Effective inventory management software requires smart decision-making when it comes to what should be the safety-stock level of inventories in every warehouse. This also includes the frequency of restocking and production scheduling to maximize plant and warehouse efficiency thereby avoiding unnecessary inventory costs.
If your company has integrated a management system, this will help increase the transparency over your inventory items from receiving, to pick up, to production, to packing, and then to shipment. This will also give you a heads up on anticipated orders and the possible increase in customer order quantities thus reducing the chances of stock outs or overstocking.
When you have inventory management in place, you will have better visibility of your company’s inventories and thus giving you an increased opportunity to improve your sales performance.
The process of inventory management encompasses the monitoring of the movement of items in and out of your company’s inventory stock. The top priority of having this system is to control the transfers making sure that the inventory level is neither too high nor too low which might jeopardize the operation of your company. Another facet that the system aims to minimize is the inventory-related costs which can be avoided if the company can maintain a good safety stock level and a good inventory turn-over.
The process supervises and controls the company’s stock so that you can be assured that you will not run out of stock especially with your raw materials and other products that you need to be readily available.
The following are the three key aspects that you can expect in any inventory management process:
• The lead time
Two most important lead times that you should know is first, the time that it will take for your supplier to process your order and have the items delivered to you and, second, is the time that it takes to establish such inventory during the transfer of the materials. If you have those kinds of information, then you can have a smooth run on your operations because you already have a sufficient basis on when is the right timing for you to procure the materials including the number of units and the necessary safety stock that you might have to order.
• The movement of materials
You should be able to keep track of the movement of your materials in the whole operation process as they go through different stages from production to warehousing. This will enable you to determine if there might be a need for you to adjust the amounts of materials that you are ordering before it slopes to a critical level.
• Maintenance of accurate records
One essential key for your company to attain an effective inventory management process is by making sure that you are maintaining accurate inventory records. This entails that your transactions in the database should be updated, and real-time and that there should be an automated solution for the updating of inventory ledgers in consideration of production completions to product shipments. If you maintain accurate figures, then you can also quickly communicate the right information to your entire organization.
These three must be present because if not, then your inventory management process and the money that you spent on investing an inventory management software might go to waste.
So for you to know that you have acquired the inventory management system, the basic features below must also be present:
• It must have the basic inventory controls
This might sound simple to you, but this feature tops the most requested features that every inventory management software must possess. This means that you are able to actually manage and control the inventories of your entire company across all of the sales channels that you have. Oftentimes, when it comes to new businesses, these establishments often work with spreadsheets at first wherein there is a high risk of the data to be destroyed because of a break in the formula or an error in the data within the workbook.
If your business is new, and you are one of those who is still using spreadsheets, you might want to take a pause and reevaluate your inventory monitoring method especially if your business is rapidly growing and stock movements are piling up by the moment. There are available inventory systems that are not that expensive and might be able to cater to your growing needs.
• Barcoding and scanning features
With the increase of the number of your orders, do not get too excited when this occurs because, yes, this is a good thing, but this sudden surge of orders can also lead to possible bottlenecks that if left unresolved, you might end up losing customers instead of gaining some more. This feature is very important so that you can streamline processes to accommodate the increase of volume orders and avoid the risk of losing your valued customers.
• Provide demand forecasting
This demand forecasting feature is important for you to be able to know how you will spend your resources wisely. Having the proper tools in place will let you learn more about what products have good sales performance, and which channels are actually giving you positive results. With the ability to dive down to your sales attributes will give you essential data which can help you keep precise inventory levels and arrive at smart decisions when it comes to the procurement of materials.
• Enabled accounting integration
This is also an important feature even though this can’t give you a specialized order and inventory management system. Accounting is essential in running a successful business, and your inventories are part of the accounting process wherein inventory tables are connected to the Inventory General Ledger accounts and be able to keep track of operating expenses that not within the ambit of inventory.
The maintenance of your inventory records is not an easy task, and because of that, there are already a number of types and techniques of inventory management systems to study based on your specific business needs. Identifying which inventory management system you should adopt first can help you then choose the appropriate software to monitor, predict and reorder materials whenever you need them.
