Inventory management, which encompasses ordering, stocking, and shipment, is one of the most important processes for companies selling physical products. Sadly, most businesses don’t prioritize inventory management as they should.
Common challenges companies often face when it comes to inventory management include stocking the right amount of product, keeping warehousing costs low, and moving shipments out on time. Because these challenges seem invisible or less important than front-end processes like sales, companies sometimes miss key opportunities to lower costs or heighten efficiency. But if an entrepreneur intends to grow their business in the future, inventory management should be one of the first processes to be upgraded.
If you’re looking for ways to future-proof your business processes for the sake of growth, consider purchasing enterprise resource planning (ERP) software. One of the best reasons to acquire ERP software is your chance to use an improved inventory management system that typically comes with it.
ERP systems are all-in-one suites that include modules for key business processes, like accounting, customer relationship management, and inventory management. With this new toolset, you can manage your inventory as competently as a larger business would. Here’s a list of four benefits that demonstrate how.
It Will Help You Replenish Stock on Time
A classic problem of businesses that sell physical products is the proper replenishment of stock. This has to be done in a timely manner, but restocking at the right time is easier said than done. On the one hand, business owners must restock quickly enough to satisfy ongoing customer demand—or else the latter will end up shopping elsewhere. But on the other hand, if they’re too quick to restock, there’s a chance for warehousing costs to skyrocket and for products to go stale. How can an entrepreneur achieve that perfect balance?
This is where the inventory management module of an ERP system comes into play. The module can streamline all inventory-related data and notify authorized users in real-time about when certain items are low in stock. Specifically, there’s much less ambiguity about how much of your product is being moved.
Also, your staff can be wiser in their decisions about how much more product to buy from suppliers during the next order cycle. Finally, the whole company can arrive at those conclusions without spending an excessive amount of time counting items manually or poring through individual spreadsheets. The ERP system will help everyone pinpoint the right amount of product to order and the right time to order it. And that will result in a big win for your company’s inventory management.
It Will Help You Deal with Dead Stock
Another common problem when it comes to keeping inventory is the accumulation of dead stock. This is the kind of stock that takes up space in your storage facility and costs money to keep but can’t be sold easily. Oftentimes, companies try to deal with dead stock by selling the products at huge discounts during the off-season. But a better and more cost-effective strategy for you would be to avoid dead stock altogether. If you take care not to order in excess, you can increase your company’s liquidity and decrease your overhead costs. That’s one definite way of saving a huge amount of money by optimizing your inventory management.
The inventory management module in your ERP suite can help you forecast the ideal amount of product to order and reduce your risk of overstocking. Thanks to the ERP’s superior analytics capabilities, you’ll be able to determine the best margins based on past data and current trends. This may keep you from repeating past mistakes, like over-ordering seasonal products and watching them gather dust in your warehouse. For sure, you will feel the difference in your quarterly revenues when you have much less dead stock to deal with.
It Creates Greater Transparency in the Supply Chain
Part of the difficulty that comes with inventory management is the finger-pointing that goes on when people make mistakes. This often happens with inventory management systems that are reliant on out-of-date manual counting processes or overly nebulous systems of individual spreadsheets. It’s easy for staff and suppliers to get hot-headed about undercounted or overcounted items, missing stock, or stock that’s long overdue. But it’s harder to figure out what exactly went wrong and where in the supply chain the error might have occurred.
Having an ERP system will go a long way in problem-solving for such issues. Not only will the data about inventory be properly consolidated. It will also be more readily available to involved parties and will result in greater transparency across the supply chain. You, your staff, and your suppliers will be more aware of obstructions in the supply chain and act quickly and calmly to solve any problems.
It Will Help You Track Different Segments of Your Inventory
Inventory management is not only preoccupied with holding product. It is just as important for a company to keep track of where the products are when they’ve left storage. A conscientious business owner knows that they should not rest until their product has moved safely from the storage facility to its physical shelf. And when it comes to delivery, the transaction is not done until the product safely arrives at the customer’s home.
The inventory management module on an ERP system can provide peace of mind when it comes to tracking and delivery. By using barcode or QR code technology, the module can assign unique identifying information to each product and track where exactly it’s gone. If customers or resellers of the product are wondering where it is, you and your staff can have an exact answer for them. If your business is known for being consistent and organized about tracking inventory, it will be a huge boost to your reputation.
Final Words: Upscaling Your Inventory Management Capabilities with ERP
In summary, inventory management should be among your priorities for scaling up your business operations. Great inventory management practices will allow you to save money, reduce hiccups in your supply chain, and be responsive to your customers’ demands. A new ERP system with an inventory management module attached will help you check off on all those goals. Get smart about your storage space, your stocks, and your shipments by using ERP software for your inventory management.