4 Benefits of ERP Inventory Management

Inventory management is central to getting the results you need from your ERP. At the same time, your ERP helps provide the good inventory management you need.

Planning Replenishment Orders

Inventory management allows you to properly plan your replenishment orders. Your inventory quantity must be accurate so when the signal to buy or make more is received, you have confidence that you need to take action. Your ERP inventory management system allows you to categorize parts which helps easily 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. Your goal here is fewer transactions so you order enough to satisfy all the demands seen in the next three months. Optimizing replenishments means fewer transactions and that leads to better inventory accuracy.

Surplus Inventory Management

You can quickly see and react to surplus inventory. Whether the surplus is caused by a decrease in some demand or you learn that the economy of a good buy wasn’t so economical, your ERP inventory management system will spotlight the surplus immediately. Should you return the item? Can you contact the customer and ask for another order to use up the surplus? There are options you have when the surplus is quickly found and reaction is immediate. Delay might mean you move the surplus to the trash pile and disposition costs money instead of earning money.

Inventory Turnover Tracking

You can track turnover of inventory by segments and not just overall. ERP inventory management systems allow you to categorize your inventory in many ways and to analyze whether your inventory assumptions are true.

Are your A parts turning over much more rapidly than your C parts? They should. Are parts for one customer gathering dust on your shelves? Maybe it is time to rethink your relationship with that customer. Are your shelf-life items turning over before they are outdated? Can you buy is smaller quantities? Can you increase the shelf life by storing in a better environment? Your accountant might say your inventory is turning over ten times a year. You know some items turn over daily and others might never move.

Business Savings

You save time and money through better inventory organization using your ERP inventory management software. Better organization can lead to improved customer satisfaction. Organization might mean moving your items with the most transactions to locations at the front of the stock room and near each other. It could mean combining the parts used for a particular order in nearby bins. ERP is easily used to improve inventory organization and the results can be much improved efficiency and better productivity in your stock room. Your employee satisfaction goes up and your profits right along with it.

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Tom Miller

About the author…

Tom completed implementations of Epicor, SAP, QAD, and Micro MRP. He works as a logistics and supply chain manager and he always looks for processes to improve. He lives near San Francisco Bay in California and can be found on the water in his kayak or on the road riding his motorcycle. Contact Tom at customerteam@erpfocus.com.

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Tom Miller