Poor inventory management is one of the major factors that can lead to manufacturer failures. The ability to stock, track and manage inventory supplies is essential to keeping a production line running and filling customer orders. A small business needs to take advantage of software tools in order to avoid these three common mistakes of inventory control:
1. Lack of planning
Entrepreneur magazine warned small business owners there are big disadvantages to having too much or too little inventory. The fear of not having the supplies on hand to meet customer demands leads many manufacturers to buying a surplus of materials. However, buying too much deals a huge blow to finances. Unused inventory will take up much needed warehouse space. The longer an item sits on the shelf the better the chances it will degrade or become obsolete.
There is no way to see the future, but the proper software solutions help a business create better-informed projections. By tracking seasonal demands, customer preferences and industry trends, a data system can create a better understanding of what inventory a business has and what it will need in the near-future.
Data provided by a system like Microsoft Dynamics NAV can be updated instantly and charted to create a projection for reasonable supply orders. Warehouse tracking software will tell managers which items have been in storage the longest and prevent supplies going to waste. Any inventory needs will become known to the entire company the second they are detected.
2. Employees errors
Warehouses need a system. Modern Material Handling suggested employees shouldn't just throw materials into any available slot. It is recommended that a manufacturer provide its warehouse workers with modern data tools they can use on the floor.
Mobile devices equipped with ERP technology will allow workers to upload and update inventory information instantly. The warehouse can become a closely monitored system. Using tools like bar code scanners makes inventory counting and processing extremely simple and quick. The more often a company is able to perform material counts, the less likely a mistake will go undetected. Scanners also cut down on human errors. The more times a piece of data needs to be entered, the more opportunities to submit incorrect information.
3. Poor vendor
Even if a business has a perfectly managed warehouse, external influences could create inventory problems. Some companies do not monitor their suppliers. A vendor that is unable to deliver on-schedule or does not have matching order numbers will make it very difficult to keep a proper inventory.
ERP solutions can be used to improve business-to-business relationships. Dynamics NAV features procure-to-pay software to track the exchange of goods and services between manufacturers and vendors. Every step of the procurement process, from the initial order to the final payment is tracked as a data point in the system.
If a business does have an issue with the supplier, they can work off a singular set of data to discover where the issue is occurring or to create a better business plan in the future. It is difficult to control the actions of outside parties. The right system allows a manufacturer to manage its own inventory and create plans for what to do when those difficulties do present themselves.