Companies that thrive in inventory management get the most profit and customer satisfaction for the most minor investment in stock. And, as those efficient organizations demonstrate, good inventory accuracy management is all about data: purchases, reorders, shipping, warehousing, storage, receiving, customer satisfaction, loss prevention, stock turnover, and so on.
Fortunately, inventory management systems provide access to most of this information. Companies that connect enterprise resource planning (ERP) systems with inventory and warehouse management capability gain a competitive advantage.
The primary competitive advantage, however, is the ability to communicate information in real-time across different parts of their business processes. This helps in making informed decisions. In this blog post, we will go over the definitions of Inventory Management, ERP, and ERP in inventory management, as well as the advantages of inventory management ERP software.
What Is Inventory Management?
Inventory management enables businesses to determine which stock to order and how much stock to order at which time. It monitors inventories from purchase to the sale of items. The process identifies and responds to trends to guarantee that there is always enough stock to fulfill client orders and that any shortages are correctly reported. When inventory is sold, it generates revenue. Inventory ties up cash before it is sold while being recorded as an asset on the balance sheet. As a result, too much inventory costs money and lowers cash flow.
What Is Enterprise Resource Planning (ERP)?
Over the last few decades, technology and Software have advanced significantly in terms of their ability to assist small businesses in scaling. Enterprise Resource Planning (ERP) software is designed to assist businesses in managing inventories and a variety of other functions, such as accounting, warehousing, contact management, commission processing, sales channels analysis, and more. ERP software is essential for firms trying to expand, automate laborious procedures, or invest in business efficiencies.
What Does ERP Mean In Inventory Management?
ERP in inventory management software is a system that enables firms to manage all parts of their operations from a single platform, including inventory, finance, planning, logistics, and operations. An ERP inventory management system delivers real-time inventory data to the entire organization.
This is a vital skill for firms that intend to grow, have complex workflows or supply chains, require extensive automation, operate in "just in real-time data" mode, sell many products, or just want to maximize their inventory investments and customer demands.
Advantages Of ERP For Inventory Management
ERP Systems Save You Money
Every business owner understands that efficiency = cost savings. Rather than paying for separate systems to handle different components of your business, utilizing an ERP for inventory management covers a wide range of topics, lowering overall workload and expenses. Better inventory management equals more jobs out the door.
ERP inventory management systems automate and streamline processes, reducing human labor and promoting business growth. ERP systems also allow you to collect higher-quality data, which provides insights into your business, making data-driven decisions and helps you track its performance and plan for growth.
Better Product Identification
Depending on the products you offer, using numbers or codes to identify them can help you organize your inventory more efficiently. Retailers frequently use SKU numbers to identify products and track their movements.
Serial numbers and lot numbers are commonly employed in the food, beverage, and pharmaceutical industries since it is critical to understand the movement of these items. These identification numbers aid in the prevention of product expiration and the detection of counterfeit goods. Lots/Batches are also highly useful during product recalls because you will know exactly which supplier the goods came from and which customers they were delivered to.
Data Security And Improved Decision Making
When evaluating ERP software, there are two deployment options: on-premises and cloud. Cloud-based Software has risen to prominence in recent years due to the protection it provides for your data and its low cost.
Manual processes of inventory management ERP solutions may include using programs kept on a computer's local hard drive, which needs more security and flexibility than an ERP system with a cloud backup can give. Having precise historical data, such as the number of footballs sold last summer, can assist you in deciding forecasting measures.
Purchasing stock too early can be detrimental to the inventory management module because it takes up warehouse space that could be used to store other in-season products. ERP software provides the information you need to make the best decisions about your inventory management flow of goods.
Enhanced Customer Service And Automation
ERP software is designed to produce any report you create and display sales trends and other standard application reports. This type of reporting provides insight into what clients prefer and enables your people in sales channels to provide more effective customer support because the information is easily accessible and accurate.
Many inventory operations management processes, such as adjusting pricing across all selling channels or automating purchase orders, can be easily automated. When purchasing commodities from a supplier, pricing may fluctuate, requiring your staff to cross-reference pricing and quantities to ensure the figures match on the back end. Automating purchasing orders speeds up the process for your employees and decreases mistakes due to human error.
Inventory Tracking
Inventory management is understanding what merchandise is on hand and sitting on the shelf. However, once your inventory forecasting and management system is integrated with the rest of your company, it can successfully optimize your inventory.
An ERP combines inventory management with the rest of your business operations, making tracking inventory throughout your organization simple. An ERP system provides your employees with fast access to a consolidated inventory database that is continuously updated. This allows you to know exactly what you can and cannot fulfill and what raw materials you have on hand. It also gives you confidence that what is recorded in the database corresponds to what is on your shelf, making not only production more efficient but also financial reporting easier.
Read more: Streamline Your Inventory Management with Arion ERP: Unlocking the Advantages
Forecasting, Restocking And Managing Excess Inventory
An ERP system automates sales, purchasing, and logistics, allowing you to maintain the appropriate inventory levels for your firm. With an ERP, you can benefit from an inventory management system that is in sync with the rest of your operation. This makes it easier to manage things like long lead-time items, as you can be aware of these items during the design phase of a project.
This gives you more lead time to order the item and ensure you get it on time. Knowing real-time stock levels also makes it easier to replace inventory-an ERP may either automatically renew materials for you or notify your buying manager that products need to be reordered.
Manufacturers can incur hefty fees to expedite freight when they are severely in need of stock if they do not have an ERP that alerts them when it is time to replace inventory. Having real-time access to surplus inventory means you may be able to return items rather than taking up shelf space that could be better used for something more vital.
Increases The Accuracy Of Demand Forecasting
Accurate forecasting is crucial for manufacturers. It all starts with a thorough grasp of prior demand to assist you in forecasting inventory requirements. Forecasting indications often include the previous growth rate, orders, promotional activities, the economy, and even political tendencies.
Accurate demand projections can help you save money and improve inventory management. Modern cloud-based technology enables you to analyze the entire supply chain and demand requirements online and gain actionable and valuable insights.
Tracks Inventory In Real Time
An ERP inventory management system enables real-time inventory tracking, allowing you to update your existing inventory optimization data to reflect actual inventory control automatically.
Without real-time monitoring, your staff delays uploading inventory data, sometimes waiting until they can batch load it. Inventory optimization data will stay out of sync with accurate inventory in stock until this operation is completed. The issues only worsen with many inventory locations.
Features To Look For In An ERP Inventory Management System
An efficient ERP inventory system should be tailored to your organization's changing demands. Consider the following key features or characteristics when looking for the best enterprise inventory management solution for your firm.
- Accurate Inventory Management: The ERP system you choose should keep accurate digital records and give you fast access to all detailed inventory information, such as transactions, customizable cycle counts, ABC category analysis, and more.
- Real-time visibility of Inventory Tracking: Look for a system that enables you to manage and track inventory in one or more locations in real-time from anywhere, utilizing a mobile phone or tablet.
- Supply Chain Management: Modern inventory management processes solutions should include supply chain management features. This tool lets you examine supply chain operations and demand planning requirements online to make more educated decisions that increase inventory turnover rates and improve forecasts and customer experience.
- Automated Inventory Management: Your organization is constantly evolving, and automation allows you to adjust to those changes rapidly. An inventory management ERP should enable you to develop bespoke inventory procedures to meet your company's needs and achieve customer loyalty.
- Full Traceability, Lot, and Serial Number Tracking: Thorough audit trail queries are all features a contemporary inventory ERP should include.
- Customer Relationship Management: Integrating a CRM with your multi-channel inventory management solution as a centralized platform will help strengthen customer relationships and fulfill orders more efficiently. An inventory performance ERP can be integrated with CRM to give a centralized data source for all your activities, including sales teams.
-
Supplier Collaboration: Effective inventory management software systems are only possible with solid supplier relationships. Your inventory ERP should enable collaboration with suppliers, staff, and customers, allowing you complete visibility to increase productivity and operational efficiency by sharing data, ERP reports, business analytics, and more to provide actionable insights.
Conclusion
Inventory management-optimized ERP systems automate critical operations to ensure that excess stock purchasing, organizing, and transferring are all in sync. The system also assists in maintaining human resource allocation of ideal stock levels by integrating the inventory requirements of employees, customers, and suppliers.
Excellent inventory management is essential to the success of any firm. Fortunately, efficient inventory management does not require several software solutions. A modern inventory ERP should offer complete traceability, including lot and serial number tracking and detailed audit trail inquiries. Furthermore, with your inventory analysis and management solution, CRM can help you enhance business performance, client relationships and quickly fulfill orders.
