In the manufacturing industry, effective inventory control and management is crucial to meet customer demands, all while controlling production costs.
At its core, raw and finished goods supply and stocking is just a process you need to determine what you have in your warehouse so that you can perform inventory evaluation. Here you also need to implement inventory control and management procedures. But, remember. Not all of them are favorable for every type and size of business or for varying phases of your company’s development and growth.
Often some processes are quite complex to handle, especially for small-scale businesses – they might not afford these methods. So, you must know about the systems you can make the best use of for tracking your inventory levels, maintaining the stock, creating orders, and sending out stock when and where required. This is where the Best ERP software with inventory management components steps in.
Well, depending on the nature of your business and company size, you apply any of the following approaches to control, manage and track your inventory.
How To Track And Control Your Inventory Levels
Manual Inventory Logging:
The simplest of all the methods to track what raw materials and components come in and leave is to use a ledger or a stock book. Although the pen and paper system for logging inventory is quite old and seems outdated, small businesses with a few items can easily get away with this simple system. Well, it could be challenging to use this system because of the higher chances of human errors, and also, it’s an actual record that you may not be able to use for planning purposes. It’s quite complicated to collect and manage your data manually.
Excel & Google Sheets:
Yes, we are talking about simple spreadsheets used as a basic tool for data management. Several small companies are still using excel and good sheets to record and manage their product data electronically. All you need is to implement some basic coding and formulas and with consistent updating, you can easily control your current inventory levels and statistics. It’s also a manual method, but with quick customization by adding high-level macros, you can use this system to meet your needs. You must also recheck the data entries to mitigate the risk of inaccuracies.
Stock Cards Or Bin Tags:
Now, this is a bit more complex method to track and control your inventory levels. Stock or bin cards system involves a table that records the current unit price, product selling cost, and inventory count of every single product. It’s basically a summary or report of inventory movement, including beginning and remaining balance, stock issue and receipt, and the ending quantity of raw and finished products. Each product in your warehouse has its own individual card, showing sales, returns, promotional withdraw, and how much stock remains according to this report. Additional notes make it more effective and with consistent updates, you can prevent the chances of data inaccuracy.
Simple Inventory Software:
Low-cost and targeted inventory management software for small to medium scale businesses comes with simple automation. Often these basic software solutions are integrated into point-of-sale systems to make automatic stock updates and generate real-time inventory reports. Besides, drilling down to stock details and customers buying patterns, you can introduce analytics and reporting modules to run cost comparisons, identifying best and worst selling products, and creating reorders. As your manufacturing business grows, you can scale this system to more complex functionalities like running cost comparisons and creating sales orders from RFQs received.
Well, with simple and basic features, all these systems are pretty good options for tracking and controlling your inventory. However, the organizations and especially large-scale enterprises such as manufacturing and distribution companies that keep on planning for scaling and growth should integrate advanced software solutions to keep track of inventory levels.
Advanced Inventory Tracker Software
Developed as scalable inventory management solutions, these are targeted software that can be easily integrated with your existing software. For better business management and monitoring other operations, you can implement a fully integrated and dynamic enterprise resource planning solution that not only helps you in tracking inventory, but provides templates and analytics for improved inventory control. Now, these advanced software solutions are quite affordable for small and midsize enterprises.
Main Systems For Inventory Control:
When it comes to automated inventory control methods like using a manufacturing ERP, there are two types of systems you can implement. These inventory control and tracking systems are based on accounting for tracking the number of raw and finished goods on hand. Big enterprises often need to monitor their inventory levels across warehouses, storerooms, and even websites.
Two Major Types Of Inventory Tracking And Control Systems
Periodic Inventory Control System
This system works best for small companies where they usually don’t need immediate updates and inventory scanning. Periodic inventory management systems involve regular, but occasional counts of inventory that are performed manually. Based on your business needs, you can conduct the physical inventory evaluation and calculate the cost of the ending stock. There is a downside in this system that you may have to suspend some of your business activities during this period because you need manual labor for physical inspection and counting of the available stock.
The solution to this problem is hiring additional staff, which is not quite feasible for many small businesses. So, better perform this activity outside of your regular working hours and pay bonuses to your workers for this extra task which they might carry out during a night shift. It becomes more challenging because there is a lack of accountability between inventories and their accounting discrepancies.
Perpetual Inventory Control System
This is the best and most practical solution to immediately and continuously track and count your inventory numbers. However, it’s a bit more expensive solution compared to a periodic system because it requires asset management software. Or, if you have significant capital, you can invest in a manufacturing ERP system with an inventory management module. The inventory tracking is controlled by automated monitoring of sales and purchases and this is why you will have accurate data about stock in hand. You can even forecast the future demand for raw materials and finished products to avoid stockouts. Inventory depletion on a specific product is simply out of question with perpetual inventory tracking.
Since all inventory data is accurate and updated in this type of system, discrepancies may exist because as time passes your recorded stock may not reflect what’s physically present in your warehouse or stock rooms. The reason could be stolen goods or breakage, or improperly scanned items. So, it’s important to conduct periodic inventory checks along with perpetual accounting.
Pro Tip: Use barcodes as an essential part of your inventory management system; be it periodic or perpetual. Barcoding helps in the quick collection of stock information, eliminates data inaccuracies, streamlines inventory movements and reporting, and reordering the stock to meet necessary levels. Implementing barcodes ensures scalability and accuracy.
Inventory tracking, control, and management is a challenging task, especially in the discrete manufacturing and distribution industry where you deal with millions of products on a daily basis. An inventory management app is a right tool to keep everything inventory-related accurate, automated, and efficient.