There are several arguments for modern-day businesses to invest in enterprise resource planning (ERP) systems, or all-in-one software suites that manage key business processes. One of the strongest of these arguments, however, is what ERP can do for inventory management in particular. Whether big or small, your business needs to move products in order to continue making money. If your system for keeping inventory is either inefficient, out-of-date, or not aligned to scale, it could spell irrelevance—or worse, failure—for your company.
Thus, if you’re considering purchasing an ERP system like SAP Business One, make sure that it comes with a module for inventory management. Here are the top five reasons for why it will prove extremely beneficial to your company.
You Can Track All Financing Decisions Related to Inventory with the ERP Module
Your ERP’s inventory management module will contribute greatly to balancing purchasing and cost with your profit for each of your products. It will be much easier to get the numbers on how much you’ve spent acquiring and stocking products, versus how much you’ve made from sales. This leaves little room for ambiguity with regard to the money matters involved in your inventory. You’ll find that your ERP’s inventory management module will help you stay on top of costs much better than individual spreadsheets would.
You Can Optimize Your Inventory to Follow the FIFO Principle
In most cases, you should move the products in your inventory according to the principle of FIFO, or “first in, first out.” But how will you be able to set the newer items apart from the older ones, especially if your inventory is constantly increasing in size? In that regard, an inventory management ERP module will prove extremely handy for you and your staff. It can help you utilize a tracking system for older items versus new ones and ensure that the former is sold first. The module may also help you determine which items are generating a surplus, and thus refine your purchasing strategy for your next orders.
You Can Be in Better Sync with Suppliers for Your Supply Chain Management
If you acquire an ERP system for your company, it’s mostly your company staff that will oversee it. But they can share the data they get from the inventory management module to others who work with your business, like third-party suppliers. Thanks to the module, both your staff and your suppliers will be privy to the right information about your supply. That, in turn, will enable them to work efficiently together in their supply chain operations.
You Can Generate Accurate Financial Reports Based on Inventory
This particular ERP module will also allow you to generate quick, accurate financial reports about your inventory, which are vital to your future capital investments. With just a few clicks, you’ll be able to download information that you’ll need for tax returns, revenue forecasting, and the next purchasing cycle. The best part is that neither you nor your staff members will need to slave away on spreadsheets for days just to prepare one report. Your module will likely be able to streamline a whole month’s worth of financial data for you in just a few minutes.
You Can Scale Your Inventory to Match Your Business’s Growth
It may be in your plans to expand your company by opening a new branch or diversifying your product lines. But if that’s the case, one of the first things that you should ensure is that your inventory management can handle that growth. Luckily, an ERP system will do more than enough to get your operations to scale. You’ll be equipped with a higher capacity to manage inventory data, and you’ll find decision-making tasks for a larger inventory much easier to do.
Doing inventory management on an ERP software suite could set a great precedent for success in your company. Along with other key processes—like accounting, bookkeeping, and customer relationship management—let your ERP improve your inventory management practices. Stay on top of this aspect of doing business to become a true powerhouse in your home industry!