Can you imagine the situation of a business that gets more orders than the inventory that it has? Such a situation can arise due to poor production planning and inadequate inventory forecasting. The business will lose all the orders, thereby affecting its revenue. They could have avoided such situations if they had managed their inventory.
An Enterprise Resource Planning system is the solution for such problems. ERP is mainly used for automating the various back-office functions so that all the functions are integrated seamlessly. All the operations of the business that are crucial for the running of the business can be easily integrated and incorporated into the Enterprise Resource Planning system. From production planning to warehouse management, inventory management, order processing, purchases and financials, everything is covered under one umbrella.
Inventory management is very crucial for the successful running of the business. Only with a proper inventory management system can the businesses analyse the stock available and therefore determine the amount of stock to be replenished. It can help in defining strategies that can be useful for planning future growth.
Benefits of integrating Inventory management with ERP
The key benefit of automated inventory management is that it can optimize the inventory for meeting the ROI goals and product availability. Keeping a right mix and amount of inventory is quite important for improving the profitability of the business. The business can neither afford to under-stock nor can it over-stock. With all the reports and systems in place, the system would be able to analyse on fast-moving and slow-moving products so that appropriate measures can be taken.
For companies that rely on supply chain partners for managing the inventory and shipments, an effective inventory system can be integrated with the supplier’s system. This will help the suppliers in analysing whether the stock is available in the warehouse or not.
Accurate Financial Statements
One of the significant components on a Balance Sheet is the inventory value. When the inventory is managed through an ERP, the chances of variation are minimized. This gives more accurate information on the financial statements, which can be useful for the shareholders.
Easier physical stock takes
Every company that deals with inventory has to go through annual physical stock takes. When the inventory management is automated, the physical stock take becomes much easier.
With a proper inventory management system, the movement of stock becomes real-time, giving an accurate picture of the stock position. Stock reconciliation also becomes easier.