Using Enterprise Software for Inventory Management and Control
If you take a moment to ponder your business’ balance sheet, you will likely realize that inventory is typically one of the biggest numbers on it. Is this true for you? It is probable that your manufacturing and distribution company relies heavily on inventory to get the job done. Inventory is one of the biggest assets in a company. With so much of your business success relying on inventory, effectively controlling and managing it is vital. The good news is that enterprise software such as Sage 300 ERP or Sage ERP X3 can help!
How is this inventory control effectiveness measured? Traditionally, this is done by measuring how successful a company is at reducing inventory investment while still meeting customer needs and customer service goals. It is also done by achieving maximum output while simultaneously keeping costs contained. In essence, it comes down to determining what items to stock, how many of each item is necessary to keep stocked, and when more of that item should be ordered.
This “simplistic” rule for effective inventory control does not create a complete picture of the complex reality. In practice, simply knowing what to stock and how much is difficult to carry out in practice. Three overarching categories complicate the process, but Sage 300 ERP or Sage ERP X3 can help. Let’s take a closer look at the complications.
Factors Complicating the Inventory Control Process
- Conflicting Objectives in Different Departments within the Company
If you think about, there are some parts of your business that are probably seeking to increase inventory. At the same time, others are trying to decrease it. This complicates things as viewpoints differ on how to truly achieve better profitability.If the sales department wants to emphasize and prioritize the speed of delivery to keep up with customers and satisfy demands, they will want inventory amounts of finished goods to be high. Likewise, the purchasing departments wants high levels of inventory as well because they can get discounts when ordering large quantities at the same time. The production team wants all parts and materials to be readily available to keep efficiency along the line high. In addition, running large batch sizes is more efficient. In these three cases, increased inventory is a good thing,On the other hand, the finance department and product developers are watching trends. They want to decrease inventory of existing products in order to make room for new products. Management want inventory decreases as well because large amounts of inventory translate into less cash flow.
- Unpredictable Supply and Demand
There are so many factors that make predicting supply and demand difficult. These supply difficulties include unsteady supplier performance, supply chain disruptions, material scarcities, perishability of raw materials, obsolescence of products, etc. Buffering stocking levels is important in order to provide safety days of lead-time supply. The demand difficulties include the fluctuating economy, constantly changing products due to innovation, and high-traffic sales on some products with only occasional or seasonal sales of other items. This requires responding to demand individually by item in order to achieve appropriate stocking levels.
- Warehousing across a Variety of Locations
Manufacturers and distributors also face the problem of accessibility. This stems from finished good for sale and parts for assembly are not all housed in the same location. Instead, they are spread over multiple location making easy access to needed items difficult.Even with these complications in mind, it is still important to focus on two inventory management keys to success: meeting customer needs and stocking the least amount of inventory possible. Enterprise software can help you with both of these. The reality is that inventory management is an area being targeted aggressively for improvement by distributors and manufacturers. Do you need to improve inventory management as well?
IWI Consulting offers enterprise software system options to meet your company’s needs for improved inventory management even with the potential complications. Learn more about two solutions we offer here at IWI Consulting by clicking on the each solution: Sage 300 ERP and Sage ERP X3.
Download our whitepaper “Better Inventory Management: Big Challenges, Big Data, Emerging Solutions” for further information on improving inventory management and overcoming the potential complications of inventory control.
Our small and dedicated team specializes in helping small-to-medium size Canadian businesses and non-profits select and adapt Enterprise Resource Planning (ERP), Customer Relationship Management (CRM), Human Resource Management (HRMS) and IT services. With IWI’s 15 years in business and 100 plus years of combined experience, IWI has helped hundreds of manufacturing, distribution, and financial service companies gain efficiency, grow, and lower their operating costs.
With the unique combination of industry knowledge and diverse technology expertise, IWI provides cost-effective solutions to help clients gain a competitive edge. As a Sage business partner, servicing the Greater Toronto Area, we support evaluation and implementation of operations and finance systems to optimize technology, ensuring high return on investment with a quick and painless transition to new software.