Have you ever heard an idea and thought, “Why didn’t I think of that?” When it comes to inventory management, many great ideas are plain common sense.
Sure, there are some who like to make warehouse management into a complicated thing. They use mathematical formulas to calculate how quickly you should move freight or how fast your receiving area should be cleared. All well and good, and maybe even helpful. But it’s usually the old-timers on your team, those who have been with the company the longest, who can offer common sense wisdom that saves the day.
Common sense, combined with an enterprise resource planning (ERP) system, provides the best combination of ideas and data to help your company grow. With a good ERP system, you can use the data and reports from the system to derive insights about profitability, improving production, and staffing for growth that will help your company remain competitive and profitable.
Inventory Management Rules of the Game
- Accurate data is needed for accurate forecasting. Your forecasts are only going to be a good as the data feeding them. An ERP system such as Sage 100 can take the guesswork out of forecasting inventory needs. Mobile, cloud-based ERP systems can track real-time data and update systems accordingly. With accurate data, you can make better forecasts.
- Make what you can sell. Years ago, manufacturing companies produces as many goods as they could and hoped they sold them. If you do that today, you’ll be bankrupt before you finish reading this article. Only make what you can reasonably sell in a given time frame, such as quarterly or annually. Overproduction uses valuable resources and costs you It sinks liquid capital into goods that decrease in value over time. Be cautious about production quotas and scale them according to sales forecasts.
- What you can’t sell, you shouldn’t make. Here’s where the data from your ERP system comes in handy. If you can make accurate predictions and forecasts based on last year’s data, you have a better chance of making only what you can reasonably sell. You can then change production over to other in-demand goods and stop making what you can’t sell.
- Unsold inventory does not improve with age. Some things improve and increase in value over time. Wine, for example, can improve with age and increase in value. Unsold inventory does not. It ages badly, rather like milk. When your liquid capital is tied up in unsold inventory, you’re going to spend more time and money on sales and marketing, which uses up capital too. It’s a losing proposition. Managing inventory is of primary concern to any manufacturing company. The better you can manage your inventory, the better you will be at increasing profits.
An ERP system provides you with the data that you need to predict sales, manage inventory, and produce goods in quantities most likely to sell. Isn’t it time you added an ERP to your company’s business systems?
ERP Software with ASI
Accounting Systems Incorporated (ASI) provides ERP, accounting, and other software and systems to help your company grow. We focus on helping small to mid-sized companies improve operational efficiencies through the power of software and technology. Software such as Sage 100 and Acumatica ERP can provide the business intelligence you need to grow your company. For more information, visit our website, or call us at 803-252-6154