TOP Critical Inventory Management Сhallenges for Trading and Manufacturing Companies

TOP Critical Inventory Management Сhallenges for Trading and Manufacturing Companies

29.11.2021
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Inventory management in trading and production companies is quite challenging - you always have to be aware of the current information about your warehouse and know what exactly you have to purchase, to receive, or prepare for shipping.

It is obvious, that lack of detailed and well-analysed statistics of the purchased goods and materials may lead to inefficient business. Situations like not sold goods lying on the stock may become your loss if considering the long-term financial statements.

Today there are lots of different accounting systems offering warehouse management, but most of these wms can’t provide detailed information about your inventory in stock such as colours, sizes, expiry dates, and serial numbers. So, most commonly the data that you can get from the wms software is the quantity of a specific item and the cost of a specific item. To reveal proper information such as colours, sizes, and expiry dates of some specific inventory, the warehouse staff often rely on the stock management in excel sheets. 

 And, despite the fact, that excel sheets may seem to be simple and rather appropriate for warehouse management, this particular approach has disadvantages, which we’ve indicated.The first one is access level control, as there are no tools how you can limit the access of specific people to excel sheets. In case if you are running the inventory stock ledgers all the information about the cost will be transparent, which is not correct.

The second major challenge in excel management is the access ability. Almost every person can go to google sheets or excel sheets just copy any information and bring it out of the company for any purposes.

Furthermore, there is a very basic control of the previous period. The data can be edited by anyone at any time. Some numbers or indicators of the previous period can be changed, which can affect all historical data till today. Moreover, that can be done with the previous year and reflect all the ledgers in excel.

One more problem with excel is that multiple people working in a single excel sheet may cause inconveniences. If there is a simultaneous work of two people with the data of one inventory, that will cause an error which may create a problem in the future period.If we are talking about inventory control in trading companies and production companies they are constantly within the limits of sales plan or any demands based on the previous period sales. To run successfully, they have to purchase a sufficient quantity of the inventory. The production companies should take into consideration the correct inventory control. They should be aware of the minimum stock levels, production orders, or sales orders just to be able to produce a certain quantity of finished goods required to satisfy some specific demand.And right here the inventory software of ERP becomes essential for the trading companies and production companies. Sure, different systems can provide stock control, Tally inventory management, or Quickbooks inventory management, but in comparison with them, the First BIT ERP system provides customized integration with barcode scanners, label printers, PDAs, and other devices according to your business tasks.

And undoubtedly, the benefits of this integration in comparison with the stock management in excel sheets are absolutely clear. The reasons for that are mentioned below.

The great advantage is that the ERP system can give you transparency for clear stock management of your warehouse, stores management as well. This inventory management system can provide multiple people working with multiple locations. So, you can notify certain people about receiving the inventory.

 If you want to upgrade the inventory control in your warehouse, firstly, you should use the best inventory management software for on-time notifying all the staff on receiving the inventory. As an example, when the salesmen are aware of the right inventory stock or absence on the stock by some pop-up notification, they can proceed with faster work. With such fast stock control, the staff can proceed with requesting payment from the customer or creating a request for shipment and delivery, inventory reservations.

So, the ERP system is a management system where you can create certain conditions based on which inventory will be in your warehouse, what will be reserved for a specific sales order or a specific production order. Also, salespeople can create reserves or can request inventory reserves in a warehouse based on certain conditions. 

In case if we are expecting to get an advanced payment in 3 days for a certain inventory, so this inventory will be reserved. And if the payment doesn’t come, this reservation of a certain inventory will be cancelled by the system. This warehouse management software covers your requirements, according to your business flow. That can provide full warehouse control.Another important inventory management tool of ERP is the ability to be integrated with barcode inventory systems and other warehouse devices. With the help of such devices as label printers, bar code scanners, data collectors you may reduce the number of errors in receiving inventory, in shipping out the inventory, or in inventory transfers between locations or departments.

If you are using the barcodes from the supplier or you want to print out your system-generated barcodes you can introduce an efficient system for your warehouse staff. Such inventory management solution gives the ability to see what exactly the warehouse employees are scanning in real-time, if they are scanning the correct item for shipping or not correct, therefore reducing errors and returns.

The benefit of such warehouse inventory management is obvious because you hardly want to experience situations when a specific item reserved by one customer, will be bought and shipped to another customer. That may lead to returning of the inventory, errors in the wms system, and undermine the reputation of your company.

Another important point in the ERP system is that in the Inventory management module there is a facility to create different areas and zones in the warehouse to streamline the process. So, it allows the work to be more efficient and transparent whenever they are making shipments or receiving the inventory. If you are working remotely it gives you an opportunity for online inventory management. You can analyse the inventory movement and determine in which areas you want to store definite types of inventory.  Additionally, successful inventory management will help to simplify hiring and training new warehouse staff. In case if you have the stock control system, which shows the exact location of specific inventory items in the warehouse they don’t have to memorize the information. The human factor decreases significantly. So even not proficient employees will not interrupt the process of sales, receiving, or shipping of the inventory.

Another crucial tool in the stock management software is the integration with such equipment as data collectors. That provides great inventory management solutions for trading and manufacturing companies. It is known that taking stock reconciliation and stock counting takes much time and causes many errors. Moreover, business interruption comes at the time of each stocktaking, so the warehouse gets non-operational for normal business, like shipping or receiving. However, with PDA, you can continue your operations without any interruptions.

In terms of Inventory management in the ERP system, the important thing is traceability, as expiring dates tracking is urgent. The inventory system with expiry dates controls has certain sales conditions based on time limits. The inventory control system will help you to sell all goods with close expiry dates on time. If your company is dealing with serialized inventory or you are providing warranty services on what you are selling, it is crucial to be able to track each serial number that you receive. Starting from receiving from a supplier and ending up with the after-sales support.In a proper inventory management system document turnover is significant as well. Every transaction of the serial number should be available in the online management system in case of any situation like service repairing or sales.

 With the module of Inventory management in the present ERP system, you will be able to minimize losses on expired goods. As well, you will be able to optimize the warranties for your inventories. 
If you are dealing with manufacturing, so in terms of inventory control for the production it is important to have a quality assurance process of every step. And it is obvious that you want to make notes about every stage of your production and you want to see the specific finished item.

Such type of control foresees notes about parameters of the quality, deadline for finishing, additional notes according to your requirements. For your control, you may include information about raw materials, when it is on the first stage of production when it’s finished when it’s time for shipment. So, all this information should be saved and be available in one click for you in the warehouse management system. This type of inventory management software contributes to the efficient result.

If talking about managing returns in production companies it is important to be able to understand why a specific item was returned. And here comes proper analyses of the production process. To make decisions and choose a better supplier for an item or exchange some raw material or make changes to your manufacturing process you will rely on your statistics taken from the inventory management software.

And one more important point to discuss if talking about trading companies is inventory transfer to consignment. In inventory management control, you should always take into account that, when transferring inventory to consignment to a third party, this inventory is technically your inventory till the time they will sell it or return it to you. So, you have to understand once you transfer it to the third party, you have to be able to see the value and quantity of the inventory which is currently with the specific consignee. Report control is extremely important in this process. This way of inventory management is supported by the ERP system in the Inventory management module.

So, to summarize the above mentioned points, the FirstBIT ERP system can provide warehouse management control, including extremely important tools to make the business for trading industry distribution, and for manufacturing companies successful and more efficient. This software gives online transparency and the ability to forecast different scenarios.


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