Tips for Organizing Your Inventory with an ERP Platform

Before technological advancements, inventory was accounted for using pen and paper. Companies needed to rely on file cabinets filled with documents to accurately account for their assets. The filing process was tedious and often unreliable. Additionally, it was a hassle to share information between departments and off-site offices. Nowadays, technology is able to streamline the entire inventory reconciliation process. With the introduction of Enterprise Resource Planning, or ERPs, companies became able to resolve issues, provide accurate counts, and offer mobility of the data within an organization with ease.

What Is Inventory Management?

The process of inventory management includes the ordering, storing, and shipping of a company’s physical products. Inventory management oversees the flow of goods from manufacturers to warehouses, and from those facilities to points of sale. ERP inventory management systems enable businesses to command their logistics, operations, finance, and inventory from a singular system, decreasing errors and increasing efficiency. 

The primary goal of ERP inventory management software is to reduce holding costs by providing insight and alerts into reordering schedules, restock alerts, or re-manufactured products. An effective ERP inventory management system lessens overhead costs and increases performance by addressing common inventory concerns.

Inventory Management Uses

Maintain Safety Stock Levels

The use of statistical forecasting helps produce accurate sales predictions. With accurate predictions, the ERP system is able to maintain inventory at an optimal level. ERP systems are useful for helping track inventory and vendor information to ensure business continuity grows and helping to avoid common inventory pitfalls.

Excess Inventory

Companies that have seasonal inventory usually end up with excess inventory they are unable to offload. Too much inventory reduces liquidity and increases overhead. However, forecasting too conservatively will lead to inventory shortages. ERP systems analyze historical sales data and past seasonal trends to set realistic safety margins.

Inventory Shortages (Out-of-Stock)

Inventory shortages can be just as costly as excess inventory. If the profit margin of your product is high and your space is competitive, not having enough stock during peak selling periods can be detrimental. An ERP monitors par levels of inventory and sends an alert out immediately to restock. Additionally, if combined with a CRM, customers can be automatically alerted if stock levels cannot be replenished and a substitute must be provided.

Dead Stock

Dead stock is on-hand product that is expired, unused, unsold, or unreconciled. Maintaining an inventory of dead stock is harmful because the original cost-of-goods sold cannot be recovered. This can be particularly detrimental if your warehouse costs increase each day the stock appreciates. An ERP system continuously tracks data for unprofitability and maxed out appreciation. Alerts can be set up to inform operations teams when products become dead. Being able to get dead stock out of your inventory helps keep storage costs low.

Use Real Time Data to Make Decisions

ERP software is able to analyze inventory and sales operations data in real time and provide visual charts on performance. Prior to an ERP, various spreadsheets had to be analyzed and pitched by financial teams before a decision was made. ERP systems can intake and compare sales forecasts, inventory levels, and purchasing costs to provide the ideal model for inventory acquisition, lot sizes, and manufacturing requirements. Today, operations managers are able to open up their ERP dashboard and gain all the insight they need to make an informed decision.

Comprehensive Tracking

Inventory items often have different demands from customers, as well as varying costs and valuation methods. ERP systems enable you to track each SKU’s pricing, performance, inventory levels, and lead times. When inventory reaches minimum standards, an ERP system is able to auto-replenish and alert your teams if substitutions need to be made.

Additionally, ERPs are able to track vendor information and reliability. Data on conditions of supplies received, timeliness of orders, and receipt information are automatically tracked. This information can be useful for financial teams when analyzing profitability and vendor relationships. It is also important for operations and productions teams to be able to track the backlog of their stock and where it came from. ERP systems automatically inform you if a vendor has issued a recall and where the stock is located on your inventory floor. Additionally, by combining an ERP with a CRM, you are able to automatically alert any customer that has been affected by recalled stock. 

Increased Communication

Lack of communication between departments can lead to inefficiency and higher operating costs. ERPs help remedy common communication issues regarding stock that a company may face. Using an ERP allows cross reporting and sharing of information internally and externally within an organization. 

• Sales forecasts can influence budgeting for procurement and operations.
• Purchasing managers are able to submit purchase orders to vendors with ease. This enables sales teams to view expected inventory levels and manage client expectations on the spot in real-time.
• Financial departments are able to analyze and project sales and profits quickly. Additionally, they are able to generate comprehensive reports that would have previously taken hours within minutes. 

Using an ERP inventory management system allows your company to more effectively monitor, store, and allocate your assets. By streamlining back-office functions, your company is able to provide every department with accurate insight and projections. When implementing an ERP system, it is important to find the right partner who understands your business’s unique needs and goals. 

Partnering with a strong agency is a great way to ensure you get the most out of your ERP software. ManoByte is skilled at ensuring and leveraging growth opportunities for all of our channel partners. Contact us today to see how we can help you meet your goals.