Top Benefits of Automated Inventory Management (and How It Supports Retailers)

Manual inventory management is chaos. Endless spreadsheets and inaccurate hand counts. Inventory issues like out-of-stock items, overstocks, and skyrocketing carrying costs.

Fortunately, technology makes this better. Enter automated inventory management.

Inventory automation uses software to simplify stock management tasks. Managing processes like ordering, fulfillment, and cycle counts can all benefit from automation. The latest retail inventory automation tools help you:

Get closer to real-time visibility and better accuracy.

Automate tedious tasks.

Reduce waste and carrying costs.

Make data-driven inventory decisions.

The result: on-time deliveries, improved inventory control, happier customers, and a boost in profits.

Interested in how it works? This guide outlines everything you need to know about retail inventory automation. Keep reading to learn what it is, how it works, and why your business should be using it.

Quick Summary:

Inventory automation uses software to simplify, speed up, and improve inventory control. This guide covers:

Challenges of traditional inventory management

Key benefits of automated inventory systems

How inventory automation works

Choosing automated inventory management software

How to use inventory automation to grow your profits

Ready to embrace the future?

You’ll never look at inventory management the same.

The Inventory Struggle: From Chaos to Control

Many businesses start with a manual inventory counting system. They count by hand and enter the stock data into a spreadsheet.

It works… until it doesn’t.

As a business grows, however, this type of inventory management becomes disorganized. And businesses start to face a variety of problems like:

1. Lost Productivity

A manual count can take hours or days of labor. Suppose your warehouse has 15,000 items in stock. If it takes 2 seconds to count each item, that count takes 30,000 seconds (or about 8 and a half hours).

This doesn’t even account for lost productivity due to:

Data entry

Inventory reconciliation

Manual demand forecasting

Communication gaps and inefficiencies (from using disparate systems)

Ultimately, automation can instantly improve efficiency. One Production and Inventory Management Journal study found a $600,000 yearly productivity savings for a large multi-location wholesale business after implementing automation.

2. Accuracy Woes

Inaccurate stock levels are a ticking time bomb. Unfortunately, most businesses don’t even come close to 100% inventory accuracy. Most, in fact, are around 65% accurate, according to estimates from the Auburn University RFID Lab.

Accuracy issues often cause overstocking and stockouts. But inventory automation tools like radio frequency identification (RFID) tags can have a big impact.

One study from the International Journal of Logistics Management found a 55% decrease in stockouts after implementing automated inventory. The ECR Community Shrinkage & On-shelf Availability Group found that improving accuracy rates can lead to a sales increase of 4% to 8%.

3. Forecasting Chaos

Inventory accuracy can have an impact on demand forecasting, although the significance is unclear.

However, without inventory visibility, the risk for stockouts and overstocking increases significantly. Therefore, you might accurately predict demand, but due to miscounted inventory, you could find yourself with too much or too little stock.

Your Future Sales, Forecasted Today. Get the tools you need to forecast demand and reduce overstock. Learn more >

4. Human Error

Manual inventory processes are prone to human error. An order that’s placed too late, miscounts, physical inventory that gets lost, damaged, or stolen.

In fact, the average cost of a mispick is $100, according to ShipMonk! With most businesses experiencing a 2-3% mispick rate.

That’s up from $22 a decade ago, when mispicks resulted in $500,000 in annual losses for companies.

But human error doesn’t just affect fulfillment. It can touch on every aspect of inventory management, including ordering (missed dates), forecasting, communication, and inventory control.

5. No Clear Visibility Across Locations

Running multiple stores? Manual tracking means you’re flying blind. Spreadsheets can’t show real-time stock levels at different locations, leading to:

• Overordering at one store while another runs out.
• Delayed transfers because no one knows where extras sit.
• Wasted sales when customers can’t find items “in stock” at a sister store.

Automated inventory management systems fix this. They sync data across all locations, so you can:

• See live stock levels for every shop.
• Transfer inventory before shortages hit.
• Make smarter purchasing decisions based on total network demand.

6. Inventory Shrinkage and Loss Go Unnoticed

Shrinkage – theft, damage, or miscounts – eats profits for most retailers. The worst part? Manual systems detect it too late (if at all).

With automated inventory tracking systems, you:

• Spot discrepancies instantly (e.g., scanned 50 units, but only 48 are on the shelf).
• Identify patterns (e.g., losses always happen during a specific shift).
• Integrate with security cameras to link missing items to transactions.

7. Poor Customer Experience

Nothing drives customers away faster than:

• “Sorry, we’re out of stock” (after they’ve waited in line).
• “It’s in the back… maybe” (spoiler: it’s not).

Automated inventory operations prevent this by:

• Keeping online and in-store stock counts accurate.
• Alerting staff before popular items sell out.
• Enabling rain checks or nearby store pickup seamlessly.

Pro Tip: Pair your point of sale (POS) and inventory management software to show customers live stock availability at checkout.

8. Time-Consuming Inventory Counts

Manual counts shut down operations for hours. For example:

• A small boutique spends 12+ hours/month counting.
• A grocery store loses $1,200/day in sales during stock audits.

Automated inventory systems eliminate this downtime:

• Handheld scanners update counts in real-time.
• RFID tags let you scan entire shelves at once.
• Cycle counts happen without closing aisles.

9. Inefficient Team Collaboration

With manual systems:

• Spreadsheets get outdated the second they’re saved.
• Staff duplicate orders because they can’t see real-time updates.
• Managers make decisions on yesterday’s data.

Automated inventory management software keeps everyone aligned:

• Cloud-based access = same data for all teams, everywhere.
• Role-based permissions = cashiers, managers, and warehouse staff to see what they need.
• Audit trails = track who changed what (and when).

10. Difficult to Scale

Manual tracking cracks under growth. Adding more products, stores, or sales channels? Prepare for:

• Spreadsheet crashes (50,000 stock keeping units (SKUs) don’t play nice with Excel).
• Hiring more staff just to count stock (instead of selling).
• Errors multiply with every new location.

Automated inventory management scales with you:

• Handle 100 or 100,000 SKUs without extra work.
• Sync with ecommerce, suppliers, and POS effortlessly.
• Grow revenue without growing headaches.

Manual vs. Automated Inventory Management

Factor	Manual Inventory Management	Automated Inventory Management
Accuracy	Prone to human errors. Miscounts, misplaced items, and outdated spreadsheets lead to stockouts/overstocking.	99%+ accuracy with barcode/RFID scanning. Real-time sync eliminates discrepancies.
Time Efficiency	Hours wasted on counts. Staff diverted from revenue-generating tasks.	Minutes per count with handheld scanners. Cycle counts happen during operations.
Cost Implications	Hidden costs: labor, shrinkage, stockouts, and excess inventory.	Saves 20-30% annually: reduced labor, shrinkage, and optimized stock levels.
Integration	Siloed data: Spreadsheets don’t sync with POS, ecommerce, or suppliers.	Seamless integration with POS, enterprise resource planning (ERP), and sales channels. Live updates across all systems.
Error Rate	High. Manual entry mistakes compound over time.	Near zero errors. Automated tracking and alerts prevent costly mistakes.

The Power of Inventory Automation

Automated inventory management systems (AIMS) solve many of these issues. They help improve accuracy (which can increase sales), simplify fulfillment, and reduce the impact of human error.

These tools are increasingly important for companies implementing curbside pickup programs. This can be a huge sales driver. One study from ECR Retail Loss found that during the holiday season in 2018, Target experienced a 5.7% growth rate by offering in-store pickup.

Here’s what the latest inventory automation tools do:

Automatic reordering and stock level alerts: Never run out of stock again! Automated inventory tracks your inventory and triggers reorders when levels dip below a set point. Plus, intelligent alerts keep you informed of any potential issues.

Real-time inventory visibility across channels: No more information silos! AIMS provide a unified view of your inventory across all channels, online and offline, giving you complete control and transparency.

Ecommerce integration: Seamlessly connect your AIMS with your online store, automating processes like order fulfillment, curbside pickup, and shipping. Say goodbye to manual data entry and hello to streamlined efficiency.

Powerful data analytics: Unlock the secrets hidden in your inventory data. AIMS provide powerful analytics tools for demand forecasting, trend analysis, and optimizing your product assortment. Make data-driven decisions that fuel your growth.

Automated warehouse and fulfillment processes: Embrace the robots! AIMS can integrate with automated warehouse systems, RFID tags, and fulfillment robots, boosting efficiency and accuracy in your storage and shipping operations.

Cutting-edge technologies: Inventory automation utilizes tools like RFID tags to optimize inventory management, as well as barcode scanning and other new technologies.

Transforming Your Business: Benefits of Automated Inventory Management

Embracing inventory automation isn’t just about replacing spreadsheets with fancy software. These tools can unlock a treasure trove of benefits that transform your entire business.

Here are 15 key benefits of these systems (that affect your bottom line):

A. Maximum Efficiency

Automation cuts out a bunch of tedious manual tasks. Cycle counts, data entry, and order processing. And this can immediately help you reduce costs. An Auburn University RFID Lab study found that utilizing inventory tools in cycle counts increased operational efficiency by 5 to 10 percent.

Here are some key productivity benefits:

1. Strategic planning: Focus on growing your business instead of being bogged down in operational details.

2. Building customer relationships: Invest in personal interactions and exceptional service.

3. Product development and innovation: Unleash your creativity and bring new ideas to market faster.

B. Improved Accuracy

Say goodbye to the fear of stockouts and overstocking! AIMS provide real-time inventory visibility across all channels, ensuring:

4. Accurate order fulfillment: Eliminate the frustration of inaccurate orders and unhappy customers. Automated inventory can result in driving order accuracy rates up to 99.9% according to a 2018 study done by the Auburn University RFID Lab and GS1 US.

5. Optimized stock levels: Avoid higher carrying costs and lock-up capital.

6. Improved financial forecasting: Make data-driven decisions based on reliable inventory data.

C. Better Visibility

No more flying blind when it comes to inventory trends. AIMS unlock the power of your data through powerful analytics, giving you insights into:

7. Demand forecasting: Anticipate customer needs and avoid stockouts or excess inventory.

8. Product insights: Identify best-sellers and adjust your assortment accordingly.

9. Supplier performance: Evaluate supplier reliability and negotiate better deals.

D. Control Costs

Every retail business owner’s dream: reducing costs and boosting profits. AIMS achieve this by:

10. Minimizing carrying costs: Hold less inventory without compromising availability.

11. Reducing lost sales: Always have the right products in stock to satisfy customers.

12. Increase omnichannel sales: There are now numerous marketplaces businesses can sell in: online shop, in-store, and web-based markets. Omnichannel selling requires robust tools. One Accenture study found that 83% of RFID adopters sold through 3 or more marketplaces, compared to just 24% of non-adopters.

E. Customer Satisfaction

Happy customers are the lifeblood of your retail business. AIMS contribute to customer satisfaction by:

13. Timely order fulfillment: No more waiting games for customers.

14. Reducing backorders: Deliver on your promises and build trust.

15. Improving communication: Provide accurate product availability information.

F. Cost Savings

16. Lower Holding and Labor Costs

Manual inventory eats into your budget with unnecessary labor and storage expenses. Automated inventory management systems slash these costs by:

• Reducing staff hours spent counting stock (save 15+ hours/week)
• Cutting warehouse costs by optimizing stock levels
• Eliminating overtime pay for end-of-month inventory crunch

17. Minimized Shrinkage and Loss

Shrinkage – whether from theft, miscounts, or supplier errors – drains 1-3% of annual revenue. Automation fights back with:

• Real-time alerts for missing/discrepant items
• Audit trails to pinpoint loss sources
• Integration with security systems (like closed-circuit television (CCTV) or RFID gates)

G. Scalability and Flexibility

18. Manage Growth Seamlessly

Adding new products or locations? Manual tracking collapses under scale. Automated inventory management software grows with you by:

• Handling 100 → 10,000 SKUs without extra work
• Syncing data across stores/warehouses instantly
• Automating reorders as sales volume increases

19. Adapt to Omnichannel Demand

Selling online, in-store, and on marketplaces? Automated inventory tracking systems keep everything in sync:

• Prevent overselling (no more “Sorry, out of stock!” after online purchases)
• Centralize stock levels for BOPIS (Buy Online, Pick Up In-Store)
• Update all channels in real-time

H. Effective Team Collaboration

20. Update Teams Simultaneously

No more conflicting spreadsheets or stale data. Automated inventory management ensures:

• Live updates for managers, cashiers, and warehouse staff
• Mobile access to stock levels from anywhere
• Role-based views (e.g., cashiers see only store inventory, managers see analytics)

I. Scalability

21. Manage Thousands of SKUs

Spreadsheets crash. Humans miscount. Automated inventory systems handle complexity effortlessly:

• Bulk import/export product catalogs
• Auto-categorize items by department, supplier, or demand
• Generate reports on top/low sellers in seconds

22. Handle Multiple Warehouses

Juggling several storage locations? Automation keeps you organized with:

• Location-level tracking (e.g., “Backstock Aisle 3” vs. “Overstock Warehouse B”)
• Transfer requests between warehouses with 1 click
• Demand forecasting per location

How Automated Inventory Systems Connect with Other Business Tools?

Automated inventory management doesn’t work in isolation – it integrates seamlessly with the tools you already use. This connectivity eliminates manual data entry, reduces errors, and keeps your entire business in sync.

Here’s how automated inventory tracking links with key business systems:

Ecommerce Platforms

• Real-Time Stock Sync – No more overselling! When an item sells online, inventory updates instantly across all channels.
• Order Automation – Online purchases auto-deduct stock levels and trigger fulfillment workflows.
• Multi-Channel Management – Sync inventory across your online store (FTx Commerce), and your brick-and-mortar store.

POS Systems

• Unified Sales & Inventory – Every in-store sale updates stock counts in real-time.
• Barcode/RFID Scanning – Cashiers scan items, and inventory adjusts automatically – no manual logging.
• Purchase Order Automation – Low stock alerts trigger reorders directly from the POS.

Accounting & Finance Software

• Auto-Sync Cost of goods sold (COGS) & Margins – Inventory changes flow into accounting for accurate financials.
• Tax & Compliance – Track inventory value for audits without spreadsheet headaches.
• Vendor Payment Tracking – Match purchase orders to invoices to prevent overpayments.

Warehouse Management Systems (WMS)

• Smart Picking & Packing – Route warehouse staff efficiently with real-time stock locations.
• Cycle Count Automation – Schedule counts without disrupting operations.
• Multi-Warehouse Sync – Transfer stock between locations with a few clicks.

Choosing an Automated Inventory Platform

There are so many options for warehouse management software. Which option is right for your business? Start by asking these questions:

How big is my business?

Are you a small startup or a large enterprise? Each scale and industry have unique inventory needs. A system suitable for a clothing boutique won’t work for a multi-location convenience store operation.

What are my biggest inventory pain points?

Think about the issues you want to solve. Does your business struggle with inventory accuracy? Do you have a slow or inaccurate fulfillment process? Prioritizing your needs will guide you to a system that can help you solve these issues.

What’s my budget?

Don’t underestimate the importance of budget, but remember, investing in a robust system can save you money in the long run through improved efficiency and reduced errors.

According to one study, the cost of an automated inventory system was $300,000 per year. BUT… it saved $600,000. The return on investment (ROI) is clear.

A Closer Look at Features

Here’s an overview of features that you need from an inventory automation system:

• Automatic reordering & alerts: A system must include automatic reordering and low-stock alerts.
• Inventory visibility: Choose a platform with real-time inventory that syncs with online and offline sources.
• Ecommerce integration: Look for one that offers support for delivery and in-store pick-up.
• Data analytics: Choose a system that supports demand forecasting with machine learning algorithms.
• Automated warehouse & fulfillment: It should include warehouse order management tools, like picking maps and fulfillment syncing.
• Barcode scanners: Your system should include handheld inventory scanners that simplify barcode scanning and sync in real-time.

Beyond the Features

All the flashy features are nice. But they aren’t everything. The best automated inventory system is also:

• User-friendly: Look for a system with a user-friendly interface and intuitive design. You don’t want to spend more time wrestling with the software than managing your inventory.
• Integrations: Ensure seamless connection with your existing ERP, retail POS system, and other software. No more data silos and redundant tasks.
• Support and training: Reliable customer support and training resources are crucial for a smooth implementation and ongoing success.

Choosing an AIMS is a journey, not a destination. Take your time, research carefully, and don’t hesitate to ask questions.

Conclusion: Master Your Inventory, Master Your Business

The battle against inventory chaos is no longer one you have to fight alone. Automated inventory management systems stand ready to transform your business.

Remember, this journey isn’t just about automating tasks; it’s about unlocking a new level of control, efficiency, and profitability. With inventory automation, you can:

Free up valuable time and resources

Make data-driven decisions

Boost customer satisfaction

Increase profitability

Increase sales by 4-8%

Are you ready to master your inventory? Contact FTx POS today to learn about warehouse inventory management tools with automation. Start transforming your business today.