Streamline Your Inventory Management with ERP Software: Why It's a Must-Have for Businesses

Inventory management is the key to maximizing profits and customer satisfaction. As we can see, inventory management is all about the data. This includes customer satisfaction, loss reduction, stock rotation, etc.

Online companies must manage their inventory. Inventory management relies on data from various sources, including sales, restockings, logistics, storage, distribution, customer satisfaction, loss prevention and stock turnover.

Companies that have a good inventory management system generate more revenue. Stock investment is minimal and can improve customer satisfaction. What's the best way to handle inventory?

Inventory management in enterprise resource planning makes these data readily accessible. Inventory management capabilities in enterprise resource planning systems give businesses a competitive edge.

ERP is a key component of inventory management. Its role is to communicate real-time information between departments within the organization. This is what gives it its competitive edge. Choosing the right solution for your business can take time and effort. Investing in software that meets your current and future requirements is important.

Inventory management systems provide a lot of information. This integration gives companies a competitive edge. However, the main advantage comes from their ability to exchange information between different areas of their Company in real-time.

ERP Inventory Management: What is it?

Enterprise Resource Planning inventory management (ERP) is a platform that helps businesses manage their entire business from one place, such as finance, inventory, planning, logistics, and operations. ERP inventory systems provide real-time information on inventory to all employees. Businesses that are expanding, require advanced automation, use "just-in-time" operations, sell many products, or wish to maximize inventory investments should consider an ERP system.

Which Features Are Present In An Erp Inventory Management System?

ERP inventory management features are designed to streamline business operations. One of the core features of an ERP inventory system is its ability to calculate order quantities.

You can integrate your inventory into all aspects of your business with an ERP system. This includes planning, operations, production and accounting. By integrating all your operations into a single software, you can streamline, regulate, and increase the efficiency of your Company.

CRM (Customer Relationship Management)

Many ERP systems connect with Customer Relationship Management to include customer information in decision-making and report generation. ERPs can organize data such as contacts, prospects, models, order records, etc., to create a database accessible to prospective customers.

Marketing and sales can focus their efforts on the leads most likely to convert. They can also streamline lead times and create stronger campaigns.

Automatism

ERPs reduce errors and save time by automating repetitive, time-consuming business processes. The organization can access the information users input into the ERP system for inventory management. The data is used to automate efficient and highly effective processes.

Savings in time and money are significant with the best-automated systems. Remember that the system administrator is required to help you develop automation rules for an ERP.

Supply Chain Management

ERP systems are reliant on supply chain management. SCM (supply chain management) is the process of managing the flow of data and items associated with products or services, starting from the acquisition of raw materials to the delivery at the intended destination. ERPs collect information on the supply chain to make optimal recommendations for transfer orders and purchases.

Centralized System

ERPs have two main purposes: eliminating redundant data silos and integrating departments. ERPs collect information from multiple departments within a business to build a complete picture of the Company's functional, economic and commercial details.

Financial and Accounting Management

ERPs track financial data and manage all accounts for business, including budgeting and forecasting. 

Certain systems may also provide features such as revenue recognition, support for multiple currencies, and tax and asset management. A structured ERP helps organizations budget, plan, and make efficient decisions.

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What is Inventory Management? Three Questions You Should Ask

This series of questions can help businesses evaluate the current systems and processes for inventory management:

• How Can I plan using my existing system?

Do you have a system that provides lead times to restock and insight into what's on hand, how to replenish it, the inventory turnover rate, and what sells (and who and when)?

• How Can I plan using my existing system?

You need to have a system that will help you manage your growth and give you an early warning of any changes you may see. Stock-outs can drive your customers away from competitors.

• Are my Sales and Customer Services Teams equipped with the insights they need to provide a quality customer experience?

All team members can now access inventory data with the current technology. Not just the inventory on hand but also where it's located, when it's due to arrive, and how fast it will be delivered.

ERP Inventory Management: How it Benefits Your Business

ERP systems use a wide range of data sources to provide companies with a better understanding of the past performance of different SKUs. These data are used to help organizations make better ordering decisions and create accurate forecasts for future demand.

Inventory management driven by ERP can also increase efficiencies across the entire supply chain. It can reduce the double handling of products and automate everyday tasks like ordering.

The following are some of the benefits that ERP can bring to inventory management:

• Transparency in the supply chain: When a company can integrate its back-end system and communicate with partners directly, it minimizes surprises. For example, a component critical to a product may not be delivered on time or priced at a higher price than necessary. Integrated ERP systems allow order and shipment information to be synced.
   
• Better Reporting: Accurate inventory data allows decision-makers to benefit fully from data-driven insights. For example, they can understand the top-performing SKUs, cost-of-goods-sold (COGS), and sales by channel and location. Custom reports are possible with ERPs, resulting in accurate data that can be used.
   
• Accurate counts: ERP systems track and record excess inventory, shortages and other metrics such as COGS and average turnover rate. The system in the warehouse tracks product transfer through receiving and shipping.
   
• Inventory Management: ERPs offer analytics at each step of the inventory cycle, including the cost of goods, turnover rates, and shrinkage. Companies can increase inventory efficiency by analyzing inventory metrics.
   
• Inventory Quality Checks: Most ERP systems have logic you can specify to check inventory quality. For example, you can specify that products must comply with safety or environmental standards. The system will then check the product's safety data. The system will alert staff if it detects that the product may not comply.
   
• Inventory planning: Each item has a status in the ERP that allows staff, partners, and customers to see what is available and how many are on hand or in order. Inventory metrics and history are easily accessible, which makes planning easier and improves customer satisfaction.
   
• Cycle counting: An ERP system guides staff in a well-planned and thoughtful cycle count. Regularly incorporating cycle counting into warehouse operations is an effective way to improve inventory records and perform checks and balances.
   

What to Look for in an Inventory Management ERP System

Consider its potential for the long term: A new system which reaches so many areas of your Company and is time-consuming to install must meet your requirements now and in the future. You should only use systems with limited functionality, which you may outgrow in three to five years.

Here are five simple steps to choose the right system for your Company.

Step 1: Determine Your Desired Outcomes

Create a case for your business by considering the goals of all stakeholders. Strategic planning involves analyzing business trends, external opportunities, resources, and internal and core competencies.

Ask yourself: Does the purchase proposed align with established long-range goals, as well as those that have been recently revised? It will provide valuable information to help us formulate our inventory strategy.

Step 2: The Next Step is to Scope Out the Project

Which data sources should be used to integrate key metrics in the ERP Inventory Management solution? Which partners will require access, such as the suppliers? List the features and abilities that are required to achieve the desired result.

Step 3: Develop a RoI Analysis

Focus on the benefits of investing in your business. You can make it more profitable and efficient while delivering better customer outcomes. Show how technology can help your business to grow by improving inventory management.

Step 4: Draft a Vendor List

Review case studies of businesses similar to yours and determine which systems will meet your requirements. To narrow your supplier list, ask the following questions:

• Does the system allow for easy integration and scaling?
   
• Can other businesses in our field provide testimonials?
   
• How much training will be required? Does the Company offer training support?
   
• Is there a free trial version or a paid-for version available?
   
• How much does it cost to buy the software or the cloud? How much is maintenance?
   
• When will we be up and running again?
   

Next Step: Take a Look at the Ahead

Assess whether the product roadmap of your prospective system vendor aligns with business requirements. Checklist to determine if an ERP Inventory Management System is the right choice for your Company.

ERP Inventory Benefits

Integrating Information Fully

ERP software allows for integrating all information relevant to inventory management, whether it is incoming or egressing. This eliminates the need for manual analyses. This benefit directly reduces the risk of shortages and overstocking. Prioritizing monitoring also provides an accurate forecast of the demand, which is crucial to every business.

Improved Product Identification

You can have a global overview of all your stock by identifying your products with codes and numbers. This benefit optimizes the work of your professional staff. Your ERP software provides expiry dates in real time. The geolocation is accurate and fast. It only takes a couple of clicks to get this information.

Improved Inventory Control and Safety

Access must be fully controlled to avoid Excel documents becoming a headache to consult. This applies whether they are locally stored or on a cloud-based service. ERP software lets you monitor the authorizations given to employees to improve inventory management and secure data.

Improve the Flow of Merchandise

The flow management feature is essential to improving the monitoring of current inventories. Real-time information provided by ERP software helps you develop the most effective strategies and optimize the flow of products. Once more, inventory control is boosted with a unique numbering system.

Automating Purchase Orders

ERP software automates your purchase orders for your customers or suppliers. The commercial management module in your integrated management package allows you to use up-to-date accounting data to predict future stocking needs while reducing the required steps. Information can be instantly transferred between departments, allowing for a more efficient organization.

Automating Inventory Restocking

Inventory restocking without current information can lead to "questionable inventory management" or shortages, which can harm any business. By integrating data that is updated in real-time, ERP software can automate these processes.

Effectiveness in Operations and Logistics Management

Implementing ERP software within a company, business, or organization can be a major event for logistics teams. The efficiency of analysis is increased. The simplified user interface provides greater access for all employees.

Better Decision Making

Centralizing relevant data through an automated system can reduce the workload of staff members responsible for managing a spreadsheet. Reports are easier to use and help make better decisions about product replenishment. ERP software also integrates accounting data from every balance sheet. Once your goods have been received, this information will be updated.

Control Over Financial Reports

ERP software ensures consistency between departments. The control over financial graphs and reports (which are constantly updated during every variation in inventory management) allows for avoiding delays.

Customers Service Improvement

Time is an important resource that we all lack. To respond adequately to your customers' requests, your colleagues who take orders must be able to access and trust all necessary information: Quantity in stock, price per unit, quantity ordered, date received, etc. 

Your order-taking colleagues will be able to provide your customers with the solutions they need if you are short on parts or equipment. Integrating ERP with the CRM software of an organization, business, or Company is also possible and recommended. The synchronization allows all information to be centralized on a dashboard.

Analysis of the Purchase Behaviors of Your Customers

Inventory management software can also be used to analyze customers' buying behaviors to improve your marketing strategies. Restocking frequency can be evaluated based on the trends to achieve better results. Inventory management can be improved by identifying off-peak times.

ERP Inventory Management: Get Up and Running

Follow a roadmap to implement the ERP system and get the full benefits. A roadmap has three major steps:

1. Create the Record: Include all data and functions into one ERP, or connect data from legacy systems that are still necessary to your ERP. This will allow for integration and real-time updates.
    
2. Enhance the Record: Layer other functions such as payroll and procurement. All these functions can be combined into one record system to achieve optimal performance.
    
3. Extend with Advanced ERP Functions: ERPs offer sophisticated features, including planning, analytics, and quality management modules that will help you innovate and adapt to market changes.
    

ERP can manage many functions, areas and aspects of the business. You can use the road map to help you get your business to where it should be.

ERP Inventory System Can Solve Common Challenges in The Stock Management Process

A business can only face problems if it has an ERP system for inventory management. Upgrading to an Enterprise Resource Planning system (ERP) can help solve many inventory issues.

A good ERP system will help you avoid the following problems:

Inventory

In the U.S 43% of small business owners need to track their inventory or use a manual method. Avoiding excess inventory is a good idea when selling seasonal items. Inventory can reduce liquidity and increase costs. If you are too cautious in your forecast, you could face inventory shortages.

U.S. retail stores hold $1.43 worth of inventory for every dollar of revenue. You can use an ERP system to analyze past sales and seasonal trends. This can be used to create realistic safety margins.

Stock Shortages (Out of Stock)

Stock shortages can be just as expensive as surplus inventory. Insufficient inventory during peak sales periods, for example, can be detrimental to your business if you have products with a large profit margin in a highly competitive market.

ERP Inventory Software can define "par levels", or minimum inventory thresholds, for each item. These can be modified throughout the year.

If a product is under the par stock level, an order request will be sent out immediately. When combined with automation software, ERP inventory systems can send purchase requests automatically.

Deadstock

The U.S. inventory can range from 20-30% dead stock or outdated. On-hand, dead stock and unused or unsold goods can confuse the non-expert. Dead stock is bad because it costs money in two ways.

1. The original price of the goods cannot be recovered.
    
2. Storage (warehousing costs) increase every day that the product is idle.
    

An ERP inventory system will help you keep track of the data about your products, including their purchase, manufacture, expiration date, and insolvency. It can send out alerts when stock levels drop.

Inventory Turnover

You can use inventory turnover to determine when to reorder or remanufacture goods. Manually calculating your inventory can take a long time. 46% of small businesses need to track their inventory. The following are the steps involved in this process:

1. Cycle of counting
    
2. Order Cycle
    
3. Delivery Cycle
    

It's also time-consuming and prone to human errors. You can keep your business running while maintaining and ordering goods if you automate the process. ERP will help you to execute this process easily.

Use of an ERP System to Control Inventory

A system optimized for stock management automates the necessary functions to ensure that stock purchasing, organizing, and transferring are all in sync. It also integrates the needs of customers, staff and suppliers to maintain optimal stock levels.

Below is a graphic that shows how ERPs can interface with your central database, these software systems, and their groups. ERPs act as the "brains" of inventory management.

Each group on the diagram has different processes and functions, so they need different systems. For example, suppliers use applications based on financial forecasting, inventory and prediction. All of these systems must be working together. All systems can communicate through the ERP, which acts as a brain and an interface.

Let's say a company uses an inventory management system (PLM), from conception to release of production, to better understand how ERPs integrate with other systems. ERP and PLM work together. ERP is responsible for managing the planning of production resources. 

These systems will interact sequentially. PLM initially provides product information. When a product has reached a stage of development where it requires resources, ERP integrates production with other business processes.

You need a system and a team of people to perform inventory control properly. More than just one system is needed for inventory control. A centralized approach, particularly when your business is growing, is essential.

Start early when you want to implement an inventory management system and gather a group of experts within your Company who will be able to help:

• Document your current inventory process.
   
• Budgets should be realistic.
   
• Establish milestone goals.
   
• Tests, acceptance by users, training, and other checkpoints for implementation.
   

The Following Are Some of the Primary Reasons Why Companies Prefer to Use Erp Software for Their Inventories:

Plan the Resupply of Orders

Businesses can plan their replenishment effectively by using ERP. Inventory quantity must be precise and ready for any business to continue working immediately after receiving a green light to buy or sell. ERP software allows businesses to classify goods and order them in different quantities.

The Company will only collect an item when it receives the specific quantity required to be ready for the needs of both the customer and the business. ERP software has another item that is only ordered when the cost is lower and can easily be procured. ERP analytics can monitor this process.

The Company must have fewer transactions to order more goods to meet the expected demand in the next three months. The business will benefit from increased inventory accuracy by optimizing replenishments.

Surplus Inventory Management

ERP software allows businesses to respond immediately and effectively to issues such as surplus inventory. ERP software can help a business determine whether its surplus inventory is due to an unexpected drop in demand for items it sells or if the firm has realized its good purchase was more economical than expected.

ERP software will help you quickly find the surplus. The ERP software can help the business find an immediate solution to this problem by asking questions such as whether the Company should refund the product or if they could contact the customer to offer another order for the excess inventory.

When a surplus is discovered, a business has many options. It can act quickly and take advantage of them. If the problem is not addressed quickly, it could lead to excess inventory being thrown in the garbage, which would be costly.

Inventory Tracking

The overall inventory turnover of any business is difficult to monitor. Microsoft ERP Products is an ERP program that allows companies to keep track of their inventory by segmenting them in different ways. This allows the organization to categorize inventory according to its wishes and determine if the stock's assumptions are accurate. This method would allow the Company to pinpoint some problems and begin asking themselves many questions.

Why does one inventory part turn over more quickly than the other? It may be time to reconsider the customer relationship if several parts belonging to one client constantly gather dust. Can the Company buy in smaller amounts if the products are nearing expiration? The Company can increase the shelf-life of the products by better storing them.

Accounting might indicate that a company's stock is expiring ten times yearly. This method would allow the Company to determine which items are in its inventory and can be sold daily. Other items may be present but might not move from the stock.

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Final Words

There is no right or wrong option when selecting an inventory software system. Your Company's specific objectives will determine everything. Which software will help you achieve your goals?

The ERP software used for inventories can positively impact a business. The ERP software can help a company identify its inventory flaws, sins and shortcomings and then take action accordingly.

ERP Inventory Management Systems can prove beneficial, provided they have all the features required to scale and expand. Before making a decision, research all the ERP inventory management systems available.