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Inventory control

Inventory control

Food and beverage inventory management: How to take control

By | Food and Beverage, Inventory control | No Comments
Inventory control

Take control of your inventory management by using the right enterprise resource planning solution.

Inventory management can be a challenge for food and beverage companies. With effective inventory control, companies can realize significant improvements in wastage, traceability and compliance.

Having the right enterprise resource planning (ERP) solution helps companies discover how to take control of food and beverage inventory management.

Why focus on inventory control?

Inventory is at the heart of food and beverage operations. Without sound inventory management, companies are likely to have costlier manufacturing processes, poorer outcomes, strained supply chain relationships and shakier regulatory compliance.

Often the issue is a lack of good data. More precisely, it’s about being able to collect, manage and use that data to make better decisions in the moment.

The right food ERP solution helps companies resolve some of their greatest inventory management issues, including:

  • Poor stock rotation leading to spoilage
  • Too much capital tied up in stock
  • Inadequate stock levels
  • Inaccurate sales projections
  • Slow turnaround time on customer orders

Solving those issues requires a food ERP that can collect and display data in the moment of critical need, drive better decisions and improve output.

Inventory control.

ERP solutions provide the data, insights and tools to reduce spoilage and ensure regulatory compliance.

Solving the big three challenges of poor inventory management

Food and beverage companies grapple with inventory issues daily. Here’s a look at three of the most critical issues and how the right ERP platform solves them.

1. Reducing food waste

Food waste costs companies millions each year in disposal costs and reordering. The issue is compounded today by customer expectations for rapid introduction of new products, ingredients and recipes.

Reducing food waste means a focus on three core areas:

  • Overstocking. Without clear predictive models on demand, food companies can understock (and risk losing revenue) or overstock and suffer from reduced cash flow and increased spoilage.
  • Spoilage. Companies need data generated by their ERP tool to track products by lot and vendor to prevent spoilage. An ERP tool can also optimize and accelerate production scheduling to factor in expiring ingredients.
  • Cross-Contamination. Tracking products to avoid contamination is a regulatory and safety issue. With the growing number of food allergies, inventory needs to be stored, handled and packaged properly to track products and manage workflow. Your ERP solution can help map where products are stored and trace usage at every stage.

2. Traceability

Farm-to-fork traceability is the expectation today among customers and consumers. Providing this information means having ERP capabilities to track sources, locations, handing, processing, delivery dates, quantities and quality.

Traceability is a critical part of recall management planning and execution. With track-and-trace functions in place, your company can respond faster in the event of a recall, providing the public, customers, stakeholders and regulators accurate information faster.

3. Compliance

The Food Safety Modernization Act (FSMA) has changed the regulatory landscape for many food and beverage companies. You need an ERP tool that can properly track, record and report on various compliance mandates from different regulating agencies. Automation, quality control and IoT objects connected to your ERP solution are critical to remaining in good standing.

Finding a solution

Sage Enterprise Management (formerly Sage X3) gives your food and beverage company the ERP solution designed to meet your inventory management challenges. Sage Enterprise Management offers shelf-life management, production planning, stock management, lot management, formula and recipe management, quality control and allergen tracking tools designed specifically for the food and beverage industry.

NexTec works extensively with food and beverage companies to find, implement and optimize their ERP solutions. Our consultants have years of experience with Sage Enterprise Management. Take a free tour of Sage Enterprise Management to learn how to transform inventory management and reduce costs for your company.

Worker with orange hard hat taking inventory by hand.

Enhance inventory control & speed up order fulfillment

By | ERP, Inventory control, Manufacturing | No Comments
Worker with orange hard hat taking inventory.

Digital tools can reduce the need for manual counting and tracking of inventory.

Inventory control is dynamic and complex, requiring tools that allow for accurate, real-time management of raw materials, products, sources, and supply chain partners. Fortunately, the recent advancements in enterprise resource planning (ERP) technologies have improved the management and impact of inventory control.

How can your manufacturing ERP software enhance inventory control & speed up order fulfillment? By giving your employees access to real-time data that allows for better decisions, improved quality, and better customer outcomes.

While there are standalone inventory control and management software products, those that are integrated with your ERP solution are able to leverage the many benefits of having data collected and accessible in the same platform. As seen in the recent post, Strategic Guide to Planning Manufacturing Production Cycles, ERP solutions offer considerable upside to inventory management and many other areas of your manufacturing company.

Here are a few of the ways your ERP solution helps inventory control.

Replenishment management

ERP inventory management helps you plan for replenishment ordering. By tracking parts and part categories, your ordering can be triggered by indicated or projected demand parameters. Other triggers can include price levels or other factors built into your system. ERP systems help reduce the quantity of orders and project the right timing for when orders should be placed.

Surplus inventory management

Inventory surplus can cause significant issues, from wastage to improper usage to cost considerations. With ERP inventory controls, surplus inventory issues can signal alerts and warnings requiring action. And with ERP integrating information from finance, sales, and operations areas, the decisions about what to do about surplus can be made with better information and collaboration as necessary.

Woman worker with a white hard hat taking inventory.

Inventory management tools connected to your ERP help make better decisions about products and parts.

Better order fulfillment

Market demands are pushing order fulfillment needs every day, as customers and consumers expect rapid turnarounds, low- to no-cost shipping costs, and transparency in the tracking of shipments throughout the transportation process.

ERP tools allow companies to build materials and complete kitting work, track serial numbers, print barcodes and labels, and manage SKUs. Other tools allow companies to value inventory on hand.

When companies have large amounts of inventory on hand, ERP tools also allow manage spend levels and manage cash flow.

Inventory analytics and management

Turnover is crucial for inventory management and profits. Does your company know all it should about what products and parts are moving? Are parts for just a few customers sitting on shelves longer than is financially prudent?

Understanding inventory dynamics helps manufacturers consider whether products should be purchased in smaller or larger quantities, improve shelf life conditions for products and ingredients, and determine optimal levels of items. You’ll reduce carrying costs, warehousing fees, and product maintenance.

ERP solutions can also provide better information about where products are using tracking and mapping tools that reduce the amount of time and expense in locating items in your inventory.

Better customer relations

Better inventory management results in fewer backorders, lost sales, and unhappy customers. Orders will ship more accurately, faster, with less processing time necessary.

At NexTec Group, we help companies identify the ERP solutions that meet their unique manufacturing needs. Contact us to see how NexTec Group can help in finding the vendor, product, and features that will drive improved operations.

Warehouse with large blue barrels.

Inventory control in the chemicals industry and your ERP choice

By | ERP, Inventory control | No Comments
Warehouse with large blue barrels.

Managing your chemical inventory means having the right systems that integrate key functions and provide real-time data and insights.

Chemical companies today need robust solutions to ensure inventory control. With dynamically changing markets, increasing customer demands for new products and a global competitive landscape, companies need to manage inventory on multiple levels.

As seen in the recent post, Why chemical businesses should choose an industry-specific ERP, you can transform your chemical company’s production, compliance and efficiencies with the right enterprise resource planning solution. Using a generic ERP means trying to shoehorn a solution that does not meet the regulatory and efficiency needs of modern manufacturing.

When it comes to inventory control in the chemicals industry and your ERP choice, consider using a solution that is designed from the start to address the unique challenges of chemical manufacturing.

Inventory Management Components

Inventory management has several components that your ERP solution needs to address. They include:

Compliance. You need a solution that will address the myriad federal and international agencies’ guidelines that govern chemical manufacturing. These guidelines include the need to track and measure inventory, provide detailed information about materials, products and byproducts of production, and ensure accurate handling and transportation of these materials.

Accuracy. Your customers demand accurate batches and quality levels. Knowing that the materials being used are the right ones, with proper labeling, measurements, and yield analysis ensures consistent manufacturing standards and efficient use of warehouse inventory.

Track and Trace Functionality. Inventory control begins with the proper identification and documentation of materials in your possession. These become essential in the case of a recall event. Your inventory management should be able to track and trace products and ingredients, ensuring that the source is identified and any actions related to existing inventory are taken quickly.

Workers with orange vests and green barrels in the background.

Inventory management functions in an enterprise resource planning solution allow for more productive operations and less waste.

Functional ERP Needs

When you’re deciding on an industry-specific ERP for your chemical company, you need a solution that has several essential components. Your inventory solution should include:

  • Strategic sourcing. Improved supply chain efficiency is imperative, providing you with transparency and easily accessible information about vendors and partners, availability, pricing, and market trends.
  • Inventory transparency. Your ERP can monitor and track inventory at multiple locations with accessible information on lot numbers, serial numbers, grades and container types.
  • Documentation. Track shelf life requirements and other properties such as expiration dates, potency and volatility to ensure that chemicals are being used in a timely manner, reducing waste and inaccurate results.
  • Predictive forecasting. Gain access to real-0time reports on inventory levels, allowing your team to integrate inventory levels with anticipated or actual orders, allowing for better purchasing and optimized use of inventory space.
  • Compliance. Your ERP should be able to monitor and track processes and products using automated tools. The same goes for quality control measures to ensure that finished products are made to the proper internal guidelines and regulatory mandates.
  • Safety. Track Safety Data Sheets in an online database to provide information to employees and reduce accidents, injuries, and improper handling incidents.

Choosing the right partner to help select and install your chemical ERP solution is an important step. NexTec helps our clients by understanding their needs and pain points. We help companies identify the products and features that will have a profound impact on operations, from inventory to production to distribution.

Contact us to see how NexTec can help your company select the right industry-specific ERP.

Man watching the manufacturing of liquid in bottles.

Inventory control ERP functionalities in foods and beverages

By | ERP, Inventory control | No Comments
Man observing the manufacturing of liquids in bottles.

Tracking inventory in the food and beverage industry becomes more streamlined and powerful with an enterprise resource planning solution.

Managing inventory control has major advantages for food and beverage manufacturers. With proper inventory controls, companies can accurately predict supplies, manage ordering more efficiently, and improve operational performance.

Inventory control also helps to eliminate spoilage and waste, both critical and costly areas to corral.

As seen in the recent Comprehensive guide to key ERP functionalities in foods and beverages, having a sound approach to inventory management is one of the main advantages of a modern enterprise resource planning platform.

Here is a closer look at inventory control functionalities in foods and beverages.

Holistic view of inventory

With the right ERP tool for inventory management, companies gain a real-time view of their entire inventory system. From stock levels to locations to inventory activity, managers can gain a keen understanding of their inventory at a moment’s notice. And with automation tools, companies can also improve the picking, sorting, and operations of the warehouse and its employees.

Using these tools, more accurate decisions can be made in the moment about inventory, ordering, and operations.

Inventory level management

One of the major issues for many food and beverage companies is having the right level of ingredients and raw materials on hand to meet anticipated demand. With inventory controls, companies can hold accurate levels in inventory to decrease overhead costs.

Forecasting improves with better understanding of available products, anticipated orders, and historical trends. Having the right inventory level means not losing out on sales due to a shortage of needed ingredients, too.

Large collection of mason jars.

The right inventory control system helps eliminate waste and improve warehouse functions.

Quality control

With inventory control tools, companies can better assess quality of the products and their vendors. Using quality management tools, inventory management can develop quality assessment measures to inspect and test lots as they arrive and once they are in the warehouse. These tools can ensure that products meet provided descriptions for what was ordered.

Companies can manage their inventories to look for defects, leaks, tears, or other discrepancies soon after acquisition. Doing so ensures that that the right products are available and intact when needed for production.

Spoilage reduction

Perishable items need to be managed carefully while in inventory to ensure they are used in a timely manner so that they are not wasted and that finished products are also consumed in the proper timeframe.

Inventory management tools can track and monitor usage, available products, and ensure that those closest to expiration are used first.

Production management

Use data collected and shared by inventory controls to project production needs and schedule work, workers, and equipment. Proper production management leads to increased efficiency and usage of available capacity.

Warehouse management

Inventory and warehouse management go hand in hand. Your ERP solution needs to manage warehouse functions and improve supply chain efficiency.

ERP tools can help with bin location, stock transfer, label generation and verification, quality control checks, and movement into, within and through the warehouse. With accurate RFID and barcode tools, companies can improve the speed and accuracy of warehouse management.

At NexTec, we help food and beverage companies identify the right ERP solution to maximize inventory control functionality and improve efficiency. Read our recent study on the food industry to see how NexTec can help your company become more efficient and generate higher profit margins.

Inventory control

Warehouse automation: Competitive advantage for food manufacturers

By | Food and Beverage, Inventory control | No Comments
Inventory control

Warehouse technology today offers more tools to improve operations and boost efficiency.

As seen in the recent post, Leveraging Automation in the Food and Beverage Industry, there are amble opportunities for companies that invest in digital technologies that have the ability to transform.

For food and beverage companies, one area where these innovations can be particularly transformative is warehouse management. Warehouse automation offers the chance to boost efficiency, reduce costs, and respond to changes in the way food is made today.

That’s what’s at the heart of warehouse automation: competitive advantage for food manufacturers.

Ahead and Behind

The industry historically has been at the forefront of flexible approaches to warehouse management, even if it’s been decidedly low-tech. For decades, manufacturers have added equipment and people to respond to seasonal variances that require additional output.

The option is an affordable one for companies not willing or able to invest in the capital needed to add systems and technology.

Today, however, the competitive landscape has changed, as have consumer tastes. The need for new tools that automate processes, support employees, and collect and use data strategically is more critical than ever.

There’s been a proliferation of SKUs, meaning there’s additional demand, variety, and complexity to the products being made, stored, and shipped, and the number of ingredients and steps required for success.

Automation can influence many aspects of warehouse management, not only internally but across the supply chain.

Inventory control

Food manufacturers use automation tools to lower processing time and respond to ever-complex product mixes.

Here are some of the ways in which automation can have an impact.

  • Reduced processing time. With the rise of online ordering, next-day delivery, and more product variability, successful picking and packing management is essential. Shorter processing times allow for faster fulfilling and higher levels of customer satisfaction. Voice picking, sortation, and automated freezer pallet storage are just a few of the solutions that can drive down processing.
  • Scalability. As businesses grow or seasonal variability comes into play, automation can play a critical role in how quickly a company can adapt. Proportional deployment of technologies allows for better planning and certainty.
  • Order complexity. The increase in SKUs and rise of the omnichannel shopping continues to put pressure on warehouse operations. Maintaining accuracy in an era of growing order complexity puts added pressure on companies that need to be responsive to changing expectations and order composition.
  • Transparency. Today’s successful food and beverage companies need to leverage the expertise and problem-solving capabilities of supply chain partners. Automation tools can easily share data, trends, and insights across the supply chain, allowing for better insights and solutions across the supply chain.
  • Accountability. The food and beverage industry faces increased scrutiny and accountability from agencies and the general public. The Food Safety Modernization Act (FSMA) requires companies to identify and prevent risks, document, and plan for track and trace functionality. Automation helps to monitor and track information and provide reports required for compliance.

At NexTec, we help companies identify their warehouse management needs and recommend solutions for inventory control and distribution management software. Our consultants work closely with clients to understand pain points and recommend the vendors, products, and features that will help solve problems.

Contact us to learn more about how NexTec can transform your food or beverage company’s warehouse operations and remain competitive.

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Top three resources for learning more about the Cloud

By | Acumatica Cloud ERP, BI, Cloud, Dashboards and KPIs, ERP, Inventory control | No Comments

Companies are moving to the Cloud at a rapid pace. In 2018, Forrester predicts, more than 50% of global enterprises will use at least one public cloud platform in their path to drive digital transformation and delight customers. As companies see the benefits of cloud adoption, this number will only increase as we approach 2019, 2020, and beyond.

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Inventory control

Integrating the key components of inventory control

By | ERP, Inventory control | No Comments
Inventory control

An enterprise resource planning (ERP) solution helps employees better manage the myriad components of inventory.

Inventory control helps coordinate the shifting supply and demand functions, plays a key role in manufacturing and distribution, and needs to be integrated closely with other core business functions such as finance and sales. Maintaining inventory in real time is a challenge for many organization at every stage of business development.

An enterprise resource planning (ERP) solution helps keep together the various moving components related to inventory control and warehouse management.

How an ERP helps inventory management

When it comes to integrating the key components of inventory control, here’s how an ERP software solution makes sense.

  1. Processing time. For processing functions, timing is critical. An ERP connects production functions with warehouse management and fulfillment functions. The pacing of manufacturing enables companies to know exactly when completed goods will be delivered and available for distribution.
  2. Costs. Pricing and timing of purchase play a critical role in supply chain management and inventory control. With an ERP solution, companies can dramatically reduce costs by having real-time, company-wide data available to make smart purchasing decisions. Comprehensive solutions provide employees with the best information about commodity availability and price, while also allowing for automated decision-making.
  3. Availability. The availability of raw materials and finished goods is a big factor in managing warehouse space and scheduling manufacturing. ERP solutions enable sound inventory allocation and material resource planning (MRP) that, in turn, allows for sound and predictable manufacturing scheduling.
  4. Operations. Processing materials requires a clear understanding of where materials are and when they can be used in manufacturing. Without accurate information on sales and demand, production can get well ahead or fall behind anticipated need. An ERP provides insights into all of these areas simultaneously, facilitating smoother operations throughout the enterprise.
  5. Data and documentation. An ERP helps companies to create the right reports for deep analytics, using real-time data. These systems let companies calculate the needs of a manufacturing operation, report on efficiency and supply chain productivity, and gain insights to improve operations.
Inventory control

Effective inventory management requires a clearer picture of other functions within the company.

Balancing investment in inventory

Companies want to minimize the costs associated with inventory while keeping operations running at peak efficiency. This is epitomized by the concepts of lean processing, doing away with the waste associated with extra or non-usable inventory. The most effective tool for promoting this is a comprehensive ERP solution. This enables companies to reduce waste, minimize surplus, and work closely with partners throughout the supply chain to best manage storage, production, and distribution. Better insights allow for the retention of the right amount of safety stock, which acts as a buffer in cases of delay or unexpected sales surges.

The ERP also allows companies to better manage some of the variables associated with different locations, such as utility costs, labor costs and availability, and transportation availability.

At NexTec, we understand the importance of sound inventory management. We work with companies across industries to understand the unique challenges and opportunities they face. We then recommend the right ERP solutions that contain the features and solutions necessary at the right price point.

Our teams of experienced consultants across the country take the time to learn what our customers need and deliver solutions that enhance inventory management and other related business functions. Download the NexTec Corporate Overview Brochure to see how our expertise can improve your company’s operations.

Inventory control software

5 tech tools for better inventory control

By | Food and Beverage, Inventory control, Sage X3 | No Comments
Inventory control software

Inventory control software helps companies become more efficient and reduce waste in food and beverage manufacturing.

Inventory control is a must-have in today’s complex, dynamic food and beverage manufacturing industry.

Knowing where ingredients and finished goods are at each stage of production and distribution allows companies to gain improved efficiency, cut storage and transportation costs, and deliver the freshest possible products to consumers.

There are many different tools available to companies looking to hone their inventory management. Some are simple and others are end-to-end enterprise solutions.

As noted in the recent post, From farm to fork: Exploring the state of America’s food industry, efficiency gains and freshness are two key factors for companies looking to be nimble and responsive to complex consumer tastes and preferences. Here is a closer look at five tech tools for better inventory control.

1. Pen, paper and spreadsheet

Yes, this technology is old school, but it is still the way in which many small businesses operate. Small food and beverage manufacturers track inventory with a simple spreadsheet program.

While such a system seems simplistic to complex organizations, the basic principles are in play. You need a system that tracks when you have used ingredients and alerts you to when it is time to order more. Finished products are also tracked to measure sales volumes and predict future needs.

2. Point-of-Sale (POS) systems

Computerized POS systems, often tied to cash register activity, decreases the inventory count for an item (or ingredients that comprise that item) every time a product is sold. Most systems issue alerts when stock is low to ease ordering and allow for printable inventory control sheets.

3. Barcodes

Barcoding, especially in tandem with an inventory control software package, uses a scanner to check in products and ingredients when they arrive and check them out when they are sold or leave a warehouse.

Inventory control software

Several technologies allow for easily generated inventory reporting, which can be used for reordering ingredients and managing warehouse space.

4. Radio Frequency ID (RFID) systems

RFID deploys a small tag or microchip embedded in a product’s packaging. Often more efficient than barcode systems, RFID products can detect tags automatically within a small radius.

5. Inventory control software

Comprehensive inventory control software systems, such as those provided in Sage X3, provide manufacturers with many tools to enhance their management and that of their suppliers. Here are a few top features of such systems.

  • Customization. Modern software for inventory management allows users to customize components to address needs and better reflect production, ordering, and inventory control.
  • Data integration. Software allows managers to integrate with suppliers, gaining a better understanding of lead times, improved communication, more transparency, and decreased oversupply or undersupply of ingredients or finished goods. With perishable items, this results in fewer production delays and waste.
  • Traceability. With the implementation of the U.S. Food Safety Modernization Act (FSMA) rules, food and beverage manufacturers need additional safeguards in place. In the case of a food safety issue, inventory control software can accelerate track and trace needs, allowing for issues to be identified and mitigated faster.  If regulatory reporting is necessary, software can generate reports quickly.
  • Automation. Inventory control software plays a crucial role the growing push to automate food manufacturing, allowing managers to gain a better understanding of procurement, operations, distribution, and sales.
  • Scalability. Many software packages today can grow with the company. A small producer might need to switch from spreadsheets to barcode scanners, requiring new purchases, processes, and training. Smart companies select an inventory control software program that will grow with anticipated expansion.

At NexTec, we work closely with food and beverage manufacturers to learn about their companies, challenges, and needs. With our deep network of vendors, we help companies find products with the right features that will offer smart solutions. To learn more about how NexTec can help your business with inventory management, download the NexTec Ebook – Take control of food and beverage inventory management.

 

 

 

Food processing software

FSMA standards for warehouse management. Are you compliant?

By | Food and Beverage, FSMA, Inventory control, Sage X3, Warehouse management | No Comments
Technology is transforming warehouse management and compliance.

Technology is transforming warehouse management and compliance.

With the implementation of key provisions of the Food Safety Modernization Act (FSMA) now in play, food and beverage manufacturers need better technologies and tools to monitor and manage their supply chain. Warehouse management is a critical component of food safety. As a food manufacturer, there is an important question you should ask yourself regarding FSMA standards for warehouse management: Are you compliant?

FSMA addresses prevention, inspection, compliance, response, and import management. At each step, the act’s provisions are focused on accurate measures that will drive better oversight of the entire food supply chain.

Many consider the FSMA to provide an opportunity to shift from reaction to prevention. New technologies in the warehouse are one key way to ensuring companies can comply, while also improving food safety and providing functionality that improves efficiency.

Warehouse management has traditionally been a predominantly manual system. That is changing as companies embrace new technologies and integrate warehouse management systems into enterprise resource planning (ERP) platforms that facilitate multiple functions.

These technologies ensure better accuracy in picking, mixed SKU pallets, and other areas of warehouse management. In turn, these innovations help ensure food safety and FSMA compliance.

For example, the growth of the Internet of Things can connect objects in the warehouse that can track, monitor, record, and transmit information as inventory moves in and out of the warehouse, a major boon to the food and beverage industry.

Food processing software

Technology makes for more accurate picking and safer warehouse conditions.

Consider some of these other new technologies that are transforming warehouse management…

Paperless processes. For far too long, the picking process has relied on paper. Today, with the new federal guidelines in play and more demanding specificity by customers, warehouses need more accurate tools. For example, a customer may insist on products that have an expiration date that is no more than X days away. With electronic picking, it is easier for warehouses to manage such specifics.

Voice commands. Voice-activated controls provide far more inventory accuracy, order accuracy, and better warehouse control. Such systems are optimal in cold environments where gloves and cold fingers can lead to more mistakes.

Laser-guided pallet trucks. These systems move automatically to the proper picking location within the warehouse and move the appropriate pallets to the shipping dock, often with little to no need for a picker. The tool offers more accuracy and saves time by eliminating the need for drivers to enter and exit repeatedly.

RFID technology. This technology is semi-automated, relying on a mapped route to bring a truck to the right location and a lift that ascends to the proper height automatically. Routes are optimized, saving time.

Electric trucks. Electric vehicles have a dual benefit. They reduce the level of emissions and lower the risks of permeating increasingly thin plastic wraps on product. They also make the warehouse a safer environment for workers.

To be successful, food processing manufacturers need robust warehouse management systems that integrate warehouse functions with data from purchasing, operations, distribution, sales, marketing, accounting and billing. Sage X3 is an ERP that delivers exactly that at a fraction of the cost and complexity of typical ERP systems. NexTec has the largest, most experience Sage X3 team with deep experience implementing ERP for food and beverage manufacturers. To learn more about how NexTec and Sage X3 can help your food and beverage company, download NexTec’s Food Brochure


Why inventory control is a must and how to do it

By | Distribution / Supply Chain, ERP, Inventory control, Manufacturing, Sage X3, Warehouse management | No Comments

Smart inventory control keeps your operations moving.

As inventory items change over time, what began as a well-planned, well-organized system can become disjointed, disorganized, and out of control. There are multiple theories on how to organize inventory items. Regardless of how your warehouse is organized, the latest in inventory control software can help determine how best to control your stock.

Good inventory management is very much a matter of predicting market demand, improving means for forecasting demand, and smart management of the supply chain so that you’re never caught off-guard when a supplier can’t deliver what they’ve promised.

The benefits of smart inventory management

When inventory is managed properly, less of your inventory spoils goes out of date or becomes obsolete. Dead stock that isn’t necessarily expired but is, nonetheless, not salable takes up valuable space in your warehouse. But space is just part of your worries. Dead stock ties up your capital, limiting your ability to use your capital for other matters. Since it’s difficult or impossible to offload dead stock at full price, you face having to sell it at a loss or for scrap value.

Both viable and dead stock come with considerable storage costs. Running out of inventory may lead to costly production downtime. Keeping plenty of inventory on hand assures that you can meet your customers’ demands even when there’s a hiccup with one of your suppliers. Keeping too much inventory ties up your cash. It’s a never-ending balancing act.

How to achieve optimal manufacturing inventory management

Manage your relationships with customers and suppliers so that you get access to limited supplies and can easily smooth over an occasional hiccup in delivery times or quality.`

Manage your relationships with customers and suppliers so that you
get access to limited supplies and can easily smooth over
an occassional hiccup in delivery times or quality.

There are some best practices that you can use to optimize inventory management so that you can assure customer service and keep productivity high, without having to over-invest in stock that just sits there, dying.

  • Establish a baseline for low inventory. The amount of inventory you should keep on hand depends on how long the stock lasts, how quickly you go through it, and the solvency of your suppliers. The baseline might be a week’s worth of stock or a month’s worth, but it should make sense given how frequently the item is unavailable, how long it keeps, how quickly you run through stock, etc. Set a threshold which you don’t drop below. When stock threatens to dip below the threshold, reorder. This effectively ends the “seat of the pants” method of inventory management.
  • Adhere to the “First In, First Out” (FIFO) rule of inventory management. Make sure that the oldest inventory is used first. While usually applied to perishable stock, it’s also an excellent strategy for non-spoilable goods, because it assures that those items turn before they are replaced by new versions or new packaging designs.
  • Manage supplier relationships. Say your supplier does have a problem. Maybe their raw materials were affected by recent storms or difficulties in logistics. Perhaps their operations were shut down and they’re running behind. Temporarily they have only a limited supply available. Will they sell it to the customers who are always griping and complaining? They’ll likely offer it to the customers with whom they have the best relationships. Pick up the phone from time to time and check in with them. Personalize supplier relationship management. You will be more likely to have better access when their supply is limited and will be in a better position to negotiate prices and terms when all is well.
  • Manage customer relationships. When you have a solid relationship with your customers, they’re far more likely to be okay with some occasional bumps in the road. Manage your customer relationships like the most valuable things you’ve got, because they are.
  • Think in terms of “worst case scenario” and have contingency plans. Have a plan for a supplier that suddenly goes out of business or a situation like Hurricane Matthew when logistics can’t get your supplies to you as usual. Make sure you have enough inventory to keep on going even when something goes wrong in your supply chain.
  • Conduct regular inventory audits. Don’t wait until year end to reconcile your physical inventory and book inventory. Conduct regularly-schedule cycle counts. Inventory management is a continual process, not a once-in-awhile affair.

Inventory management shouldn’t be a mad dash at year end

Effective manufacturing inventory management is a practice that you must continually develop and improve. Better systems and processes make it much easier and take the guesswork out of managing inventory. Contact us to learn how we can work together to create an inventory management solution that is right for your business.