Balancing Inventory Management against Conflicting Demands
Have you ever felt like you’re in the middle of a tug-of-war? That’s how many inventory managers feel. On the one hand, the sales department wants you to keep plenty of products in stock in order to fill any orders that come in as quickly as possible. On the other hand, the finance and accounting departments want to control costs, and ask that you reduce inventory to the lowest possible level to keep costs contained. In the middle of all this you’re trying to keep a warehouse running.
Inventory management is the fulcrum in the middle of the seesaw, the flag in the center of the tug of war rope. You’re always going to feel the pull from one side or the other. Balancing the needs of the sales team, who keep customers at the center of what they do, against the needs of the company, which tries to reduce costs, will always be part of the job. But fortunately, there are tools to help you make the most of what could become a frustrating situation.
Inventory, the Biggest Asset on a Company Balance Sheet
Although you want to help the sales team keep customers happy, there’s something you know that they may not: Inventory is the biggest asset on the company’s balance sheet.
No matter how well you manage the inventory for your company, it will always sink a great deal of cash into inventory. That’s why managing inventory levels as carefully as you can, balancing supply and demand, is a delicate operation. Swing too far one way, and you run out of products to satisfy customer demand. Swing too far the other way, and the company produces too many goods, which ties up a lot of cash assets. It’s a tough call.
The Solution: ERP Solutions for Analyzing and Forecasting
The best way to balance that seesaw is to use data for analysis and forecasting. Based on past sales history, you can better predict future orders. This enables warehouse managers to more tightly control their inventory.
A good ERP system can analyze and synthesize multiple data sources, creating a graphical display of sales patterns. This helps you spot seasonal shifts, downturns, and upticks that change how you manage inventory. Patterns surrounding large customer orders, for example, enable you to predict when such orders may occur and trigger production increases.
Certain systems, such as Sage EM (formerly known as Sage X3) and Sage 300cloud (formerly known as Sage 300), work well with inventory management solutions. These solutions can help you more tightly regulate and control the flow of inventory and orders to contain costs and keep stock levels consistent. Sage Inventory Advisor helps prevent out-of-stock issues, improves fill rates, reduces carrying costs, and more.
Other Resources for Smart Inventory Management
Improving data entry of item barcodes and stock reports can also be a big help. Reducing mistakes through automation, taking frequent inventory, and updating data ensures that you know exactly what you’ve got to work within your warehouse at any given moment.
Learn More about Inventory Management Best Practices: Download Our Free Whitepaper
At IWI Consulting Group, we strive to help businesses become more efficient and more effective through data resources that can help you manage and plan business operations. This month, we’re offering a free whitepaper entitled, “Better Inventory Management: Big Challenges, Big Data, Emerging Solutions.”
In this paper, you will learn about solutions to help you manage inventory operations to reduce costs and maximize supply levels for optimal order fulfillment and customer service. We know you have big challenges. We offer big solutions to meet those challenges and grow your business.
Download the whitepaper today.
IWI Consulting Group helps Canadian businesses and non-profits adopt the best enterprise resource planning (ERP) solutions for their needs. We invite you to contact us today for a consultation or call 1-866-916-3851.