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.
We at VersAccounts have created a secure cloud based multi award winning comprehensive ERP solution that is e-commerce ready. It has been catered to take care of all the business needs and concerns for operating your business effectively. It addresses key issues of the distribution domain in the most effective manner possible.
VersAccounts Small Business Cloud ERP system’s web based inventory management capabilities support raw materials, work-in-process, and finished goods. It has the added functionality of handling complex BOMs and kitting. The solution supports multiple warehouses, serial-numbered and lot-numbered items, bar coding, custom-data fields, and just about any measurement units.
To know more, please visit www.versaccounts.com or contact us directly.
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