Why do we need to manage your inventory? Inventory forms a crucial part in the success of a business. It determines your sales and the amount of capital you need to inject in your business.
Your inventory, to some extent could be the reason you are in business. Failing to accurately track and manage inventory can create difficult cash flow situations for small businesses. Business owners also must keep accurate inventory records for business tax purposes.
Some of the ways that have been used to manage inventory include manually recording inventory that has been purchased and monitoring usage. This has been commonly done with Spreadsheets. The physical inventory process is difficult, disruptive, expensive and generally insignificant. There are only two valid reasons for doing a physical inventory count:
1) Record keeping is so bad that you don’t really know what you have on hand
2) You are forced to do it by a parent company, auditor or some other outside force.
A physical inventory count often requires the suspension of everyday business for up to a day or more, as well as engaging people in the counting process that may not be keen on recognizing specific items, counting accurately, writing legibly on the count sheets, interpreting those count sheets and keying in the information accurately. Under these conditions, it is likely that the count will introduce as many errors as it corrects.
Failing to accurately track and manage inventory can create difficult cash flow situations for small businesses.
Other ways include using barcode systems, where at the point of sales, the items are identified at the point of sale and inventory sales data are immediately read to a broader system that maintains usage statistics. The company’s purchasing department uses these data to make buying decisions based on sales and existing inventory levels. The RFID technology has also been used for inventory management, where items are anytime an item with an RFID tag passes the reader, the movement of the item is recorded in the inventory management software.
The objective, of course, is to keep better records. Ideally, each company should report inventory movement as it happens, as close to the event as possible, and preferably by the people that are handling the inventory. .This is the very reason why you need a system that well monitors your inventory.
- To know the reorder level and quantity.
- To account for all the goods received.
- To know the suppliers that offer best quality and trade discounts.
- To do consistent stock taking.
- To monitor all transactions touched with inventory this includes the bank or cash, the cash sales and purchases.
How then does the ERP enable you to perform these five activities?
Cost Management
Accurately track and report costs by accounting for specific detailed costs and allocating inventory costs by weight, value or quantity.
Inventory Control
Control inventory replenishment with capabilities to minimize excess stock and fulfill orders on time.
Order Fulfillment
Fulfill orders effectively with complete storage management.
Inventory Visibility
Gain real-time visibility into key inventory trends, on-time delivery, transport costs and more.
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