Inventory Management Gets Some TLC from ERP


Manufacturers, distributors, retailers and other companies that carry inventory seek to expand just like businesses in the service economy. But in a seemingly counteractive focus, they consistently look to optimize inventory and the processes around it, thereby reducing the risk associated with having a glut of goods on hand.

There are ways to do both—grow the business and shrink the stock (or at least the life of it on your shelves)—without losing opportunities to increase your customer base and/or product line. The balance is hard to find. Fortunately, there are software solutions that can help, and they likely already are in wide use inside your organization. In fact, you may have adopted enterprise resource planning software specifically to reduce inventory, thus funding the ERP investment.

An ERP solution addresses the two basic parts of inventory management—real-time inventory monitoring and automated replenishment (or at least automated triggers to re-order). The first part is accomplished not only with up-to-the-minute inventory counts—subtractions for orders and fulfillment, and additions for products completed or received—but inventory across locations, lot tracking, inventory expiration, first-in-first-out or last-in-first-out fulfillment, inventory valuation and more.

The replenishment piece can be computerized and in fact is inherent in many inventory management software products. Material usage statistics and re-order lead time data is combined to recommend replenishment so as to prevent demand disruption (and expediting charges) but not so early as to increase your financial or other operations burden.

The maximum benefit of an inventory management solution comes from the intelligence built into the back end, elevating the mechanics of keeping count from an Excel spreadsheet to a part of a predictive model that reduces production uncertainty, lost business and the budgets established to make up for mistakes. Integrating inventory tracking with enterprise-wide operations in an ERP solution eliminates much of the error that comes from manual counts and data entry, poor calculations, outdated price sheets, etc.

Still, success depends on your staff. Fulfillment folks must account for the inventory they move to the shop floor or the shipping dock. Purchasing needs to link your ERP with suppliers’ sales sheets and catalogs. Sales needs to keep pipeline data current to support inventory accuracy.


For more information on inventory control via a software solution, read our white paper “Four Strategies for Smarter Inventory Control.”