Companies that excel at inventory management drive the maximum amount of profit—and customer satisfaction and customer relationships—from the least amount of investment in stock.
And as we see from those efficient business models, managing inventory successfully is all about real-time data: purchases, reorders, shipping, warehousing, storage, receiving, customer experience, loss prevention, stock turnover, and more.
Fortunately, much of this information is readily available from inventory management systems. Businesses that include inventory management features in their enterprise resource planning (ERP) systems have a competitive advantage. The main competitive advantage, however, comes from being able to share information within different parts of their business in real-time insight.
Enterprise resource planning (ERP), which is used to store, manage, and interpret data from many business processes, is often used by many organizations. ERP systems allow companies to manage customer service and management, as well as purchases, production planning, and purchasing. ERP systems are great for inventory management solutions. They can track stock throughout the supply chain, monitor stock levels, and process orders.
ERP Inventory Management Limitations
When inventory management teams want to improve their inventory optimization, they will start to notice limitations in the ERP system. This could include automated replenishment activities, advanced inventory planning, and statistical demand forecasting. Due to limitations in their ERP inventory management modules, inventory planners often resort to spreadsheets to perform such activities. However, spreadsheets can be tedious to set up and maintain, and there is a high chance of making mistakes.
To provide these capabilities, more and more business functions are turning to inventory optimization software. They need the tools to make sure the stock they have in stock is available at the right time and place. Are you able to recognize signs that your company needs an automated inventory management tool?
EazyStock ERP add-ons for inventory optimization can be easily connected to your business system to provide additional features that are crucially needed. They can help you save time and money in ways you might not have thought of.
ERP inventory management requires sophisticated demand forecasting
Although many ERP inventory management modules provide some demand forecasting functionality (mostly based on simple, linear rolling average calculations), these methods do not take into account typical causes of demand volatility. An inventory optimization app, on the other hand, will take into account:
The life cycle of a product:
As a product goes through its product cycle (market introduction, maturity, decline), it will see changes in demand patterns. At maturity, the demand patterns may be stable, while demand can become volatile as the product nears its end. Each scenario has its own demand patterns, so it is important to take this into account when forecasting demand. EazyStock uses historical demand data to identify the 'demand type' of each SKU and then applies the most efficient statistical algorithm for demand planning.
Seasonality:
Seasonal products will see a rise in demand. Inventory managers must identify peak demand to maximize sales opportunities and spot troughs to avoid stock buildup. Advanced inventory management ERP add-ons will analyze historical demand and group products according to seasonal patterns. Forecasts can also be adjusted for seasonality.
Trends:
Demand trends will affect many items. These trends are most noticeable when goods are new to the market, near the end of their product life cycle, or heavily influenced or influenced by technology or fashion. Inventory optimization software solutions can identify these trends and account for them in forecasting future demand.
Promotions:
EazyStock can be used to provide qualitative information about sales promotions, discount information, and competitor information to improve forecasting accuracy.
EazyStock's algorithms recognize different demand types, seasonality, and trend patterns. They adjust forecasts regularly, which then update replenishment recommendations. You'll be able to take advantage of demand surges and avoid costly stockouts or backorders.
These are the limitations of ERP Inventory Management.
Does your ERP optimize your Inventory Levels?
Stock holding companies face a major challenge: how to reduce their inventory without increasing stockout risk and affecting fulfillment rates. Many ERP inventory management modules lack analytical tools that can recommend how much stock to keep. They offer basic inventory classification calculations based on ABC analysis.
A stock optimization app allows for advanced inventory classification. It categorizes stock items according to:
each SKU's annual usage value (VAU). This includes both the sales volume and the product's unit cost.
How often is each SKU picked? This allows you to distinguish high-volume products that have many requests (1000 requests per unit) from low-volume products that only receive 2 requests per unit.
Each SKU's demand volatility. EazyStock automatically segments items according to their demand volatility behavior. This determines how easy it is to forecast their demand.
EazyStock uses these variables to create inventory policy matrices that have varying stock/no stock rules. These allow business operations to make better stocking decisions by providing a more detailed level of inventory classification than if they used an ABC classification framework.
Optimizing stock levels according to customer demand, cost, and pick frequency can increase inventory turnover, reduce carrying costs, and free up working capital. You can rest assured that your stock levels will be optimized to meet customer expectations, and there is a low chance of stockouts.
Many inventory optimization add-ons will set service levels for each SKU within your portfolio. Service level (or key performance indicator) in inventory management is a measure of how well your stock is meeting demand.
The system helps you find the right balance between your capital investment in stock and your service level (fulfillment targets). This will allow you to make better decisions about what stock you have and how it will impact your service levels.
ERP inventory management requires automated replenishment
Many traditional WMS and ERP inventory system modules use rule-based methodologies to calculate replenishment. Many business owners do not require this level of accuracy and sophistication. These spreadsheets and manual calculations are difficult to use, time-consuming, and prone to errors.
EazyStock's ability to automate replenishment tasks and increase the productivity of your inventory planning or purchasing teams is a key advantage. This saves you a lot of time figuring out which stock to reorder and when.
EazyStock continuously analyzes and evaluates many markets and business variables, including demand, supplier lead time, stock levels, stock in transit, and target service levels. Advanced statistical algorithms use this data to calculate your replenishment requirements, including your optimal safety stock levels and reorder points. This process is ongoing to ensure that your ERP receives the best replenishment recommendations. This is how you can ensure that your ERP has sufficient stock to meet your service goals without having to over-invest in inventory.
You'll get an automated daily list with recommended orders as an EazyStock customer. You can then decide whether to approve each replenishment order or manage by exception only and review the ones that are most at risk.
The techniques a company employs for managing inventory, such as product tracking, tagging, and forecasting, are referred to as inventory management. ERP can be used in various company areas or just for inventory management.
How well does your ERP Inventory Software Manage your Suppliers?
It can be difficult for companies to keep track of and monitor the lead times of suppliers. EazyStock allows you to upload your supplier calendars, which can be used to automatically calculate replenishment for each SKU.
EazyStock will adjust your order quantities for all items if you place orders with one supplier only once per month. It will also adjust your reorder points to account for holidays like Chinese New Year. This will reduce the chance of stockouts.
Cost-efficient ordering
While your ERP inventory software will automate the ordering of stock, it can also ensure that you place the lowest-cost order quantities.EazyStock, for example, can identify the most appropriate items to be added to orders to meet minimum order quantities and fill shipping containers. This allows you to quickly fill orders with items that are in demand, either now or in the future.
Read More:- Why is Inventory Management Software Important for Serialized Data Management
EazyStock, however, can help you decide if a larger order at a lower "price per unit" will save you more than buying smaller quantities more often.
EazyStock helps you to reduce operational costs and ensure stock availability by always suggesting the most cost-effective buying strategy.
ERP Inventory Management Enhanced
An inventory management ERP add-on is a simple way to increase your business's future value. It can help you reduce stock investment, improve service levels, and increase product availability. These benefits can have a ripple effect on your entire supply chain management.
EazyStock's key advantage is its ease of use and quick implementation. It is a cloud-based ERP system that can be easily linked to your business systems. It's then configured to meet your business's requirements and train your staff. You'll be up and running within weeks.
How Does ERP Inventory Management Benefits Your Business?
ERP systems use a range of data sources to give businesses many different insights, including a better understanding of the performance history of different SKUs. Businesses utilize this information to generate more accurate estimates and to make more informed purchasing decisions in order to meet future demand without keeping an excessive amount of inventory on hand. ERP-powered inventory management boosts the effectiveness of the supply chain. It can reduce the double handling of commodities and automate routine chores like reordering because it is a centralized system. Other advantages of using ERP for inventory control include
Supply chain transparency:
When a business is able to effectively interact with its partners and connect back-end technologies, it avoids unsettling shocks like a vital component not arriving. when anticipated or being priced higher than is reasonable for the product. Integrated ERP systems also enable the synchronization of order and shipment data.
enhanced reporting
Decision-makers may fully benefit from data-driven insights by using accurate inventory data to determine top-performing SKUs, landed cost of goods sold (COGS), and sales by location and channel. ERPs provide customized reporting, which results in accurate and useful data without taking much time.
More accurate count
ERP systems track and report parameters like average turnover rate and COGS as well as metrics like excess inventory, shortages, planned replenishment, and obsolete inventory. The system monitors and records product transfers from shipping to receiving in the warehouse.
End-to-end inventory analysis:
ERPs offer analytics for each phase of inventory management, including the cost of goods sold, turnover rates, and shrinkage. Businesses can increase inventory efficiency by looking at important inventory data. Inventory quality checks can be specified using logic in the majority of ERP systems.
Quality checks:
You may specify inventory quality checks using logic in the majority of ERP systems. You can specify that products must abide by environmental or safety requirements, for example, and the system will check the safety of the products.. The system will alert workers to amend the item if it thinks it might not be in compliance.
Inventory planning:
Each product has a listing of its inventory status in the ERP, allowing employees, partners, and clients to check availability and quantity both on hand and on order. Having your inventory history and metrics easily available eases planning and increases customer satisfaction and customer loyalty.
Cycle counting:
An ERP system assists personnel in carrying out a methodical and well-thought-out cycle count process. Integrating regular cycle counting into your warehouse's daily operations like warehouse space and warehouse management serves as an important means of checks and balances and improves inventory records.
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What distinguishes Inventory Management from ERP?
ERP is a general word that covers the way in which businesses connect various workflows and operations. The techniques a company employs for managing inventory, such as product tracking, tagging, and forecasting, are referred to as inventory management. ERP can apply specifically to inventory management or to other business activities.
