More than half of all new businesses will fail within the first five years of setting up operations. A further 30 percent of the businesses will not enter their 10th year of operation. While there are a significant number of reasons for businesses to fail, one of the most striking, and avoidable, reason is poor inventory management. Companies unable to manage their inventory either have too much of a stock in one place or not enough where there is a demand for it. They could also be saddled with excess inventory and not be aware of it.
However, this is one reason that can easily be avoided by simply having an ERP solution in place to manage inventory. The following are the different ways an ERP helps manage inventory:
- Tracking: The right ERP solution will track inventory levels throughout the organization, irrespective of the number of facilities you have. Take the example of a fashion retailer with multiple locations across the country. Implementing an ERP empowered their sales teams to access centralized inventory control to check for stock levels across various locations. So even if they were not carrying a particular product they could still close the sale and get it delivered to the client from the location it was available. Additionally, you can track expenses and profits related to inventory sales using ERP, providing you with actionable financial data.
- Reports: ERP generates real-time accurate and thorough reports on inventory levels, purchases and accounting. This enables your staff to maintain optimum inventory levels based on actual demand. It takes the guessing out of ordering supplies.
- Shipping and Logistics: The shipping process is streamlined from receipt of materials to manufacturing, transport, storage and delivery of products. ERP also records the time and costs associated with storage and transportation. This automation saves you time and expenses while increasing efficiency of your resources and maximizing staff time.
- Inventory Control: ERP optimizes all inventory control processes, regardless of the size of your business, number of facilities or amount of inventory. You can use ERP to easily manage stock levels in several ways, including automating orders of products and materials based on preset time intervals or stock levels, as well as inventory analysis reports. ERP offers management functions for product recalls, as well as complete product traceability. ERP's expense and profit management capabilities let you track expenses and availability of products over time and compare costs between suppliers. You can easily oversee pricing, allowing for profit and expense management on a facility, product or per-unit basis.
- Planning Replenishments: Inventory management allows you to properly plan replenishment orders. ERP inventory management system allows you to categorize parts so you can order the right quantity. One item is ordered only when there is a specific demand in exactly the quantity to meet the demand. Another item is ordered when at a lower cost and easily procured. Optimizing replenishments means fewer transactions and that leads to better inventory accuracy.
- Surplus Inventory Management: You can see and react to surplus inventory in real-time. There are options you have when surplus is quickly found and reaction is immediate. Delay might mean you have to junk the surplus, thereby losing money.
Ensuring an efficient inventory management system is key to running an efficient business. Click here if you would like to give your inventory the ERP edge.