4 Signs Your Inventory Management System is Hurting Your Business
Your inventory management system may be helping or harming your business. The goal of an inventory management system is to make sure that you have the necessary information about your inventory so you can respond on time. When customers place an order, your business’s inventory management system should process it and ship the order.
A reliable inventory management system minimises manufacturing delays by making sure that the materials required to run the production volume are available. In manufacturing, the term Just-In-Time manufacturing or Lean Manufacturing is a well-known methodology aimed at optimising the flow between the production systems, suppliers, and customers. When your inventory management system is sub-par, the effects are felt across the company in several ways.
Four Effects of Poor Inventory Management System
Poor Cash Flow
Having too much cash tied up in the wrong inventory, such as slow-moving items or outdated items, will leave you with fewer resources for your fast-moving inventory. When you are stocking up slow-moving inventory, it means that you do not have optimised inventory levels. You will end up with over-stocking or under-stocking issues. Using an integrated business solution will enable you to have a better insight into your inventory movement. You will be able to have a better inventory forecast, which can help in your purchasing process – to have optimal inventory.
The Need to Physically Verify Inventory
You know your inventory management is failing when your sales or customer service team physically verify that there’s enough inventory to take an order because they don’t trust their spreadsheets. The need to physically count your inventory is making your employees less efficient and will affect the overall operations of your organisation. Using an inventory management solution will eliminate this challenge. Your team will know the availability of inventory in real-time.
Those customers willing to wait for the back ordered items because you have stocked out do not have infinite patience. If any of these people are repeat customers, their loss will be costly. The cost of gaining a new customer is significantly higher than keeping an existing customer. Any business does not want to lose a customer due to a poor inventory management system.
Lack of Operational Direction
It is a challenge to develop an operational strategy if you do not have accurate numbers you can trust. Without useful analytics, sufficient and accurate data, and forecasting, you will not be able to make good business decisions. All of these will affect budget planning, forecasting, and revenue projections, which are vital for business planning.
If any of the above problems seem familiar to you, consider retiring your current inventory management system for something better. To learn more about a better way of doing things with a robust and reliable inventory management system, please contact us..
SAP Business One is an affordable Enterprise Resource Planning (ERP) software designed for small to midsize businesses. As a business management solution, SAP B1 streamlines business processes, provides real-time information, and help boost overall business performance. The solution covers finance, sales, customer relationship, purchasing, procurement, inventory and manufacturing in one centralised system, enabling accurate and precise information retrieval that assist in reporting, forecasting and analysis.