Inventory Optimization-How ERP Systems can improve Cash Flow
Simplifying ERP Systems for Wholesale Distribution and Manufacturing series continues with Inventory Optimization for cash flow improvement. An additional Inventory Optimization article is forthcoming.
Key Performance Indicators Dashboard
Crucial to your competitive advantage is the ability to know your financial standing at any given moment and all that effects it.
Using a completely integrated ERP system you interact daily with key performance indicators (KPIs) via a centralized ERP dashboard. Knowing your financial standing helps you improve cash flow by intelligently interacting with your data so you can take proactive steps.
Inventory Optimization Scenario 1:
By reviewing your global inventory from a centralized ERP dashboard you can see an immediate snapshot of KPIs such as:
• Inventory valuation
• Inventory turns
• Fill rates
• What items are under the minimum
• Suggested replenishments
With this KPI information you can proactively take action, avoiding any adverse consequences. Imagine getting a snapshot of suggested replenishments to avoid the expense of back orders.
Inventory Optimization Scenario 2:
By using the advanced, automated tools inherent in an integrated ERP system, buyers can make informed procurement decisions. Buyers also receive assistance with advanced purchasing suggestions when the inventory management system automatically analyzes items that should be ordered using your collected data.
• Previously, inventory management was manual, cumbersome, perhaps even impossible, to accurately gauge your needs. Now, using purchasing calculations presented by your inventory management software, your buyers can utilize the most efficient buying method based on formulas which analyze your historical and forecasted data along with variables such as min/max, safety stock, and daily usage.
The inventory management system analyzes current needs, future needs, and vendor targets for special pricing and available quantity discounts.
• Your buyers are presented with suggestions across different product lines and multiple warehouses to take advantage of buying opportunities.
• Your buyers can analyze the suggestions and, based on any other human-known variables, they can update the suggestions.
• If desired, your buyers can further analyze other vendors you purchase inventory from by drilling down to compare vendor prices, deals, and lead times.
• With a click, buyers create purchase orders and print, fax, or email the POs.
• Along with suggestions, your buyers receive proactive, automated alerts for stock that falls below the reorder point and immediately deals with this exception.
Using your ERP software you optimize your inventory with suggested purchasing and tracking vendor deals and automated alerts. In so doing, you reduce your inventory carrying costs by replenishing inventory to optimal levels while taking advantage of vendor deals.
Wouldn't "What-if?" return on investment scenarios be helpful to allow you to see the effect reducing carrying costs has to your bottom line? ROI scenarios help you analyze and visualize the effects an integrated ERP system with advanced inventory management can have on your profitability.
With their newly gained efficiency, your buyers now have time for additional inventory management on even more profit-oriented tasks such as reducing dead stock, negotiating better prices with suppliers, or reviewing product mix? What else is on your buyer's to-do list?
You may be surprised to see how easy optimizing inventory with ERP can really be. To see how you can increase productivity across all departments and thereby reduce operating costs, sign up for our ERP simplified series.
To further simplify your business, learn more about SaaS ERP, Software-as-a-Service, for distribution,manufacturing, and retail.