Inventory is one of the biggest assets of manufacturing firms which is to be cared for properly. Improper management of inventory can turn to losses. Eventually leading business -owners need to shift their focus from different business opportunities and cope with changing profit
Managing inventory is a tough call, no matter how big or small the organization is. Failure to manage inventory will lead to chaotic situations that may disrupt the entire supply chain. These issues result in locking extra cash and add extra costs for an organization which leads to out of stock and understock situations.
Let us look at the five mistakes which lead to such problems.
Inaccurate demand prediction
A wrong estimation about a product would mean an imbalance of demand and supply chain woes. Projecting accurate forecasts would mean ordering the right quantity at the right time. A wrong forecast can either call an understock or overstock situation. Abundance would mean an excess of raw materials, finished products, shortfall and inability to fulfill customer orders.
So properly assessing demand is highly beneficial. Companies continue to identify trends and needs of the customer.
Not having a common database
Not having a common database is one of the main business hurdles that need to be rectified as soon as possible. A disintegrated database calls for potential risks and confusion. How much in store? What is to be ordered? How much quantity needs to be ordered? Answering these questions become wearisome and time-consuming, not only for a multi-location but for a single-facility business.
It is a must to embrace an Inventory Management System for error-ree results and other potential benefits. Opting an ERP system is better as it not only manages your inventory better but streamlines every other department. Updates from one department make your process faster.
Better planning of material, demand, and production ensure that components and raw materials are available, the plan is set to meet the orders and production is laid out in time. An ERP at the production unit does this for you, it forecasts and fetches demand, looks for available inventory, checks what is expected to arrive and how much is in production. When these inputs go in MPS/MRP result in effective production scheduling and material procurement which leads to timely order completion, result, in-time deliveries. better services, happy customers, greater profits.
There are few more inventory mistakes to avoid such as doing yearly inventory checks, lack of robust software in place, disorganized warehouse, inaccurate tracking of stock, outdated inventory management systems, not communicating internally, never trying new things, insufficient store preparations, relying on spreadsheets, failure to automate, not having someone in charge and so much more. So, if you need one partner that can help you with erp customization services or so, you can contact SAP Business One customization partner that can help you with a varied requirement of your business.