Enterprise resource planning (ERP) systems are equipped with various tools that can be used for analysis, forecasting, and management. Taking advantage of the various tools available can greatly increase profitability and efficiency with your company. Let’s take a look at several ways to fully utilize ERP tools to increase the effectiveness of your ERP.
Tools for Analysis
Inventory specialists can take data analysis functionality to a whole new level by integrating inventory optimization tools with existing enterprise resource planning (ERP) systems such as Sage 300 and Sage PFW. These enterprise software optimization systems provide graphics that can illustrate the synthesis of data from all departments. These graphics can help analyze, diagnose, and identify seasonal demand shifts, order patterns, likely stock-out dates, lost sales, excess orders, unsellable items, price reduction patterns, and patterns of production downtime among many other capabilities.
The analysis done by an inventory optimization tool can then use this big data to forecast demand with greater accuracy and faster speed. Through this, the system can recommend optimal inventory levels for sales availability. It can take into account possible stock-out and overage risks giving managers the advance warning needed to take care of stock levels when they are becoming too high or too low.
Tools for Management
Managers need to know what is happening with inventory in order to best respond. Inventory optimization tools make this easy through recommendations given about optimal restocking schedules in addition to automated ordering and re-ordering. In addition to helping find and act on trends, the tools can also help alert managers of exceptions to these trends so they can mitigate them. Through integration with enterprise software such as Sage 300 or Sage PFW, the tools communicate across departments and even outside of the organization using actionable intelligence. This can inform decisions about recommended stock levels, replenishment schedules, automated orders, and exception alerts.
Decisions can be made using these tools combined with management and inventory specialists. The data and information provided allows inventory optimization to be achieved. These decisions can help balance the trade-offs between the costs of a stock-out versus the costs of overstocking. Inventory management tools must adjust recommended stocking levels that are dependent upon variable risk tolerance. There is a balance to strike between pushing risk tolerance in the direction of avoiding stock-outs and having more inventory ready versus pushing management to stock as little inventory as possible to avoid storage and waste costs. The ability of an inventory optimization tool to adjust forecasts based on the “what-ifs” is a huge plus to management.
Inventory management is all about making better decisions that result in better balance. This depends on the shifting goals that are influenced by the reality of the events going on in the warehouse. Tools that can improve balance provide a large and ongoing return on investment. The goal is to reduce inventory levels by 20 to 50 percent that results in significant savings. Because right-sizing is a complex challenge, cost control and customer satisfaction have become the focus. These are driving the adoption of more sophisticated systems of inventory management. By utilizing new, flexible, and refined tools that provide for dynamic optimization of inventories to maximize customer service and market share while decreasing inventory investment and lowering costs, inventory managers can significantly impact overall competiveness and profitability.
Download our whitepaper “Better Inventory Management: Big Challenges, Big Data, Emerging Solutions” for further information on improving inventory management through various tools.
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