Inventory Management is a critical skill that allows businesses to maximize profits while satisfying customers with the least stock. Inventory management, as we can see, is all about data. Purchases, reorders, shipping, warehousing, storage, receiving, customer satisfaction, loss prevention, stock turnover, and other considerations are all taken into account.
Inventory control is critical for online retailers. Using the right inventory management software boosts efficiency, dependability, and, most importantly, scalability. It cannot be easy to select the best software for your company. Software systems should be able to meet both your current and future requirements. We can assist you in making the best investment decision.
If you're looking for an integrated system to manage your inventory control operations, you have several options. Many businesses invest in an ERP inventory system that covers all aspects of their operations, from warehousing and replenishment to purchasing orders and distributor management. Online wholesalers and retailers have more cost-effective, flexible, and efficient options.
What's the point?
Don't be concerned about which system is best for you. We'll review everything you need to know about inventory tracking and retail management systems so you can make the best decision for your business processes.
Many inventory management systems contain this information. Companies with enterprise resource planning (ERP) and inventory software management functionality have a competitive advantage. However, the main competitive advantage is the ability to share information in real time across different business units.
What is ERP Inventory Management?
Inventory management, as part of Enterprise Resource Planning (ERP), enables businesses to manage all aspects of their operations from a single platform. Inventory, finance, and logistics are all included. ERP inventory management systems provide the entire organization with real-time inventory data.
This is a critical capability for businesses that want to expand, have complex workflows or supply chains, require advanced automation, operate in "just-in-time" mode, sell multiple products, or simply want to maximize inventory investments.
Many businesses now use ERP inventory management software to keep track of their inventory costs. Established businesses will require more production supplies or raw materials. The warehouse will need to be expanded. These items are kept in inventory. Inventory item management is difficult in complex systems.
This can lead to fatal errors that hinder a company's progress. Finance, planning, logistics, and operations all use ERP software. Companies that use ERP software for inventory management can manage their raw materials more effectively, potentially leading to higher profits in the future.
ERP System Inventory Management Software can be integrated with other software to assist you in directly analyzing data. Accounting systems, CRM sales, and many more are examples. We will review the main advantages of ERP system cloud-based inventory management software for your business activity.
Are You Looking for Inventory Management?
It's a great question. Choosing the right ERP for your business depends on which core features are necessary to manage inventory levels effectively. ERPs, like all software tools, have their pros and cons.
ERP systems can be used to improve supply chain transparency, inventory optimization, and data-led reporting. They also allow for more precise counts and quality checks.
ERP systems can be complex to implement, making your business operations more complicated. Some businesses may struggle to implement an ERP system across their entire company.
ERP systems are not able to be customized for each customer. ERP tools frequently lack the specialized features required by your ecommerce business and do not typically provide pre-built integrations to ecommerce platforms or marketplaces.
Because of the complexities of ERP implementation and management, many businesses hire an ERP specialist to assist them in customizing and maintaining their system. This comes at a cost and is not sufficiently flexible.
Many fast-growing businesses will grow beyond their ERPs due to a lack of flexibility. This may necessitate the addition of complex customizations (possibly from a third-party provider) to keep their ERP system current.
Three Questions to Ask
Businesses can use these questions to assess their inventory accuracy management processes and systems.
1. Can My Current System Assist Me in Planning?
Is your current system capable of providing information on inventory turnover rates, lead times, sales (to whom and when), stock levels, and replenishment?
2. Do I Have Strategic Insights From My Current System?
With today's supply chain challenges, you need a system to help you plan for growth and inform you about market changes. Customers may abandon your rapid business as a result of stock-outs.
3. Are My Sales and Customer Service Teams Properly Trained to Provide a Quality Customer Experience?
With today's technology, all team members should have access to inventory information. You need to know what is in stock, where it is, when it will arrive, and how quickly it can be delivered to a customer.
ERP Inventory Management: How Does ERP Inventory Management Help Your Business?
ERP systems rely on various data sources to provide insight into past performance and other information. Organizations use this data to make better ordering decisions and forecast future demand.
ERP-powered inventory management boosts supply chain efficiency. It can eliminate double-handling and automate mundane tasks such as reordering.
There are other benefits to incorporating ERP in inventory management:
- Supply chain Transparency: When a business can integrate back-end systems effectively and communicate directly with its partner, it minimizes disruptions like a critical part not being delivered on time or a product priced too high. Integration ERP systems allow for the synchronization of order and shipping information.
- Improved Reporting: Use accurate inventory data to get the most out of data-driven insights. Understanding top-performing SKUs, landed costs of goods sold (COGS), and sales by channel and location are all part of this. ERPs enable the creation of customized reports that contain accurate and useful data.
- More precise Counts: Excess inventory count, shortages, and planned replenishment are all tracked and reported by the ERP system. It also tracks metrics such as COGS and average turnover rates. The warehouse system records and reports product transfers from shipping to receiving.
- End-to-end inventory Analysis: ERPs provide information for each stage of the track of inventory flow, such as the cost of goods sold and turnover rates. By analyzing key inventory metrics, businesses can improve their inventory cycle efficiency.
- Quality Checks: Most ERP systems allow you to use logic to define inventory quality checks. You can indicate that products must meet safety or environmental standards. The system will then check the product safety information. The system will alert staff to make necessary changes if it detects that the item is not compliant.
- Inventory Planning: Each ERP product has an inventory status. Customers, staff, and partners can view and verify available numbers and order information. To help with planning and increasing customer satisfaction, your inventory history and metrics are easily accessible.
- Cycle Counting: The ERP system guides staff through a well-planned and planned cycle counting process. Regular cycle counting is an important tool for inventory management and checks and balances.
What Are the Primary Purposes of an ERP Inventory Management System?
Consider the long-term potential of any new system: A system that touches so many areas of your business and takes time and effort must be able to meet your current and future needs. You should avoid systems that are limited in functionality and will be obsolete within three to five years.
Here are five steps to help you find the right system for your entire business decisions.
Step 1: Identify Your Desired Outcomes
Make sure you consider the goals of your stakeholders and develop a business case. Analyzing business trends, core competencies, and external opportunities is part of strategic planning.
Ask yourself these questions: How does the purchase of the proposed item align with long-term goals, both previously established and newly revised? What insights will it provide that are currently unavailable to assist us in planning our inventory strategy?
Step 2: Find the Project
Which data sources are required to integrate key metrics into ERP inventory management software? Which suppliers and partners will be able to use the ERP inventory management solution? Make a list of all the required capabilities and features to achieve the desired result.
Step 3: Create an ROI Analysis
Don't just focus on cost-cutting. Consider instead how the investment will improve your company's profitability, efficiency, and customer satisfaction.. Explain how technology will allow your business to grow by improving inventory management.
Step 4: Draft a Vendor List
Examine case studies from similar businesses to determine which systems best suit your company. To narrow down your options, consider the following:
- Are the systems flexible, scalable, and easy to integrate?
- Are there any testimonials from other companies in the industry?
- What type of training is required? Is the company able to support training?
- Is there a free or paid trial version that can be used for testing purposes?
- How much does the software cost upfront? Or monthly for cloud-based applications? How about maintenance?
- How long will it take before we are up and running again?
Step 5: Keep an Eye on the Future
Examine the product goals of potential system vendors and determine if they align with your business. When deciding whether an ERP inventory management system will work for you, use the checklist below.
Read More: Why is Inventory Management Important?
ERP Inventory Management: How to Get Started
An implementation roadmap is required to reap the full benefits of an ERP inventory management software system. The roadmap is divided into three steps:
- Create the Record: Integrate all data and functions into a single ERP system, or connect data from legacy systems to your ERP for real-time integrations and updates.
- Elevate The Record: Other functions, such as payroll, procurement, and advanced analytics, can be added as a layer to the record. All of these tasks can be completed in a single record system for maximum efficiency.
- Expand with Advanced Functions in ERP: ERPs provide advanced functions such as planning, analysis, quality management, and analytics, allowing your business to innovate and adapt to changing market conditions.
ERP systems can handle many functions and areas and, thus, many aspects of a business. The roadmap can assist your business in moving from where it is now to where you want it to be.
An ERP System is Used to Control Inventory
An ERP system optimized for inventory management automates the necessary functions to ensure stock buying, organizing, and transferring all work in sync. It also integrates the inventory requirements of customers, suppliers, and staff to maintain optimal stock levels.
The diagram below depicts how an ERP might interact with these groups, their respective systems, and your central database. The ERP serves as a central "brain" for inventory operations.
Each diagram group has different tasks and requires different systems. Suppliers use inventory, financial, and forecasting software. All of these systems must be working together. Each specialized software system must be able to communicate with the ERP system.
Assume a business uses PLM to manage its inventory from conception to production. This will help you understand how ERP interacts with other systems. PLM and ERP work in tandem. ERP is in charge of production resource planning.
They would work in a logical order. The PLM is used to retrieve the initial product data. When a product reaches a point in its development where resources are required, the ERP integrates production with the rest of the process.
To properly manage inventory, you must have a network of people, systems, and processes. Inventory control requires more than "one system and done" when your business grows. Inventory control requires a centralized approach. Begin implementing an inventory control system as soon as possible. It would be best to put together a team of internal experts to assist you.
- Keep current inventory records.
- Be realistic about your budget.
- Establish milestone goals.
- Facilitate user acceptance testing, training, and other implementation checks.
Companies that use disparate, disconnected systems miss out on critical inventory insights that could help them run their business more efficiently. A robust ERP system with strong capabilities can turn inventory management into a competitive advantage.
Keep an eye out for integrated business intelligence, which combines visual analytics and data to help managers make better decisions. You can adapt your design to grow your business by adding resources and features as needed.
Advantages of an ERP Inventory Management System
Implementing ERP system inventory management software is a tried and true way to boost your company's productivity. You may make mistakes when you track your inventory using spreadsheets or manual methods. If this occurs on a regular basis, it can have a significant impact on the company's operations.
This indicates that you should track inventory with an ERP system. ERP systems can assist you in presenting relevant data so that people can understand the company's performance and make an informed decision. ERP inventory management software may also provide additional benefits, such as those listed below.
1. Enhanced Effectiveness
An ERP system will allow you to reduce the time it takes to collect data. This will improve the efficiency of production and other processes. Inventory management will be simplified thanks to the software. However, there is a significant amount of work involved. The software will also increase employee productivity and provide real-time inventory reports.
2. Transparency Throughout the Supply Chain
Inventory item alignment can be aided by ERP software. The software enables software-based tracking and coordination between suppliers and manufacturers, as well as between them. It can also synchronize shipping, inventory, and order data within the Supply Chain Management field.
3. Reporting Enhancements
Accurate inventory data can help you make better decisions. You can use the data to determine which SKU is the best, how much it costs, and how customers buy from each channel and location. ERP systems can generate reports that show how a company is performing.
4. Save on Your Costs
Inventory management software for an ERP system can help you save money. Avoiding financial losses by reducing human error, excessive stock storage and unnecessary purchases are possible. Reduced costs will assist the company in avoiding unnecessary expenses and increasing profit.
5. Inventory Planning
ERP systems keep track of every product and inventory item. This makes it easier for stock management. Inventory management doesn't have to be done by one person. Partners, employees, and customers can all see the inventory available.
This data is also available in real time. It doesn't take long to see the goods inventory, and it doesn't require too much math. This efficiency helps customers be happier and can also help them plan for the future, whether stocking goods or making products.
6. Allows for Business Expansion
ERP systems can be used to make complex tasks simpler. The software can now directly monitor tasks and replace manual methods. He also helped with the company's international expansion and establishing new branches in Indonesia.
Because manual calculations are no longer viable, it is linked to ERP systems that assist businesses in growing. Even if commodities are located elsewhere, all data related to goods stock will be stored centrally. ERP systems can also be used to grow a company's operations. Based on previously collected data, the ERP system can review an operation or activity.
To ERP or not ERP?
There is no correct or incorrect way to select a software solution. It all comes down to your company's requirements. Which software option will assist you in achieving your primary objectives?
ERP inventory management systems can be extremely useful but must provide everything you need to scale and grow. These ERP systems are not meant to be universal and can't cater to all industries. An ERP may not have the specific features or functions your industry requires. ERP users also often discover that certain features are not used as intended.
A retail-specific operating system is a more adaptable way to run your business. It has features and integrations that are specific to the industry. A dedicated retail platform provides the complete package for growing online retailers, particularly those operating across multiple channels.
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Conclusion
Large business owners should consider these six factors when considering an ERP system for inventory control. Inventory management is critical for a company's survival. The effective presentation of stock product information benefits both the customer and the company. The software has also been shown to help businesses run more efficiently.
