How to optimize and improve inventory management in supply chain?
Optimizing inventory management in supply chain is a key need for business success. It will improve profits through reduced inventory cost structures.
Inventory management in supply chain is critical for distributors as effectiveness in inventory management. It will lead to better sales performance with the lowest inventory carrying costs and minimal supply disruptions.
Manufacturers today have wafer thin profit margins due to global competition and have to stay relevant by cutting costs. For any manufacturing company having optimal levels of inventory can avoid back orders, and keep warehouse costs for storing excess products to a minimal.
The key to successful demand forecasting and planning that leads to the adoption of a JIT model of operation. It starts with real time access to accurate operational data. Having the right forecasting tools that automate manual calculation may also be needed.
How can a ERP help?
An ERP can help in inventory management by:
- Automated Inventory Management in Supply Chain: You can minimize inventory costs by automating the management of their bill of materials (BOM) including even multi-level issues. It is easy to determine your order requirements in real time. This prevents overproduction and overstocks, in line with the JIT philosophy. Moreover, inventory reconciliation is automated and figures are updated in real time greatly aiding the supply chain and the sales process.
- Implementing Lean strategies: It will helps in reducing the fat and the waste in the system by helping you target wastes. These are the seven deadly wastes of manufacturing for elimination- overproduction, inefficient transportation, waiting time, over-processing, unnecessary motion, and rejects and defects.
- Forecasting of demand is more accurate with accurate and real time data: The right ERP solutions have easy data analysis and reporting features for demand prediction and forecasting.
- Better coordination between functions: Inventory planning, and demand forecasting can assist with better production planning, capacity utilization and optimization of inventory carrying costs. This can be done with visibility, analysis and collation of data from all the operational areas of your business that only a good ERP can provide.
The benefits of using the right ERP
The main benefits of inventory management in supply chain after using an ERP are:
- Easier planning replenishment: Your inventory order figures and timelines to buy or make more should not lead to a disruption in production or supply.The right ERP inventory management system can do this easily in an automated manner.
- Managing surplus inventory: One can quickly see and react to surplus inventory with your ERP inventory management system which will spot it immediately and allow you to deal with it appropriately. A delay might mean addition to costs due to obsolescence or expiry instead of earning some money.
- Tracking inventory turnover: You can track turnover of inventory by segments and not just overall figures. ERP inventory management systems allow you to categorize your inventory in many ways. The numbers of turns of inventory for a component or a product will depend on the cost classification. The inventory carrying costs for an enterprise are lower when the inventory turns are more.
- Business savings that impact the bottom line: The right ERP can easily improve inventory organization and will lead to improved supply chain efficiency and productivity.The firm will save time and money through better inventory management and optimized processes. This can lead to improved customer satisfaction through better support features, faster response times and more completed transactions.
- Most businesses can hope to improve turnaround times, reduce duplication of effort, and expenses related to order fulfillment. This leads to fewer missed shipments, returns, and cancellations leading to greater business success.
Why the Versa Cloud ERP
Every successful business eventually outgrows Excel spreadsheets and old software. If you are looking for new software that eliminates post-it notes, spreadsheets, and add-ons consider Versa Cloud ERP.
Versa ERP formerly VersAccounts is a modern all-in-one software created for fast growing inventory heavy manufacturing, distribution, and e-commerce businesses moving to the next level. It is more powerful than old software used by your larger competitors, yet simple and affordable enough for use in businesses like yours.
Yearly fees start at USD $1,800 per year for all of the capabilities included in the Versa software including financials, AR/AP, manufacturing, inventory, warehouse, shipping/receiving, logistics, projects, CRM, B2B/B2C e-Commerce and more.
Setup is self-service with guidance provided by Versa making it quick and inexpensive.
Capterra User Reviews give us a 4.8 out of 5 rating and we are working on closing the gap further.
You could also try it for free!
We’d love to hear from you.