ERP Inventory Management: The Essential Guide

The Enterprise Resource Planning tool, also referred to as stock control, handles all aspects of a company’s inventory system, including purchasing, receiving, tracking, warehousing and storage, shipping, turnover, and reordering. You can easily track orders, inventory levels, sales, and deliveries at the point of sale and enjoy a streamlined ERP inventory management process.

The ERP software is a computer-based solution that helps automate all your inventory management functions. It offers organizations a comprehensive ERP solution for their inventory management requirements.

In this article, we will cover the following topics in depth:

The ERP market is in a phase of rapid expansion, and the total market size is expected to surpass $49.5 billion by 2024.

ERP aims to maximize profits by involving minimum inventory investment without disturbing customer satisfaction.

What is ERP inventory Management?

ERP inventory management is an important tool for managing your business operations. It helps businesses manage their inventory efficiently. With ERP inventory management, you can easily track your inventory levels, order more stock when needed, and keep up with your sales forecasts. ERP inventory management allows you to track inventory stocks, orders, and sales forecasts. You can also manage your inventory from anywhere using mobile devices.

Let’s deep dive!

How ERP Inventory Management Benefits Your Business

ERP is quickly securing its position in organizations. Several operations, which weren’t initially included in ERP by default, are now integrated with ERP to enjoy larger benefits. On average, companies spend over 6.5% of their annual budget on ERP.

Here’s how integrating ERP in inventory management is beneficial:

1. Inventory Optimization

Inventory challenges are many-  a simple slip and things can take a bad turn.

In a dynamic market, keeping old products in inventory is suggestable. This becomes more critical for fast-moving products. Simultaneously, a lack of surplus may lead to losses if there’s an increase in demand or the current stock goes bad.

Owners can be reluctant to have a large pile of surplus inventory because it binds capital which can only be through sales.

The benefit of ERP inventory management is you can optimize your E-commerce inventory by integrating ERP. The tool provides insights into the current stock and any future rise/fall in demand.

2. Supply Chain Visibility

A complicated supply chain involves multiple parties supplying goods and materials to the companies. Inventory details need to be regularly updated and shared to do this smoothly. Initially, companies had the authority to carry out this task, but failing to share updates or incorrect updates led to the wrong supply, disturbing the entire supply chain.

ERP integration in production planning can avoid such inconveniences. The entire production gets integrated with easy-to-access tools and real-time and accurate details. You can share these details with any third party, including suppliers or logistics.

3. Precise Financial Reports

In most companies, inventory forms a huge part of the capital investment. Thus, inventory details are important while making financial reports, which is integral to other processes like revenue forecasting and tax returns.

Inaccurate inventory details can lead to erroneous financial reports and later cause issues. Integrating ERP and inventory automatically allows every inventory detail to be updated and accounted for in the financial system.

In fact, many ERP companies provide features that automatically create detailed reports. This results in inaccurate financial reports and other related financial activities.

4. Improved Interface

Within an organization, different operations use different systems. Each department has its own interface that employees need to learn to operate. But the ERP tool offers a simpler interface incorporating multiple operations. All you need to do is integrate ERP with inventory management to eliminate learning an extra interface.

5. Higher Savings

All 5 benefits of integrating ERP and inventory boil down to one simple advantage -cost savings. With inventory optimization, strike a perfect balance between demand and supply to reduce the cost involved in expired products or lack of supply. Among other things, optimizing your inventory’s data can lead to fewer chances of error, translating into capital gains.

It is estimated that 2020 cloud subscriptions for business applications will lead to $170 billion in revenue. Therefore, integrating ERP with your inventory can help you save money. Moreover, with far and wide benefits, integrating ERP and inventory management doesn’t require any special effort.

What are the Major Functions of ERP Inventory Management?

An efficient ERP inventory management solution can help keep your costs under control by seamlessly contributing to your supply chain.

Here’s a list of basic functions of the ERP Inventory Management Software:

1. Simplified Inventory Management

Simply put, getting inventory management software makes the entire process of managing your inventory a lot easier, time-saving, and cost-effective. You can automate your key business processes with ERP inventory management and make smarter decisions.

2. Increased Productivity and Efficiency

The tool helps automate your daily manual tasks to increase productivity and efficiency, leading to maximum business growth. You can save countless man-hours as the software can efficiently manage stock, print shipping labels, process and dispatch orders, and create and update listings from the same dashboard.

3. Increase in Profitability

Did you know 1/3 of businesses in the US often miss a shipment deadline because they have sold an item that was out of stock?

ERP inventory management keeps detailed records of marketing and production of goods for increasing profitability and reaching the maximum return on investment.

Automating key business operations with ERP paves the way to efficiently and accurately fulfill essential tasks, including updating listings across all selling channels, managing stock levels, and processing orders. This can help automatically reduce expenses and increase profitability.

4. Quality Management

The ERP system helps identify, track, and possibly even avoid issues related to delayed shipments, broken packages, etc. Moreover, the analytics feature can also guide through factors impacting quality management.

5. Forecasting and Planning

The ERP inventory management helps recognize the possibility of opening multiple regional warehouses near key customers. This can help increase efficiency and enhance service levels, made visible through insights provided by inventory management.

6. Serial-number Tracking

Another essential feature of ERP software is its ability to seamlessly track serial numbers. The software can manage an unlimited number of serial numbers from when the inventory is received to when it is issued. Additionally, the data gets recorded permanently into the system for future reference.

ERP inventory management is necessary for owners looking to take their business to the next level to grow company profits.

Common Inventory Challenges that ERP Inventory System Can Solve

The absence of ERP inventory management can create problems for a business. Thankfully, upgrading to an Enterprise Resource Planning (ERP) system can solve the most common inventory challenges.

An ERP inventory system can help you dodge the following:

1. Excess Inventory

43% of small businesses in the US either don’t track inventory or do it with a manual system.

When it comes to selling seasonal products, it is safe to avoid carrying excess inventory like the plague. Too much inventory can increase overhead and reduce liquidity. But if you forecast too conservatively, you may face inventory shortages.

In fact, U.S. retailers actually have about $1.43 in inventory for every $1 of sales they make.

With an ERP inventory system, you can easily analyze historical sales data and past seasonal trends, which can help bring realistic safety margins for your business.

2. Inventory Shortages (Out-of-Stock)

Simply put, inventory shortages are as costly as excess inventory.

For instance, if your products have a high-profit margin within a competitive space, insufficient stock during the peak selling periods can hamper your business.

ERP inventory software can set “par levels” (known as minimum inventory thresholds) for each product, which can be changed throughout the year.

The software immediately sends an alert out for order more if a product’s inventory is below the set par level. When united with the right automation software, an ERP inventory management system can automatically send out purchase requests.

3. Dead Stock

In the US, anywhere from 20-30% of inventory is either dead or obsolete.

For the uninitiated, any goods that are expired, unused, unsold, or forgotten about are called on-hand or dead stock. It is harmful to have dead stock because it wastes money on two major fronts.

1. You cannot recover the original cost of goods sold
2. The storage (warehousing) costs increase every day the product sits idle

An ERP inventory system can help keep track of all data regarding the product’s purchasing, manufacturing, expiry, and when they become insolvent. The system can also send alerts to notify when stocks become dead. 

4. Inventory Turnover

Inventory turnover helps you understand when to reorder or remanufacture goods. Calculating your inventory manually takes a lot of time. 46% of SMBs either don’t track inventory or implement a manual method. This process involves keeping track of the following:

1. Count cycle
2. Order cycle
3. Delivery cycle

Apart from being time-consuming, there’s a high chance of human error. If you can automate this process, your business can stay perfectly operational while ordering and maintaining goods. ERP consulting will be helpful to easily execute this process.

Top 5 ERP Inventory Management Software to Improve Inventory Management

If you are looking to reduce your inventory challenges using ERP software, we have gathered a list of top solutions that can be beneficial for your business:

1. Batchmaster ERP

Get process manufacturing ERP for the food, chemical, nutraceutical, and pharmaceutical industries with Batchmaster ERP.

Batchmaster ERP allows you to easily run the manufacturing application with Sage 100&300, Microsoft Dynamics, QuickBooks, GP, and SAP Business One financials.

You also have the option to upgrade to the end-to-end enterprise resource planning (ERP) solution, which further simplifies the supply chain, CRM, process manufacturing, financials, and more.

Approximate Pricing

The BatchMaster Process Manufacturing Application pricing starts at $2,000 as a one-time payment per user. The company does not offer a free version or a free trial.

2. Horizon ERP

Horizon ERP is an off-the-shelf, ready-to-use off-product solution well-suited for small businesses. It can seamlessly handle medium-sized companies’ billing, accounting, and inventory management.

A complete solution for your business, Horizon ERP is a simple user interface that helps you achieve a faster learning curve.

It presents a robust platform for handling thousands of invoices every financial year. The software helps you track and maintain up to twenty-five thousand SKUs, customers, and ledgers simultaneously.

Approximate Pricing

Horizon ERP is priced at $150.00 as a one-time payment. They do not have a free version yet, but it offers a free trial.

3. Oracle Netsuite

Oracle NetSuite can be used for enterprise resource planning (ERP). This ERP inventory management software can help your business seamlessly manage inventory, track business financials, host e-commerce stores and maintain smooth customer relationship management (CRM) systems. You can simply apply this flexible platform to a range of business applications.

 Approximate Pricing

NetSuite will cost you around $999 per month to license the core software. It has an additional per month per user cost of about $99.

4. CREST ERP

Offered by Xmplar, CREST is an ERP inventory management system that helps organizations in the manufacturing and trading industry manage their business operations. You can deploy this solution either on-premise or in the cloud.

CREST ERP has inventory manufacturing, sales, finance, project management, procurement, and human capital management modules. You can automate the purchase approval, enjoy real-time inventory tracking, view project status, plan resources, and forecast budgets.

CREST ERP provides services on a monthly and annual subscription. Contact their customer support team via phone, email, or an online inquiry.

Approximate Pricing

The vendor hasn’t disclosed price details. However, the company may offer a free trial version.

5. Acumatica

Acumatica Cloud ERP is a cloud and mobile technology inventory management ERP platform cut for mid-sized customers offering a real-time view across the business anytime, anywhere, on any device, with any browser.

The Acumatica suite includes multi-company accounting and financial management, distribution, manufacturing planning and control, time and expense, project accounting, construction, services, retail, eCommerce, and customer relationship management (CRM).

Approximate Pricing

Acumatica usually bills you based on the number of resources your particular instance of the app consumes. The license fee is around $1,000 annually, billed annually. It is useful for a typical small business with a moderate number of simultaneous transactions.