Inventory management is a key factor in the success of any business. It is the process of planning, acquiring and storing goods and materials that are needed to run a business.
A company’s inventory should be managed in order to ensure that it has enough stock, but not too much. Inventory management software helps businesses track their inventories and make sure they do not run out of products or materials.
Below, we look at different types of inventories that should migrate to an effective inventory management system:
1. Raw Materials Inventory Management
Inventory is any material or items that are kept on hand, or in storage, for future use. The term may refer to raw materials, work-in-process inventory, finished goods and/or materials used in the manufacturing process.
Inventory is a very important aspect of a business because it can be a source of cash flow and it can be used to make money by selling the inventory at a higher price than what was paid for it. Inventory management is an essential part of running any business, and it’s important therefore to use an appropriate inventory management platform to track, manage and store raw materials inventory.
2. Maintenance, Repair and Operations Inventory Management
Maintenance, repair, and operations (MRO) goods are those which are used as part of a manufacturing supply chain. They are the essential items that a business needs as part of its day-to-day production operations, including things such as PPE and safety equipment, parts and manufacturing equipment, cleaning supplies, and batteries.
Many businesses overlook MRO stock as part of their inventory management strategy. But it’s important to remember that such goods may play a vital role in everyday operations, aiding personnel in all aspects of the manufacturing cycle. Such items will also need to be stored, logged, and ordered in an effective, timely way, so as to avoid overstocking or wastage.
3. Work-in-Progress Inventory Management
Work-in-progress inventory refers to the goods that are no longer in their raw-material state, and aren’t yet ready for sale. Examples of this include a car that hasn’t yet had its engine installed or a scented candle without a wick.
WIP stock is easy to overlook because it’s often part of a complex production cycle, whereby goods are moving through various manufacturing stages. A modern cloud ERP software can help monitor such stock with real-time tracking and smart inventory management controls.
4. Packing Materials Inventory Management
Packing materials inventory refers to all the items required as part of logistics, warehousing, and delivery operations. It includes goods and materials that are used for both shipping items to customers and as a means of protecting stock in the warehouse – think boxes, packaging, paper, bags, and bubble wrap.
As with MRO stock, packing materials are regularly left out of a formal inventory management strategy. But, just as with Personal Productive Equipment (PPE) and cleaning goods, packing materials are an essential part of day-to-day operations and need to be accounted for particularly if you want fiscal reports, cost of goods, and turnover to be as accurate as possible.
Essential Elements of an Accurate Inventory Management Software
Managing inventory may seem straightforward. But with lots of moving parts and a cash flow to maintain, it’s a business function that requires commitment, investment, and a considered approach.
Below are four essential elements that accurate inventory management software System must have. These things can be applied to all types of inventories, whether that’s raw materials or MRO.
1. Stock Prioritize: Some stock will fly off shelves while other items sell more slowly. Prioritizing your inventory will help you order the materials and goods you need to retain cash fluidity.
2. Product Tracking: Tracking product information throughout a supply chain is fundamental to effective inventory management. Cloud ERP software can facilitate accurate batch tracking, which is useful for grouping inventory items by barcode, lot number, and country of origin.
3. Inventory Auditing: Regularly auditing your inventory is a powerful way to avoid common management issues such as under- or over-stocking, or product tracking inaccuracies. Performing regular stock checks is essential throughout the supply chain, reducing the likelihood of problems and backlogs further down the line.
4. Easy analysis of an SCM operation: However tightly you shopping mode control your inventory, inefficiencies, delays, or inaccuracies within the wider supply chain can have a negative impact on day-to-day operations. That’s why it’s critical to periodically analyze and review the performance of your supply chain: what works and what doesn’t. And do any of your suppliers regularly cause problems (late deliveries, missing items) that have a knock-on effect within your organization?