Long Business Systems, Inc. Identifies Four Ways to Identify a Great Inventory Management System
Industry: Computer Software/Services
This post describes why a modern ERP system, such as SAP Business One, is ideal for inventory management.
Cleveland, Ohio (PRUnderground) May 1st, 2017
There are many systems small and midsized businesses use to manage inventory, but only those using an ideal system with broad functionality and industry-specific depth can gain consistent competitive advantage and enhanced profitability from their system.
#1: Fulfillment Rate Insights
Distribution businesses are all about fulfilling customer orders, so if your distribution system is holding you back from fulfilling both predictable and one-off orders quickly and cost-effectively, you’re at risk. At a basic level, your ERP system should provide you with extremely accurate data regarding your fulfillment rates, both at a high level and a product-specific level. A great ERP system takes your customer centricity further by offering real-time inventory visibility to ensure your ongoing ability to fulfill orders.
Visibility shouldn’t be limited to knowing what you have in your warehouse(s) – it should encompass everything you need to know. SAP Business One gives quantity details and adjust them in real time based on multiple, constantly changing data points, such as the inventory quantity already committed to other customers, the volume and arrival date of purchased items, and the already-existing production orders and their associated item quantity requirements. In other words, a great ERP system provides a 360-degree view of a standard inventory report. This helps you plan better because your inventory knowledge is ‘real’ and not conceptual.
#2: Accurately Forecasted Inventory Needs
Traditional ERP systems allow you to see historical inventory usage and perform basic order roll-ups to forecast inventory needs. A modern ERP system moves your company from historical views to predictive analytics that paint the real picture far more accurately. You can predict demand based on forecast calculations around individual products, going so far as to include each product’s financial metrics to help your planners decide which items to prioritize. You can also input various business scenarios; SAP Business One will forecast the inventory needs to satisfy them, keeping inventory costs down and fulfillment rates up.
#3: Better Cash Flow Management
Cash is the lifeblood of most businesses. While traditional ERP allowed for monitoring cash flows and setting up payments, Business One takes the critical process further. Now your company can forecast cash flow by accounting for multiple items simultaneously, including cash on hand, cash after executed transaction, projected postings, journal vouchers, and recurring postings. Modern ERP also enables you to single out large, customized transactions over specified time periods so you can make special arrangements with customers, partners, and suppliers.
#4: Profitability Metrics around Parts
Modern ERP systems has taken a giant leap forward in determining which parts you should use, order, and leverage in up-sell or cross-sell situations. Much of this is due to ERP’s ability to link part numbers with pricing. While two parts may be acceptable substitutes for each other, it’s unlikely that you should always substitute one for the other; by linking individual parts with their pricing and stock part numbers, you can decide on a case-by-case basis or establish parameters for such substitutions.
What’s the current price of a new part? When, in terms of dates or volume, will suppliers offer discounts? How valuable are certain parts to other forecasted orders? Having solid answers to these questions helps you decide whether to fulfill new orders from stock or to purchase new ones. Modern ERP provides material re-evaluation functionality so you can select your part and product inventory/purchase mix in ways that maximize profits, even if markets change rapidly.
ERP systems have helped many small and midsized business organize their financials and perform basic inventory management. Today, with a system like SAP Business One you can move beyond the basics and have a system that moves your business forward in ways you never thought possible.
At LBSi, we know that modern ERP systems are turning small and midsized businesses into agile and lean industry leaders. Contact us today to learn how your company can do the same with SAP Business One.
About Long Business Systems, Inc.
You want a partner that will help you apply technology to solve the challenges that today’s fast-paced global marketplace has created. We understand and have personal experience with the diverse demands that manufacturers, distributors and service organizations face.
Our clients keep pace with large global companies by applying affordable technology to streamline operations, act on timely information, and accelerate profitable growth. Let us help you intelligently apply technology to your business challenges.
LBSi has been helping clients with technology and business process improvement since 1989.