Raw materials and inventory management is one of the most vital areas of any process manufacturer yet often needs the greatest improvement. Poor inventory management methods and insufficient material management systems can lead to a variety of problems including poor customer experience, lack of visibility across departments, low turnover, out-of-control costs, decreased profitability, and ultimately, business failure.
Maintaining the following best practices as they relate to material and inventory management will help you to control costs and improve cash flow.
ERP with integrated material and inventory management
A process manufacturer of any size that has customers and suppliers needs an ERP system with an integrated material and inventory control automation. A technology-driven approach to managing materials and inventory will help maximize efficiency, minimize waste, and limit the time spent searching for inventory, all while helping you to maintain and enhance customer satisfaction, on-time delivery, and your bottom line. It has the capacity to provide your business with:
Visibility
Get visibility into your on-hand inventory and its location, suppliers, and miscellaneous item purchases and outside services. Visibility helps you hit your delivery deadlines and keep your customers happy.
Accurate planning
Accurately plan material purchases for both raw and finished goods based on demand and forecasted demand, which will help eliminate overpayment. With an integrated system you can start ordering smartly based on your precise requirements for scheduled work. A system like this can alert you to reorder set quantities of stock when you hit a specified reorder point, and if you don’t have materials in stock or you buy your materials directly for jobs, the system also automatically factors in lead times to make sure you have what you need when you need it.
Efficiency
Easily group the materials you need for different jobs and combine commonly used parts onto one purchase order, allowing you to push your vendors for better prices. Arrange deliveries to fit around your job requirements and production schedule and once on-hand, track lot numbers every step of the way.
Simplified Complexity
If your company has complex inventory needs, such as shelf-life rules, individual stocking locations, and multiple part number cross-references, an ERP with integrated inventory control and warehouse management functionality can track inventory across multiple locations. It can also provide visibility into purchases and warehouse transfers, and consolidate this information into your integrated ERP’s quoting, order management, scheduling, AP and AR functions. This helps you keep all key business and financial information in one place, linked to each other, so you can manage your business effortlessly.
Inventory control
Accurate inventory recordkeeping enables process manufacturers to effectively balance materials levels to ensure the proper stock is on hand. The benefits to a business range from reduced operating costs and accurate data for financial records, to efficiency in turning inventory and better customer service overall.
Perhaps the most important thing you can do for the wellbeing of your company is to keep accurate inventory records. According to the “Warehouse Management Woes” survey, only 53% of small to midsized businesses conduct manual inventory counts and 50% of respondents have challenges counting or reconciling inventory.
Leveraging technology to streamline business processes is key to running an efficient and profitable organization. Cloud-based ERP software that integrates all business data, and accurately accounts and communicates information across all business functions, offers the insight needed to balance materials levels, predict purchasing trends, prepare for busy times of the year, increase productivity, and gain true total business insight.
Warehouse Management
Because most process manufacturers use at least one warehouse for storing your materials and inventory, here are a few tips to keep your warehouse operating efficiently.
Stay organized
Results from a recent ECI Software Solutions’ customer survey, “Warehouse Management Woes,” shows 25% of respondents reported challenges finding certain stocked items. Businesses lose valuable time and potential sales when items cannot be located quickly by employees or customers. Clear signage, well-labeled stock shelves that include item descriptions, and product barcoding are any easy way to keep everything in its rightful, easily found place.
Out with the old
Materials lose value and/or potency over time. Keeping old materials takes up much needed space. If cash is tied up in excess inventory, the business can’t invest in other areas that provide ROI. Discount and sell what you can and dispose of anything that’s past its shelf life.
Stock and lock
While it may be difficult to keep a locked storage area, it’s easy to delegate responsibility and accountability for materials. A documented process that defines who has access, what they are accountable for, and where materials are stored should be planned out in addition to materials handling, safety guidelines, and reporting expectations.
‘Tis the season
Analyze and understand the seasonality of orders and make sure that you are prepared for any busy time by creating space and stocking up on needed materials. Knowing when an upturn in production is coming and being prepared are key to ramping up production.
How can integrated material and inventory management benefit my business?
Here are 17 benefits that companies quickly realize when transitioning to an ERP with integrated material and inventory management:
- Optimal balancing of inventory levels to meet market demand while minimizing tied-up capital.
- Reduced operating costs that come from manual processes.
- Smarter predictive capabilities, including how much product will sell, when it will sell, and when replenishment will be necessary.
- Accurate product shipping, consistent on-time deliveries, and lead time analysis.
- Streamlined workflows through elimination of redundant tasks across business functions.
- Maximized warehouse space and equipment usage.
- Boosted productivity rates through riddance of time-consuming, manual inventory management tasks.
- Optimized job prioritization and production scheduling.
- Real-time information tracking of inventory levels, production schedules, and market demand, enabling smarter forecasting and decision making.
- Maintenance of accurate inventory counts even with fast order turns for maximum profitability.
- Streamlined invoicing and increased accounting accuracy.
- Analytics and reporting tools to identify the rate at which orders are fulfilled, and to make continuous improvements, including monitoring slow-moving SKUs.
- Awareness of variable inventory levels caused by seasonal or fluctuating demands, product promotions, and business cycles.
- Better response times and customer service.
- Visibility into current stock levels, including profit-eating dead stock, broken stock, and stock shrouded in dust.
- Reduced operating costs and improved cash flow.
- Stronger profitability through a more perfect calibration of inventory to business needs.
Leveraging technology to streamline business processes is key to running an efficient and profitable organization. Cloud-based business management software that integrates all business data, and accurately accounts and communicates information across all business functions, offers the insight needed to balance materials levels, predict purchasing trends, prepare for busy times of the year, increase productivity, and gain true total business insight.
Contact us today to see if an integrated material and inventory management is right for your business.
