Using Enterprise Resource Planning Systems to Improve Inventory Control, Planning and Optimization
There are a variety of challenges warehouse and distribution centers face when it comes to inventory control. Utilizing an enterprise resource planning system can lead to valuable time and cost savings. In this article we will discuss ways to improve inventory management through control, planning and optimization.
The Three-Part Inventory Process
Part 1: Physical Inventory Control
Physical inventory control is all about receiving, moving, stocking, and the physical control of inventory. This is typically an ongoing process with arrivals and departures occurring daily. Barcoding, consigning, and kit repackaging are all important parts of physical inventory control.
In addition, data entry is an important part of the physical side of inventory operations. All items must be tracked using enterprise resource planning system to ensure accurate and timely inventory data collection that is essential for success. Cycle counting is also necessary. This is a manual intervention that serves to check and verify that computerized data records match physical stock in terms of both quantity and location.
Part 2: Inventory Planning
Unlike the control and movement emphasized by the physical process, systematic management is the emphasis of the planning process. Planning relies on varying rates of demand and methodologies. This involves right-sizing inventory that gets turned over reliably and is replenished frequently by avoiding stock-outs and lost sales in addition to avoiding the trap of working capital in overages of pricey stock. Another aspect involves purchasing new inventory based on customer demand.
Data, just like the physical inventory process, should drive the stocking of inventory. Therefore, accurate data is essential and is driven by conscientious data entry using Sage 300, Sage 100, or another enterprise resource planning system. Systematic and preplanned approaches to replenishing inventory involve using information that is relevant to sales, finance, purchasing, production, and shipping/receiving. Enterprise resource planning systems help store and use this data efficiently.
Part 3: Inventory Optimization
Even with planning and physical inventory controls, it is still possible to have too much or too little inventory. Frequent occurrences of stock-outs and stock overages indicate inventory levels that lack optimization. Thanks to technology, inventory optimization systems now help with supply chain management by calculating where and when inventory should be deployed to fulfill predetermined objectives. By better classifying stocking levels according to past demand and improving demand forecasting for future use, these systems greatly assist in optimizing inventory.
Although mismatches between stock and demand cannot be entirely eliminated, they can be significantly reduced by forecasting more accurately and quickly. This allows the predetermined objectives (such as measureable reductions in inventory investment, increased customer satisfaction, maximized output, and cost containment) to be more within reach.
These processes come together to make up the important inventory cycle. All of them are improved with technology meant to handle many important facets of inventory management and data collection. Learn more about enterprise resource planning systems: Sage 300 and Sage 100.
Download our whitepaper “Better Inventory Management: Big Challenges, Big Data, Emerging Solutions” for further information on the key processes involved in inventory management. Physical inventory control, inventory planning, and optimization of processes can enhance your company’s success.
Mindover Software has been providing award-winning financial management systems and consulting solutions spanning the business lifecycle to small and medium sized business. Now, with consultants in Dallas, San Antonio and Austin, Mindover Software provides strong local support with the resources of a national company. Learn more about two solutions we offer here at Mindover Software by clicking on the each solution: Sage 300 and Sage 100.
As a Sage Software Select business partner, we can align many of the world’s best software solutions to meet your diverse needs. In short, we are a company available on demand to meet your business goals for today and far into the future.