What is Manufacturing ERP Inventory Management?

Manufacturing businesses can have many requirements from their enterprise resource planning (ERP) system, but inventory management has to be the most critical one of them. This newsletter comprehensively covers all things related to manufacturing ERP inventory management. Sit down and take a deep dive into it.

Overview

Running a manufacturing business involves a lot of moving parts, and to become successful, it requires all those parts to come together. Manufacturing organizations often deploy different software to run those different elements of their business. For example, they have one system for accounting, another one for managing warehouse operations, a separate point-of-sale (POS) system, and another one for inventory.

But the data these systems track is interconnected, and manufacturing businesses nowadays are all about data. Be it purchases, reorders, receiving the inventory at the warehouse, shipping, storage, customer satisfaction, and more, it is vital for them to have the correct and accurate data at all times to make the most profit. Having disparate systems at work doesn’t do the job for them. So what’s the fix?

Enter ERP software, a powerful tool that allows manufacturing businesses to manage all the critical business processes, including inventory, from a single platform. Not only can they manage and optimize their inventory to the fullest, but also achieve competitive advantage by being able to share real-time data within the different parts of their business.

So what exactly is manufacturing ERP inventory management?

It is a known fact that inventory management is an important component for the successful conduct of a manufacturing business. By gaining the knowledge and insight into the stock they have, its location, quantity etc., manufacturers can run their operations in the most efficient manner. On the contrary, inventory lying idle in the warehouse, or at the plant floor, doesn’t augur well for the business.

Manufacturing ERP inventory management is nothing but a system that allows manufacturers to manage all aspects of their manufacturing business such as inventory, planning, accounting, supply chain, and more on a single platform, providing real-time visibility into the inventory at the same time to all the stakeholders across the different departments within the organization.

Such a system helps manufacturers manage the complete inventory cycle, right from receiving the ingredients and raw materials at the warehouse, to sending them into production, and handling the intermediate, finished goods and co-products plus byproducts from production to shipping, and maintain inventory balances while performing different inventory transactions.

Why do manufacturing businesses need ERP inventory management?

With ERP inventory management, the product developers can see the inventory costs when adding ingredients to formulas, and materials to assemblies. The staff at the plant floor can allocate the best inventory for batch jobs, move inventory between plants and from one location to another, and the management can have visibility into all inventory movements and inventory levels.

It is not just about inventory management in isolation, as with an ERP software, every department works within their own module and shares the data across the organization. What this effectively means, say, is that the supply chain coordinator can see the product delay the moment it happens, and make the adjustments accordingly.

Furthermore, all the pre-order customers get informed that their order has been delayed, as an automatic email gets triggered from the customer relationship management (CRM) platform. This means that when a customer calls for an update, the customer service team can check the order status and provide detailed information about the customer’s items. This is just a small example of how an ERP software makes the processes throughout your manufacturing business smooth and efficient.

But how exactly does ERP inventory management work?

A good ERP for inventory management enables managing inventory end to end. Right at the time of receiving inventory at the warehouse, the user present at the site can associate a tracking method with it. The ERP system also generates a unique, user-defined identification code for it, so that the item can be read by an RFID or barcode device, and subsequently be tracked along the supply chain.

Further, methods such as last in, first out (LIFO), first in, first out (FIFO), and near-expiry, etc. can be associated with the inventory items, so that they can be picked for production accordingly. Also, pricing of the product can be set through various pricing methods like standard, last, average, etc. An ERP system facilitates all of it.

An ERP inventory management system also allows classifying or grouping inventory in various ways, associating attributes like potency, vendor lot number, etc., tracking the expiry/shelf life, assigning statuses like quarantine, QA, reject, hold, etc., and handling various units of measurement and their conversions, among a host of other things, at the back-office level.

It can also handle its movements between multiple warehouses, warehouses and locations, or between multiple locations. Using a hand-held device such as a scan gun, real-time transactions happening at the warehouses can be registered at any point, right from the arrival of inventory at the warehouse, till its departure. This way, ERP inventory management ensures 360-degree visibility?into inventory movements and allows performing essential tasks related to inventory management.

The benefits of ERP inventory management for manufacturing businesses

Manufacturing ERP systems draw on a variety of data sources to help the organizations create an in-depth picture of their inventory. Using this data, the organizations can make more informed decisions regarding inventory replenishment, and create accurate forecasts in order to meet the demand, while maintaining just the adequate stock levels.

Then there are other benefits too that ERP inventory management delivers for manufacturing businesses. For starters, it increases efficiencies throughout the supply chain, and automates day-to-day tasks. Let’s take a brief look at all the benefits it offers:

·?Supply chain visibility: A manufacturing ERP inventory management system allows the manufacturers to effectively integrate with all their supply chain partners to facilitate direct, uninterrupted communication between them. This enables syncing the stock purchasing, organizing and transferring functions, and also critical information such as the order and shipping information, the information about the stock, etc., across the entire supply chain.

·?Planning & reporting:?Having all the accurate and updated information on stock, orders, and customers at one centralized location, the manufacturers can take full advantage of the available insights to plan their production and material. With precise planning considering the forecast, current availability and demand, manufacturers can make best buying decision to meet upcoming demands or encash special offers from vendors, etc.

By allowing to create custom inventory reports, manufacturing ERP inventory management systems help the manufacturers use the accurate data to track idle, slow-moving inventory or inventory nearing expiry. Informed decisions can then be made to clear them off using promotional offers.

·?Comprehensive inventory analysis: Using an ERP inventory management system, manufacturing businesses can perform end-to-end inventory analysis. The system provides them with key analytics for each stage of inventory flow, such as the turnover rates, shrinkage, cost of goods sold, etc. By analyzing them thoroughly, the businesses can track and report excess inventory, shortages, obsolete inventory, transfer through receiving and shipping, etc. and increase their inventory efficiencies.

·?Cycle counting: A manufacturing ERP inventory management system also guides the manufacturers through a well-planned cycle counting process. This transparent and dynamic process serves as an important means of checks and balances, and provides greater reporting accuracy, besides improving inventory records.

·?Savings: An ERP system delivers saving on cost and time. By automating the everyday tasks, it improves overall business efficiencies, and it is a known fact that efficiency equals cost savings. Managing operations using an ERP allows the businesses to handle many working parts simultaneously, reduce overall workload, minimize expenses, increase production, and deliver more output in less time.

The best ERP to manage inventory

It has been established beyond reasonable doubt that the manufacturing organizations that use disconnected, disparate systems to manage their different business functions including inventory, miss out on key inventory insights that could allow them to operate more efficiently. In such scenario, inventory management could become challenging for them.

However, by investing in the right ERP inventory management software, and using it to execute a well-defined inventory management process, the manufacturers can ensure they have the inventory they need, and when they need it, while eliminating wastes, expense, and inefficiency from their workflows.

Once such ERP system is BatchMaster ERP, whose robust inventory management capabilities?turn inventory management into a competitive differentiator for your business. Opt for it, and reap its benefits. And if you do want to have a look at how it can transform your business, write to our experts?today.