. This is a common feature of workflow automation software.
• Invoice routing and validation: Getting an invoice approved for exception handling and authorization can be an involved process, leading to payment delays. Automatically routing an invoice from approver to approver can decrease this wait. Furthermore, if the software can match information on an invoice with relevant documents, it can automatically validate it as authentic, reducing time spent manually reviewing purchase orders.

When to Limit Automation

Automatic barcode scanning and other methods of tracking are effective methods of accounting for inventory — but they may not be sufficient alone. Such methods of automation are time efficient, but they can be exploited. Fishbowl is a great option for those concerned with fraud: Because it syncs up with QuickBooks, you can verify the validity of your information seamlessly. If you opt for other tools, you’ll want to have someone physically account for inventory on a regular basis in order to prevent fraud and ensure that everything in the computer system is correct. You’ll also want to keep a pulse on current trends and customer demand. Automation software can ensure that you are well stocked, but if current trends create unexpected demand, you’ll want to manually intervene in order to remain prepared. And, of course, it doesn’t hurt to keep extra stock on hand regardless. Keeping a few days of extra inventory can protect your company in case of unexpected demand or automation software errors. Another consideration is your financial health. When automating finances as they relate to inventory management, it helps to occasionally manually assess where your organization stands. Bring in your accountant (or contract one) to perform a financial statement analysis, suggests Ohio University. This information will permit you to make broad organizational changes when needed to ensure long-term sustainability. Finally, the systems you use for automation should be regularly analyzed for any inconsistencies or errors. Instead of reaching for a pen and paper to do this analysis, reach for your phone; mobile technology has introduced a wide variety of tools that can help small business owners, notes Fiscal Tiger. Personal finance apps can help you organize your assets and investments to check for automation errors, and cloud inventory automation services can often be accessed via your smartphone for reference anytime, anywhere. When analyzing your automation tools, you’ll also want to make sure you’ve downloaded any recent software updates, check recent transactions for discrepancies, and stay abreast of news of any security vulnerabilities. These are a few considerations you should keep in mind when implementing automation software. Have your experiences with automation been positive? Are there any other uses for automation that you’d suggest small business owners try? Leave your thoughts in the replies below.