Any manufacturing business will have the following three types of inventory:-
- Raw materials
- Work in progress
- Finished goods
What is the need for inventory management solutions?
Inventory in manufacturing organizations forms a very high percentage of their capital (50%-70%).
This justifies the need for inventory management.
Present day inventory management solutions have significantly reduced the commitment required to efficiently monitor and manage inventory.
Now, in the 21st century, these systems have evolved from complex, skill-specific technologies into easy-to-use, automated programs that virtually any employee can be trained to use. In fact, modern inventory management solutions are so efficient and accurate that they actually allow companies to take a step back and focus on other important business-related tasks.
As internet and cloud based technologies continue to evolve, it will be interesting to see where the industry goes and how existing solutions become even more sophisticated and streamlined.
Image of warehouse inventory
The Benefits of inventory management solutions:
- It increases efficiency
Without organized inventory management, you are paying your employees to dig through files or check with the ware house frequently your employees will be happy that they focus on more valuable tasks, and you will be happy because everything you need to know about your business will be easily accessible.
- Stronger Customer Service
In crowded marketplaces, strong customer service is one of the biggest selling points a company can offer to clients. By efficiently handling orders and accurately delivering goods in a timely manner, you can show existing customers that you’re worthy of their business. In the end, you’ll enjoy lots or repeat business and may even pick up a few referrals along the way.
- Streamlined Work Orders
You can ensure that all orders are visible in a digital format, thus helping you prioritize and schedule smartly. You can also choose or build a system that automatically schedules and follows up on orders, using a predetermined set of parameters and methods.
- Firm Inventory Control & Compliance
Combining the solution with RFID, barcode or wireless instruments makes it very easy to track various types of inventories at different levels.
- Production Planning
You can create better production plans with all data at your fingertips.
- Forecast Requirements
You will have a clear view of the demand for finished goods. This will help you forecast for raw materials better. Reliable forecast helps you streamline the entire raw material procurement and production process. This will save time and cost.
- Master Scheduling
You will be able to do master scheduling with ease. Since most of the tasks will be automated, you can maintain optimum inventory and can improve production planning.
- Resource planning
You can rationalize and speed up information flow across the organization. This, in turn, helps ensure the availability of necessary resources and enables you to authenticate the production plan before you create a detailed Manufacturing Resource Planning.
- Material Requirements Planning
You can do Materials planning better and ensure that you never run out of raw materials. By integrating the solution with other software, you can automate most part of the process, including purchasing and production
- Capacity Requirement Planning
You will be able to achieve production deadlines more accurately.
Once the manufacturing order is generated, the system matches planned requirements with capacity and works out the feasibility
To know more on the importance of inventory management, the book titled “The Goal”, by Eliyahu M Goldratt will be useful.
This book is written in the style of a business novel.