How can ERP software help you master inventory management?

Inventory management is often the key to profitability for small and medium-sized businesses. Despite all your efforts to manage your stocks well, you may have already experienced a shortage of certain items or, on the contrary, too many other products, which then caused a storage space problem. Every business that relies on the sale of physical products experiences challenges in terms of inventory management at one time or another.

If profitability is the ultimate goal of any good inventory management, credibility with your customers is also at stake if your products are regularly in short supply. Today, customers quickly have the possibility of finding an identical or equivalent product from your competitors. If your product is considered essential by your customer. it is missing from your inventory, there is no doubt that he will buy it elsewhere, even if it is more expensive. ERP software can solve all the problems related to inventory management and allow you to have control over the goods that come in and go out of your warehouses.

What is Inventory Management?

Before we go any further into how ERP software could help you maintain a thorough grasp of inventory management , let’s recap what exactly inventory management is. Depending on the type of business you operate and the products sold, there are 3 types of products to store:

• the raw materials , which serve as the basis for the preparation of your products and which you must not miss in any case at the risk of breaking the production chain;
• semi-finished products , which can come from your production lines or from your suppliers
• finished products that you manufacture or that you store while waiting to be sold.

Inventory

The important thing is always to keep the right quantity of products according to your volume of business. Good inventory management requires first and foremost a thorough knowledge of the quantities needed to manage your business. ERP software will allow you to avoid out of stock or a surplus of products which will lead to significant storage costs . This is called optimal stock: thanks to the forecasting and planning tools offered by ERP software, you are able to keep control and balance of your product inventory .

There are several methods of inventory valuation. The ABC method is one of the best known. It consists in categorizing the products according to their order of importance: products A are products of greater value for the company than products B and C. According to Pareto’s law, type A products generate 80% of results over 20% of quantity in stock. Another popular method in inventory management is FIFO, First In First Out, or FIFO. This method, as its name suggests, allows for optimal stock rotation. It is often used by food companies to reduce losses of perishable products. Other methods of inventory management exist and are chosen depending on the nature of the company’s activities. Drop Shipping has had its heyday in recent years. Another, more traditional method is periodic replenishment, which consists of ordering quantities pre-established by a delivery schedule.

Why use ERP software to master inventory management?

In fact, ERP software is like a real executive assistant that will allow you to master inventory management. Concretely, the implementation of an ERP software in your company will support you in the implementation of processes by which you will quickly achieve your profitability objectives.

Here is a non-exhaustive list of results you can expect from good ERP software.

Reason #1 to use an ERP for inventory management : global view of the situation at all times

Inventory management with ERP software gives you an accurate and always up-to-date view of your inventory. Let it be said, the days closed for inventory are from another time. You don’t have to wait until the end of your fiscal year to know exactly what you have in your warehouses. The ERP software gives you the quantities of each product, their location in real time. You are able to anticipate the items that are to be ordered or to make commercial decisions to destock a product in excess.

Reason #2 to use an ERP for inventory management : simplify the methods of managing your inventory

ERP software adapts to the inventory management method you have chosen. Whether you count your goods with the ABC method, or with the PEPS method, this IT tool adapts to your management. You don’t have to bend to your software, this tool is at your service.

Reason #3 to use an ERP for inventory management : improve employee efficiency

Good inventory management improves the work of your employees, but also the quality of customer service. Currently, what about the time your employees spend researching the location or quantity of products in stock? Do you hear phrases like “This item is marked in stock, but I can’t find it in the warehouse”? With ERP software, your employees share the same stock status information as you do. The inventory is available on different platforms: desktop, cell or tablet. Access to data is secure, regardless of the device used. You just need to equip your employees with the right technology to make their research profitable.

Reason #4 to use an ERP for inventory management : reduce waste

Non-Value Added (NVA) operations are numerous in inventory management processes. By keeping control of stocks thanks to ERP software, you drastically reduce NVA operations. This type of management is part of a continuous improvement approach to reduce waste, loss of time and resources. These are small changes in habits and operations that can have very positive consequences on your financial profitability and on the management of your human resources.

The different types of ERP software to improve inventory management

Today, there are two major types of ERP software available on the market:

• on-premise ERP software, also called on-premise ERP software
• ERP software in SaaS

On-premises ERP software

On-premises software, as the name suggests, is software that you purchase once and install on your organization’s servers. Purchasing a site license allows all users to use the ERP software indefinitely. This is the most advantageous solution if you plan to use your software for the long term. However, you must take into account the maintenance costs related to the maintenance of your servers.

SaaS ERP Software

Currently, ERP software in SaaS is widespread in small and medium-sized businesses. We call software in SaaS, for Software as a Service, software that you buy as a service. The price is determined in the form of a subscription payable per month and according to the number of users. This is a very advantageous solution for teams with smaller staff, because the investment is less than buying on-premise software. In addition, you ensure that you have an always up-to-date IT solution by avoiding the headache of maintaining your internal servers.

Whether you opt for an on-site ERP software solution or SaaS, inventory management cannot be left to chance!

Contact Dynamics Square to master your stock management

In short, therefore, ERP software proves to be the essential element of a winning company. Through their organization and their ability to improve inventory management, they provide companies with the appropriate solutions to control their Dynamics 365 supply chain management. In short, an exceptional way to ration a process that was once not very rational for results-oriented business leaders.

If you would like to know more about how ERP software can help you improve inventory management and thus achieve better profitability, you can consult one of our ERP or CRM software experts to ask them all the questions relating to your inventory management.