Taking advantage of the many uses of your enterprise resource planning software can assist in simplifying inventory management and take some of the guesswork out of ordering and managing your warehouse. Armed with these tools, you can maximize productivity and efficiency. 

What are the best ways to use financial management software to make inventory control easy? How is this inventory control effectiveness measured? Traditionally, this is done by measuring how successful a company is at reducing inventory investment while still meeting customer needs and customer service goals. It is also done by achieving maximum output while simultaneously keeping costs contained. In essence, it comes down to determining what items to stock, how many of each item is necessary to keep stocked, and when more of that item should be ordered. 

This “simplistic” rule for effective inventory control does not create a complete picture of the complex reality. In practice, simply knowing what to stock and how much is difficult to carry out in practice. Three overarching categories complicate the process, but having a financial management system such as Sage 300 or Sage PFW can help. Let’s take a closer look at the complications.

Factors Complicating the Inventory Control Process

1. Conflicting Objectives in Different Departments within the Company 

If you think about it, there are some parts of your business that are probably seeking to increase inventory. At the same time, others are trying to decrease it. This complicates things as viewpoints differ on how to truly achieve better profitability. 

If the sales department wants to emphasize and prioritize the speed of delivery to keep up with customers and satisfy demands, they will want inventory amounts of finished goods to be high. Likewise, the purchasing department wants high levels of inventory as well. This is because they can get discounts when ordering large quantities at the same time. The production team wants all parts and materials to be readily available to keep efficiency along the line high. In addition, running large batch sizes is more efficient. Increased inventory is a good thing in sales, purchasing, and production.

On the other hand, the finance department and product developers are watching trends. They want to decrease inventory of existing products in order to make room for new products. Management wants inventory decreases as well because large amounts of inventory translate into less cash flow. 

1. Unpredictable Supply and Demand

There are so many factors that make predicting supply and demand difficult. These supply difficulties include unsteady supplier performance, supply chain disruptions, material scarcities, perishability of raw materials, obsolescence of products, etc. Buffering stocking levels is important in order to provide safety days of lead-time supply. The demand difficulties include the fluctuating economy, constantly changing products due to innovation, and high-traffic sales on some products with only occasional or seasonal sales of other items. This requires responding to demand individually by item in order to achieve appropriate stocking levels. 

1. Warehousing and Distribution across a Variety of Locations

Manufacturers and distributors also face the problem of accessibility. This stems from when finished goods for sale and parts for assembly are not all housed in the same location. Instead, they are spread over multiple locations. This makes easy access to needed items difficult. 

Even with these complications in mind, it is still important to focus on two inventory management keys to success. These are meeting customer needs and stocking the least amount of inventory possible. Enterprise resource planning (ERP) software can help you with both of these. The reality is that inventory management is an area being targeted aggressively for improvement by distributors and manufacturers. Do you need to improve inventory management as well? 

Download our whitepaper “Better Inventory Management: Big Challenges, Big Data, Emerging Solutions” for further information on improving inventory management and overcoming the potential complications of inventory control. 

Here at PositiveVision, we are a full service software consulting firm dedicated to bringing trust, commitment, and care back to business software consulting. Our mission is to simply help small to mid-sized businesses with their software to make them more profitable. Using our team to differentiate our products and services, we seek to develop the most innovative, easy-to-use, and efficient solutions.

When small and mid-sized, manufacturing and distribution companies use PositiveVision’s business software services, they save money while reducing inefficiencies and growing revenue. We seek to assist our clients in streamlining inefficient processes, grow revenue streams, and reduce costs. As a result, our clients are more productive, competitive, and profitable. Contact us to see how we can help your company do just that.