Being a custom manufacturer means that you need a lot of different parts and pieces to build your products. And as a small business, you might not have the capital — or space — to buy large amounts of raw goods in advance. Inventory management is a string of processes. It ensures that a manufacturing enterprise has the appropriate materials in the right quantity to complete the manufacturing process. One of the biggest challenges that SME manufacturers face is regarding how to streamline inventory management. Fixing it right can make it or break it for your business.
Keeping inventory is a major headache for every business. There is usually a delay in fulfilling demand. This is because of the occasional overstock that takes up unnecessary space or shortage. Product inventory mainly consists of the products, which are produced through the manufacturing process cycle. It also includes how they are delivered/transported to the customers.
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Usually, manufacturers waste a lot of resources and energy in solving production and storage issues. But it only contributes to 30% in the process of optimizing inventory management. Following are the role-wise contribution of different departments :
- Purchase - 30%
- Sales - 20%
- Design (BOM) - 20%
- Stores - 15%
- Production - 15%
Businesses can easily solve the transactional processes instead of solving the production process. It will help them way more in solving inventory problems. With raw material stored all over the place, it's difficult to keep track of inventory. This is specifically true if one is using outdated systems like Excel. But with the right digital transformation tool which posses the qualities of both inventory management software and ERP platform like TranZact you can keep everything organized. It gives you real-time updates on your inventory and alerts you when there is a shortage.
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Cloud-Based Platform To Streamline Inventory Management
One system/platform will contain all the inventory data. It will enable businesses to control their logistics, operations, finance, and inventory from a singular system. It will also be reducing errors and improving efficiency. Automated inventory management software can easily keep track of your inventory and perform processes in less time. Having real-time updates on your inventory can help you avoid mistakes of underselling or overselling your stock.
Inventory is all about having what the customer wants when they need it. You can avoid issues like overselling by centralizing all of your inventory. Keeping track of your inventory from one location will help you deliver the best customer experience.
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Design (Bill of Materials)
Using an ERP alternative to create and manage your BOM makes the procurement of parts easy. During the design phase, your engineering department will be busy at work designing and engineering a new product. Your procurement team will have easy access to the EBOM( engineering bill of materials) at this time. This will help them to discover important long-lead items. Thus orders can be placed early, giving you time to get your hands on these parts before production begins.
The product automatically links to one system since everything is managed in one system. Thus the purchasing department always knows what is needed, and what is already sitting on your shelves, ready for production. Accurate knowledge on how much time a task will take also comes with better planning. This also allows your sales team to cost up jobs and orders more effectively. Thus the company will make more profit overall. That’s why it’s worth including some of the sales team in the BoM creation.
Minimum and Maximum Inventory Levels
You can simply set limits that represent a maximum amount and minimum inventory amount. When your stock of a certain product reaches the minimum level the system will give you an alert to reorder. Also, you can’t order more than the maximum limit. This helps to make the production process smooth and efficient. Thus it will help you streamline inventory management.
Inventory is kept accurate by implementing an integrated inventory management software system. Thus decision-making is data-driven. Thus planning is effective and synergy arises between all departments.
Threats to reputation like bad or inappropriate business practices, theft, fraud, and collusion are also kept to a minimum. This means that your people can invest their time and energy towards actually growing and enhancing your business. You can also focus on how you can improve customer experience.
Material Resource Planning
Material requirements planning (MRP) is a planning and control system for inventory, production, and scheduling. Doing it in one platform synchronizes the flow of materials, components, and parts in a phased order system, considering the production schedule. It also combines and tracks hundreds of variables, including Purchase orders, Sales orders, Shortage of materials, Expedited orders, Due dates, Forecasts, Marketplace demand, Material, Inventory, and Data. Having an MRP in place allows manufacturers to keep up with increasing demand. Therefore helps them to be streamlined and efficient in many of their processes.
You can reduce manual labor by automating and streamlining processes, using platforms like TranZact. It goes hand-in-hand with growing a business. Digital solutions let you collect better quality data, which gives you insights into your business. Thus you can track your business performance and plan for growth.
Remember that when you streamline the inventory management process in place, you can help reduce costs, keep your business profitable, analyze sales patterns and predict future sales, and prepare the business for the unexpected. It’s time to take control of your inventory management and stop losing money. Choose the right inventory management techniques for your business, and start implementing them today.