Author: Annette Grotz
There are many trends that seemed to have reversed over the past few years. Eating out is surging once again. Travel is gaining. Consumers are shifting spending to more essential items from bigger ticket items. And just-in-time inventory is now more just-in-case inventory. The main cause of the last point is due, primarily, to the global supply chain’s continued kinking with delays, strikes, and shortages.
According to the Wall Street Journal, many large companies have doubled the amount of inventory they are holding in an effort to negate the impacts of longer lead times. Others are canceling orders or lowering prices. In all cases, revenue is impacted.
Whether you are taking on more inventory to hold longer or experiencing increased demand, you need a way to effectively manage your inventory. And once you start managing your inventory, you need to commit to it. You put in a beginning balance, now you must constantly, and consistently tell the report what you have done; data needs to continually feed the report.
Your company may have different stock rooms or warehouse locations. One may go through inventory quicker than the other. Should you buy more inventory or simply transfer it? If you simply consume, financially, not physically, the inventory, the costs will need to be allocated – in particular, for true project costs. Supplies often fall into this category.
So, what is the easiest way to manage inventory in all of the above scenarios? Automate it with inventory tracking software.
How does inventory management software simplify the control of inventory?
There is nothing new about moving a process from spreadsheets to an automated system. Nor anything surprising about the accuracy and efficiency in which the move results. What is new is the direct and automated flow of real-time operational data into and out of your favorite Enterprise Resource Planning (ERP) system – from order management and purchasing, to scanning and barcode generation covering receipt to shipment. All this while facilitating collaboration amongst cross-functional teams.
Three primary components of inventory management software
1. Barcoding and automated data capture
Let’s face it, processes in the warehouse or stock room can be slick and quick, not to mention more accurate, when paper is removed, and data entry reduced. Arming your receivers with the ability to scan incoming inventory puts the order and, if needed, all information about the order at their fingertips. This can help ensure the counts, types or quality of inventory received match what was ordered, diverting issues at the beginning.
Taking this a step further, when your warehouse workers can print barcodes or labels at the point of interaction, they can complete receiving and storing tasks quicker. More importantly, the data captured is real-time and accurate, and if it is an integrated system, flows into the ERP to update orders, items and more. Efficiency is increased allowing you to scale and take on more volume or to decrease cycle times to improve Days Payable Outstanding (DPO) or even cash flow.
The same barcoding and mobile data capture tool used to receive and manage inventory is often equipped to help you count and ship inventory too. Cycle counts are much less painful and the sting of inventory write-offs nearly nonexistent when you bring in barcode scanning. Additionally, your shipping team can use the scanners or equipped smartphone to pick and ship orders too. Again, efficiency and accuracy are improved as transactions are captured rather than entered. Smart systems can even require task completion, ensuring process consistency and thoroughness.
2. ERP with financial and operational data
With integrated ERP software or an accounting and financial management system, managing inventory data does not become a task, it is automated. Data is updated throughout the inventory management lifecycle as it flows through each stage, making visibility and reporting nearly effortless.
Collaboration also becomes effortless as all teams operate from one source of truth. From scanning the barcodes at receipt, to printing the shipping labels as the orders go out the door, inventory counts and statuses are automatically updated. Now Sales knows how much is in stock to avoid over promising. Accounting knows if there are any discrepancies with a purchase order, and with certain shipping systems customers have visibility as to the status of their shipped order.
A cloud-based ERP provides secure, anywhere anytime access to your inventory data, enabling business to proceed regardless of where, in many cases, an inquiry or report needs to happen.
If you are a small or medium sized business, you want to avoid making things complex by automating them. An easy-to-use ERP with inventory management and inventory automation for light warehouse automation and kitting needs should meet both your digital transformation and process improvement objectives.
3. Active, real-time inventory management
In a recent survey from BDO, Chief Financial Officers (CFOs) from mid-market companies consider accurate demand and inventory management as a chief supply chain priority. Additionally, a top strategy for 2022 is digital transformation.
As inventory directly impacts your cost of goods sold (COGS), which in turn impacts your profits, it’s imperative you trust your inventory numbers. This is where automation changes the game. Inventory is received, Sales generate orders which generate inventory transactions or fulfillment, all culminating into a shipment. Inventory counts and their status change and having visibility into this helps you be a more agile company as you can prioritize orders and better manage inventory carrying costs among other tactics.
Say goodbye to weekend inventory counting “parties” and the doughnuts and pizza that accompanied these all-hands events. (As a high-school grocery store worker – I thought they were a lot of fun.) Inventory automation, or incorporating barcoding and scanning into your warehouse, brings regularity into cycle counting and cuts the fear of a massive inventory write-off shock.
If you are ready to commit to simplifying inventory management for your small or midsized business, check out our datasheet on inventory control for a glance of right sized inventory software that ties to your financials and to see how barcode scanning can bring you the right level of inventory automation.
Inventory Management Data Sheet: The Right Items in the Right Place at the Right Time