10 Ways ERP Inventory Management Boosts Profitability
To gain control of product costs, distribution companies benefit from robust Inventory Management solutions that track the location, status and value of their material goods. An ERP solution with integrated Inventory Management helps companies reduce the amount of assets tied up in slow-moving inventory, while increasing available cash on hand for business growth. In fact, companies that implement ERP see significant inventory improvements that have an enormous impact on their bottom line, including a 17% reduction in inventory, 62% improvement in inventory turns and 28% decrease in stock-to-sale ratio.1
The following 10 benefits of Trek Cloud ERP’s integrated Inventory Management solution highlight how companies can effectively manage their material goods for improved operational performance and profitability:
1. Eliminate disparate systems and increase inter-connectivity, resulting in improved inventory visibility and accuracy.
By utilizing Trek Cloud ERP, your company is able to discontinue using its many spreadsheets and other disparate systems and manual methods for tracking inventory housed in multiple locations, whether those locations are all in one building or in multiple buildings. A cohesive and comprehensive system like Trek Cloud provides real-time views of inventory to users across your company.
2. Easily identify stock availability for improved customer service.
With Trek Cloud’s Inventory Management, users are able to quickly identify whether material is available for new orders, currently in process for existing orders, or otherwise assigned to an unavailable status. Examples of statuses that can be used in Trek Cloud include:
- Available. Stock can be sold to the customer.
- Inbound (potential). Stock is requested from a vendor or is being produced through manufacturing and will soon be available for sale to customers.
- Work in Process (WIP). Stock is allocated to an incomplete project, such as an assembly or manufactured product that is intended for a particular customer.
- Reserve Inventory. Untouchable inventory reserved for customer emergencies or as a buffer.
3. Reduce time spent doing physical counts.
By assigning products to storage locations in the warehouse, time spent manually searching for goods is significantly reduced. Companies can custom-define their locators during their Trek Cloud ERP inventory management configuration, including such dimensions as aisles, bins, racks, levels, and bays.
4. Control multiple warehouses.
The ERP will help you maintain separate inventory at multiple locations and better manage the transfer of goods between locations. Increasing visibility of available stock from all locations also helps to decrease order fulfillment time and improve customer satisfaction.
5. Reduce inventory obsolescence costs.
Improved inventory rotation can be achieved with LIFO (Last In First Out) and FIFO (First In First Out) functionality, which is assisted by Lot or Serial Numbers. These tracking numbers can be entered or scanned into the system so that you can more easily rotate out older product that has a shelf life or that loses value over time.
6. Reduce inventory carrying costs while also preventing inventory outages.
Trek Cloud ERP inventory management allows you to set purchasing rules for products you sell based on amount and frequency. For example, if you sell 100 units every 6 months, it doesn’t make sense to buy 200 units and store them on your shelf. You may instead set rules that say to purchase 50 units every 3 months, which will reduce your carrying costs. Or, you may have a customer that always buys 75 units but you never know when, and so you always stock 75. Trek Cloud ERP gives options for how to order. You can run a process that analyzes your inventory, looks at min/max levels and generates reports. You can then either generate PO’s automatically based on the report, or the system allows you to instead interact and adjust your POs manually.
Another feature is Vendor Managed Inventory (VMI), which provides selected vendors with reports containing min/max levels. This allows those vendors to stock your shelves based on thresholds you’ve provided to them through the ERP.
7. Effectively manage material movements while improving traceability of materials.
Location fields in the ERP allow you to set and update material locations easily, as materials are transferred between locations, warehouses or places within a building. Material can also be moved based on processes, such as building a kit or a being assigned to a Work In Process.
For some companies, the need to track material location history is critical. For example, an aircraft manufacturer needs to be able to trace where each Lot of a product went and which materials from that location went into making a part. In the chemical industry, the batch process must be closely tracked in order to identify later what made each chemical. The ERP can generate documents that provide analysis, certification and tracing of product history.
8. Accurately identify purchasing needs for timely completion of multi-level BOMs and kitting processes.
Trek Cloud ERP helps you to effectively manage and streamline the Kitting process. Reporting allows you to easily identify components included in a kit, what level of inventory you have to make a finished product, and what you need to buy. These features assist your purchasing staff in identifying what is needed to make finished products, which is otherwise an especially complicated task when there are numerous multi-level BOMs (Bill of Materials) and kitting processes to deal with.
9. Utilize the complexity of ERP to manage multiple costing methods for improved timing of price changes and commissions.
Trek Cloud ERP provides you with the complexity you need to effectively manage your Cost of Goods Sold (COGS), LIFO and FIFO, so that you can, for example, sell older less expensive stock before you change prices, or better time when you will affect commissions to sales representatives. Costing methods that you may be interested in utilizing in Trek Cloud include
- Standard Costing Method, which allows you to lock in a cost you identify, such as one that includes overhead. You can then update pricing manually or by importing new numbers by batch.
- Last Purchase Order Price updates the cost for all of a stocked product every time there’s a new PO document.
- Last Invoice Price updates costs at the time of an invoice completion for all of a stocked product.
- Average Purchase Order sums up all the purchase dollars on POs for that product and divides by the quantity purchased for an average cost.
- Average Invoice sums up all the purchase dollars on Invoices for that product and divides by quantity purchased for an average cost.
10. Improve inventory planning and make faster decisions with the help of robust reporting.
Companies with SaaS ERP solutions like Trek Cloud ERP see a 46% decrease in time-to-decision in the year following their ERP implementation.1 The ability to review and analyze data and reports in the ERP, from any device anywhere, is directly tied to this improvement. Trek Cloud ERP inventory management provides highly customizable reports based on vendors, products, groups, country of origin, lead times and inventory levels. The complexity of the system allows you to create relevant reports to analyze and plan your inventory.
Ready to Learn More About Trek Cloud ERP Inventory Management?
Give us a call at 1-888-575-8445 or email us at [email protected]. We would be glad to assist you in exploring ERP options and best-fit solutions for your business.
Sources cited:
1Aberdeen Group. SaaS ERP in Wholesale and Distribution: Enabling Communication Across a Wide Network.