Technology has an impact on every area of your business, including marketing, supply chain management and financial reporting. Investing in better IT solutions is particularly important as your firm grows and becomes more complex. Consider these business challenges and the need to invest in IT:
For many businesses, inventory requires a huge investment of company assets. Retailers and manufacturers must pay for inventory as well as the cost to store and deliver goods to clients. These firms often make the business case for investing in IT to manage the entire supply chain process more efficiently.
Assume, for example, that your firm manages a sporting goods retailer with three regional warehouses and 50 retail locations. Each store carries, on average, $2 million in inventory, and your warehouses must constantly receive new merchandise and ship needed inventory to your stores. Given your $100 million investment in in-store inventory, you decide to evaluate your warehouse management system. An IT investment can improve your system in several ways:
- · Point of sale improvements: Assume that each of your store locations uses a point of sale (POS) system to track sales and changes in inventory levels. A better software system can help you track sales and inventory more precisely, while transmitting data into management reports in real time. These improvements allow management to make more accurate decisions about inventory purchases.
- · Economic order quantity (EOQ): EOQ is an equation that determines the ideal amount of inventory that a company should order, given the cost of a product, customer demand, ordering costs and other variables. Management software can use this calculation to determine the optimal level of inventory purchases for hundreds of products.
- · Shipping logistics: Your warehouse may ship inventory to each store on a weekly or even daily basis, and the logistics may be expensive. Your warehouse staff must receive each store’s order, pick the specific inventory goods off the shelves, load trucks and deliver the items to each location. Software can help you minimize errors and reduce the labor hours required to complete these tasks.
An investment in IT can reduce your required investment in inventory, which frees up cash for other uses in your business. Better software can move inventory from each warehouse to your retail locations faster, which reduces labor costs for your business. G-III Apparel Group, for example, increased their third quarter 2017 results by controlling the company’s distribution costs.
Smart marketing practices
An IT investment can improve your marketing outcomes by collecting useful customer data faster and more efficiently. Software innovations can help your firm collect and manage data regarding customer purchase trends and preferences, including how often a customer buys your product and the impact of offering coupons and discounts.
Software makes it much easier to use social media to market your products. Marketers can manage email campaigns and customer responses to opt-in buttons on a company webpage. A marketer can collect data and make changes to marketing campaigns in real time, which can improve customer response rates and increase sales.
An investment in IT products and services can be expensive, but the payoff in cost savings and improved productivity can be substantial. Purchasing better software can allow you to grow your business and continue to operate productively. Consider an IT investment to stay ahead of your competition.