Table of Contents Hide
- What is ERP Inventory Management?
- Inventory Management Challenges
- Features of an ERP Inventory Management System
- Benefits of ERP Inventory Management
- What to Look for in ERP Inventory Management Systems
- Questions to Ask Yourself
- Help from ERP Software Experts
“We often hear from customers about how other areas of their business are negatively impacted when there are issues with inventory management. Not only can it impact their customers, but it presents their internal employees with issues that make their job harder to perform.” – Tim Hiller, Senior Manager, Surety Systems
Inventory management is vital in today’s world. The lack of efficient inventory management can cost companies a significant amount of money each year. Not to mention the cost it takes on your customer experience.
Your Solution for Operational Efficiency
Companies that can master inventory management can stay competitive, maximize profits, and increase customer satisfaction. The secret to managing inventory successfully is all about the data. You need accurate, real-time data on shipping, purchases, reorders, storage, stock turnover, customer satisfaction, and more.
The good news is that all of this information can be at your fingertips from an inventory management system. And when you integrate inventory management with your enterprise resource planning system (also known as ERP system), you’ll have all the data you need to successfully master inventory management.
This article covers everything you need to know about ERP inventory management software, and it outlines what you should look for in ERP inventory management software so you can find the solution to fit your company’s needs.
What is ERP Inventory Management?
Enterprise resource planning inventory management (also referred to as ERP inventory management) is a central platform that helps companies manage many business processes, from finance to operations. It’s the source of data and information for teams across the company to use to optimize inventory levels, track materials and products throughout the supply chain, reduce inventory turnover, and more.
Here are some of the common business processes of ERP inventory management:
- Supply chain management
- Inventory planning and forecasting
- Product tracking
- Barcoding and tagging
- Logistics planning
- Financial management
Inventory Management Challenges
Inventory shortages can cost you a lot if you’re not analyzing key inventory metrics. Imagine running out of the hottest toy during the peak holiday season. Not only will that cost you money, but it will also drive your customers to competitors. With an ERP inventory management system, you always have access to your key inventory metrics. You can set minimum inventory thresholds for all your products and components. You can even change those limits throughout the year—so you don’t miss out on those peak times. Here’s how it works. Once an inventory level falls short, the system sends out an alert for you to make a purchase order. In many cases, you can automate this process so that you always have the products you need available.
Excess inventory is just as expensive as having inventory shortages. This is critical to manage if your company sells seasonal products. It’s a fine balance of having too much or not enough. An ERP inventory management tool can forecast inventory based on historical sales data and seasonal trends.
Dead stock is on-hand inventory that’s unsellable. It can hurt businesses in two ways.
- You can’t recoup the cost of unsold goods.
- Storing dead stock costs money and takes up valuable warehouse space.
ERP inventory management systems can manage inventory and expiration dates and alert you to any issues so they can be addressed before the product becomes dead.
Inventory turnover is the ratio of how frequently a company sells its products. This number is extremely important, so you know when to reorder or manufacture more products. It also helps you make business decisions like pricing, marketing, purchasing, and manufacturing. An inventory management system can help you automate this process so you won’t miss a beat—or sale.
Features of an ERP Inventory Management System
ERP software helps you streamline business operations. The goal of an ERP inventory management system is to help automate inventory planning operations. Let’s look at a few of the key features:
Customer Relationship Management
Understanding your customers and managing that relationship is vital to staying competitive. By integrating your ERP system with your customer relationship management (CRM) system, you’ll be able to access rich customer data. You can view contact information, order history, prospect status, and more. This information helps your marketing and sales teams target leads and nurture customer (or potential customer) relationships.
Supply Chain Management
One of the main functions of ERP systems is supply chain management. A robust ERP system collects supply chain data to help optimize purchase orders. You can track logistics, inventory, raw materials, manufacturing, and more to give you better supply chain transparency.
Manufacturing management ERP systems help companies streamline the manufacturing processes with production and product planning, and raw materials sourcing. You can collect data in a centralized system for your bill of materials, distribution management, product tracking, and more to help with inventory forecasting.
Other features of an ERP inventory management solution include:
- Data management
- Warehouse management
- Finance and accounting
Benefits of ERP Inventory Management
Here are some of the potential benefits of ERP inventory management.
This is the biggest benefit companies experience with a centralized inventory management solution. By centralizing your data into one platform, you can eliminate manual tasks, automate key business processes, eliminate data entry, and increase productivity and sales.
Instead of purchasing multiple point solutions to handle different parts of your business, a single ERP system can reduce costs.
ERP systems track, report, and automate inventory transactions, obsolete inventory, accurate inventory data, and inventory turnover rate. This helps companies improve inventory efficiency and streamline complex inventory processes.
Other benefits of inventory management systems include:
- Improved business performance
- Better business intelligence
- Business growth
- Enhanced financial planning
- Increases customer satisfaction
What to Look for in ERP Inventory Management Systems
There are several things to consider when deciding on the inventory management tool for your company. Besides considering the usual specifics, like cost, user experience, customizations, support, and security. Here are some specific items to factor in:
Multi-inventory Management Features
Multichannel inventory management is essential in today’s digital world. It’s the process of selling inventory on multiple channels like wholesale, eCommerce, and direct-to-consumer. You want an ERP system that can manage all of these different channels.
Warehousing and Stock Tracking
Efficient warehouse management is essential for small companies with a small storage center or a big business with multiple warehouses. An ERP inventory system with warehouse management features analyzes inventory levels and helps you avoid issues like missing products or delayed orders.
Questions to Ask Yourself
Here are some questions to ask yourself before implementing an ERP inventory management solution:
- Does my current system help me get ahead of issues before they arise?
- Does my current system help me plan for growth with real-time data?
- Do my customer service, sales, and marketing teams have the information they need to deliver an exceptional customer experience?
Help from ERP Software Experts
If your company is dealing with the challenges we highlighted here, like inventory shortages, excess stock, dead stock, or more. And if you’re trying to manage these issues by using outdated, disparate, or multiple systems, it could be costing your business in many ways.
ERP systems with inventory management can help you streamline operations, boost customer service, and support business growth.