Inventory Management – Challenges and Solution

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Every organization irrespective of manufacturing, retail, or service industry, needs to keep inventory either in the form of raw material, finished goods, repair material, or consumables which is vital for the seamless functioning of the business. Inventory becomes vital especially for manufacturing and retail for the continuous functioning of the business. In the absence of effective inventory management production and delivery are delayed leading to customer discontent. In retail, ‘Out of Stock’ or late deliveries can lead to customers moving away and loss of business.

As businesses scale up, Inventory Planning becomes a very important and indispensable part of supply chain management. It ensures timely availability of raw material, finished or semi-finished goods.

Businesses need to maintain inventory at optimum levels to meet customer requirements. Maintaining the right product at the right time becomes the key to success. Inventory management requires to address these aspects of the inventory process flow.

1. Procurement:

Organizations need to procure inventory based on requirements and past experiences without overstocking or understocking to run the business smoothly. Inventory procurement requires capital to be blocked so the procurement should be at optimum inventory levels to maintain favorable cash flow levels.

2. Storage:

Inventory needs to be stored which again requires businesses to spend on storage, lighting, and sometimes refrigeration. Here again, optimum inventory needs to be maintained to utilize the available space. Care also needs to be taken about product expiry and perishable goods.

3. Forecasting:

Inventories that are high in demand need to be ordered before they are actually needed so businesses need to forecast inventory requirements in the near future and accordingly procure and make arrangements to store. Thus forecast becomes a vital aspect of the inventory process flow. Each hour a production unit stays idle because of unavailable raw material is a huge loss. Similarly, in retail turning away a customer due to unavailability of stock is not desirable.

4. Re-ordering:

Businesses need to replenish their high-selling products to meet up customer demand. In organizations where there is a large number of products, it can become really difficult to re-order products on time in the absence of effective Inventory Management Planning.

5. Tracking:

Another important aspect of inventory process flow is tracking. Many times inventory goes missing, damaged, or stolen because organizations cannot keep track of their inventory. For example, inventory can be sent to a vendor for some value addition or can be kept at a place and forgotten. Hence, tracking the inventory becomes very vital for effective Inventory Management. A lot of businesses today have multiple sales channels and tracking inventory at each sales channel without a robust Inventory Management system can be disastrous.

The Solution

The ERP solution provided by Enspire Solutions, addresses all the important aspects of Inventory Management right from forecasting to procurement, tracking, storage, and finally re-ordering. It automates the entire process flow thereby minimizing errors. The system generates an automated reservation of inventory right from a sales order or creates a purchase requirement if needed. It helps inventory managers identify high-selling products and forecast the expected requirement based on real numbers and not guesswork. It can also create re-orders based on pre-set rules ensuring ready availability of inventory across all sales channels. It can also track inventory to a very specific location thereby, giving precise inventory positions. It helps negotiate prices with vendors by referring to past purchase rates.

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