If thinking about an inventory management system gives you a headache, it may be time to stop and think about an effective method to solve your problem. Inventory management cannot be handled properly without an efficient, well-thought-out, and operational system.
If you don’t keep a handle on your inventory, your profits can quickly decline. A simple Excel spreadsheet may have been sufficient as an inventory management system when you first started your operations.
Today, if your inventory has multiplied and storage locations seem to be getting out of control, it’s time to seriously consider implementing inventory management software to provide you with peace of mind. ERP software as an inventory management system will allow you to always monitor your inventory, maximize employee productivity and reduce losses and breakages while maintaining peace of mind.
What is inventory management?
Inventory management is a necessary evil for all companies that manage inventory. Agri-food distributors, merchants, wholesalers, all must conduct an inventory on a regular basis. In fact, at the beginning, inventory is an accounting obligation since your inventory appears in the assets section of the income statement.
Inventory is defined as a statement of your inventory. Thanks to an efficient inventory management system, it is easy to determine all inventory and record it in your accounting, to account for your assets, but also to measure any losses, theft or breakage, and record it as a liability.
So, inventory management consists of establishing a structure to account for inventory according to certain pre-established methods. When taking inventory, the following objectives are pursued:
– Accuracy: you must keep an accurate count of your goods, specifying the type of product and its value.
– Profitability: some products cannot be accurately counted. Don’t waste time counting small parts in too large quantities: estimate them. You will gain in efficiency.
– Verifiability: the method you use in inventory management should allow a third party to quickly verify the inventory;
– Speed: If your inventory takes an inordinate amount of time to complete, you’ll lose profitability, but you also risk demotivating the employees assigned to this task. This is one of the main reasons why inventory management software can be very useful to you.
You get the idea… you need to set up an inventory management method that allows you to achieve all of these objectives easily and quickly. One of these methods is to make an inventory with cyclical reporting. Cyclical reporting is an inventory management system that divides the tasks of taking inventory into a number of predefined steps. Another method is to conduct a periodic inventory. As the name suggests, this method determines a schedule for taking inventory. The third method is continuous inventory. The inventory is taken on a daily basis, according to the movement of stocks. You know what the value of your inventory is at all times. Lastly, the cyclical counting methodology consists of dividing the task of taking and keeping inventory into several steps.
Regardless of the inventory management method you choose, you must opt for an efficient inventory management system. Some use a simple Excel sheet. At first glance, the Excel sheet seems easy to use and implement. However, it has many drawbacks that, over the medium term, may lead to more errors in your inventory count. The Excel sheet does not provide a comprehensive view of the information and the data quickly becomes obsolete.
By using ERP software as your inventory management software, you have at your fingertips an artificial intelligence tool capable of producing detailed reports on the status of your inventory. You can also share the data with the rest of your team, while ensuring the security and updating of your information.
The challenge of maintaining an inventory management system requires powerful and versatile inventory management software.
The main reason for using inventory management software is to reduce the risk of errors. The most common errors in inventory management include the following:
– the lack of accuracy or the absence of a count of the goods received: this is the major error in inventory management. Without an efficient inventory management system, the receipt of a new order can quickly become a source of endless errors and omissions. With the help of ERP software to manage your inventory, you can predict the product received and assign it to the same family of items using a barcode system.
– no connection of inventories in different branches; if your business has several storage sites, you can’t afford to miss a connection solution to map the scope of your inventory. By storing information in the same place and standardizing it, inventory management software can help reduce duplicate or misidentified products, even if you have multiple stores or warehouses.
– the challenge of overstocking or inventory shortages: this is one of the main issues in inventory management. If your warehouse is overflowing with products, you run a greater risk of loss or breakage. This negatively affects your profitability and directly impacts your balance sheet liabilities. Running out of stock is no better, since you risk breaking the bond of trust with your customer and undermining their loyalty.
– an inefficient stock rotation system: inventory management implies good stock rotation. Your inventory management software must allow you to quickly and clearly see the movement of your inventory in your various warehouses. Depending on the inventory management method chosen for your company, you will be able to determine whether your rotation system is effective to ensure better storage of your items.
An ERP software program must be used as an inventory management system to be able to navigate your inventory accurately. The implementation of ERP software has already produced tangible results for all of our clients. They quickly see a decrease in warehousing costs thanks to a better understanding of the inventory. Employee productivity increases and customer service improves. The inventory management system reduces waste through better stock rotation.
Advantages of using ERP as your inventory management software
In concrete terms, the advantages of using an inventory management software package are all related to the global vision you may have of your business. Taken one by one, these benefits make everyone’s work easier. Together, they become a powerful management tool that you will not want to do without.
To begin with, data is collected using bar codes. When a new inventory is received, your employees scan the items and the quantity is directly added to the inventory management software. This reduces the risk of errors and increases the accuracy of the information.
The inventory management system also facilitates the implementation of automated stock rotation. The flow of goods, purchase orders and even replenishment are all tedious tasks for your team that can be automated.
ERP software supports you in your decision making by giving you reliable and up-to-date information about your inventory. In addition, ERP software allows you to better manage your cash flow, obtain timely financial reports and thus have a better overview of your business.
Thanks to the implementation of inventory management software, many business leaders have already been relieved of constant headaches. If your brain starts pounding when it comes time to think about your inventory management, contact our ERP and CRM solution specialists without delay. Our team will be able to offer you an efficient inventory management system method tailored to your company’s needs.