An inventory system tracks goods throughout the business’ supply chain, from purchasing and production to storage and end sales. Often, distributors and manufacturers face significant challenges keeping track of their products. While running out of stock can be frustrating, holding excess inventory is also a negative for business owners because it ties up capital. Business owners can use enterprise resource planning (ERP) software to ensure efficient stock management.
Small companies often use spreadsheets to monitor inventory levels. As they expand their business, they typically switch to an ERP solution that can interconnect all areas of the operation in real-time. If a shipment arrives and part of it was purchased the same day, the system can calculate the remaining inventory automatically. Products that have been returned but can still be sold are added back to the inventory ledger instantly.
ERP allows for better supply chain transparency. When businesses can integrate back-end operations and communicate directly with their partners and vendors, they can minimize disruptions, such as critical products not being delivered or priced erroneously.
ERP software also improves product identification and tracking through the use of serial numbers and lot codes. Businesses can set up their ERP software to identify illegitimate products and those nearing expiry. When there are product recalls, ERP software stores information about the supplier and customers so business owners can act swiftly to fix the error.
Businesses can perform quality checks on certain products using ERP software. If certain products must comply with safety standards, the ERP software can detect if they are out of compliance and inform the relevant employee, who can update it.
ERP software has automation capabilities to improve inventory management tasks, such as managing pricing and purchase orders. Prices of materials change depending on the supply and demand. When purchasing new supplies, employees might need to cross-reference prices and quantities to ensure the amounts are accurate and reconcile with their budget. Automating purchase orders speeds up this process and reduces the risk of human error.
ERP software allows managers to access historical data and develop sales forecasts. Purchasing supplies too soon takes up space in the warehouse and prevents business managers from buying more products that are actually in season. By integrating ERP software into their inventory management system, they can improve decision-making. Accurate sales forecasts also enable them to coordinate marketing efforts targeting particular customer segments. In doing so, they can keep an inventory of products in demand.
ERP software has cost-saving benefits in warehouse management. Because it allows for real-time visibility, businesses can optimize their warehouse layout, placing high demand products in the most accessible locations so that staff can pick and pack them faster and more efficiently.
ERP software also enhances customer service. When inventory data is available in real-time, businesses can fulfill orders faster, improving customer satisfaction. When all the information is in one place customers can inquire about stock quantity, price, and date of receipt, among other information, and place an order confident it will be filled correctly and efficiently.
Alex Burnett 