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

  • By Matthew Davis
  • Feb 22, 2024
  • Inventory Secrets
Automated Inventory Management

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 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% accuracy, according to estimates from the Auburn University RFID Lab.

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

One study found a 55% decrease in stockouts after implementing automated inventory. Another 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.

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 mis-pick is $100, according to industry estimates! With most businesses, experiencing a 2-3% mis-pick rate.

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

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

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 errors.

These tools are increasingly important for companies implementing curbside pickup programs. This can be a huge sales driver. One study 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 trigger 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.
  • E-commerce 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, order processing. And this can immediately help you reduce costs. An industry 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 drive order accuracy rates up to 99.9% according to a 2018 study.

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, web-based markets. Omnichannel selling requires robust tools. One 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.

Automated Inventory Management Benefits

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 has 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 fulfilment process? Prioritizing your needs will guide you to a system that can help you solve for 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 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.
  • E-commerce 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 fulfilment 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.


Automated inventory management uses software and technology to streamline various aspects of tracking and managing your stock. This can include tasks like:

  • Automatic stock level updates: Barcode scanners, point-of-sale systems, and other tools record transactions and adjust inventory in real-time.
  • Order triggers: The system automatically generates purchase orders when stock levels hit predetermined reorder points.
  • Demand forecasting: Software analyzes sales data and predicts future demand, helping optimize inventory levels.
  • Warehouse management: Systems can optimize storage locations, track product movements, and facilitate picking and packing.
  • Reporting and analytics: Generate reports on inventory levels, cost analysis, product performance, and more.

Automating inventory tasks can transform your business. Key benefits include:

  • Improved accuracy: Automation reduces human error and ensures accurate stock levels.
  • Reduced costs: Save time and money through efficient ordering, less stockouts, and minimized waste.
  • Increased efficiency: Streamline processes and free up resources for other tasks.
  • Better decision-making: Gain data-driven insights to optimize inventory levels and purchasing decisions.
  • Improved customer satisfaction: Avoid stockouts and ensure timely deliveries.

Any business that manages physical inventory can benefit from automation, regardless of size or industry. This includes:

  • Retailers and wholesalers
  • Manufacturers and distributors
  • Restaurants and food service businesses
  • Ecommerce stores
  • Healthcare providers
  • Educational institutions

The cost of automated inventory management systems varies depending on features, scale, and complexity. However, even basic systems offer significant ROI through improved efficiency and reduced costs. One study found ROI for a large warehousing operation to be 300%.

Here’s a short list of some of the challenges:

  • Integrating with existing systems
  • Data accuracy and quality
  • User adoption and training
  • Finding the right system for your needs
  • Ongoing maintenance and updates

Most modern systems are designed to be user-friendly and require minimal technical expertise. Some vendors also offer implementation and ongoing support services.

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Business Experts & Contributors

A New Solution Coming To FasTrax

Danielle is a content writer at FTx POS. She specializes in writing about all-in-one, cutting-edge POS and business solutions that can help companies stand out. In addition to her passions for reading and writing, she also enjoys crafts and watching documentaries.

Danielle Dixon

Content Writer
A New Solution Coming To FasTrax

Matthew Davis is a content marketing specialist for FTx POS. With experience in marketing, brick-and-mortar retail, and ecommerce, Matthew enjoys writing about strategies and technology retailers can use to grow. Previously, he managed retail operations for a sports/entertainment facility and worked in marketing consulting.

Matthew Davis

SEO Specialist/Content Writer

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