An Inventory System as the infallible eye
To countless business enterprises, the inventory system acts as a superhuman eye that tracks the inflow and outflow of goods in the course of the company’s operations.
There are many points for inventory. For instance, there are raw materials needed for the manufacture of the company’s main product.
When an order comes in, the company becomes aware of how many units of the product it needs to produce. Consequently, the raw materials required must be noted, as well as their actual quantities on hand, must be taken into consideration. If the inventory is enough, work can proceed right away. The inventory system will make sure this information is made available right away.
But if the raw materials are not readily available, the company must begin procuring them so it can begin production. The inventory system will also inform the staff that materials have to be sourced to respond to the demand.
There should be no problem if the materials could be sourced immediately, or if there are suppliers willing and able to provide these at once. However, some raw materials also need to be ordered, or transported, even imported. If these take too long, work is delayed and the customer who placed the order for the product – and expect it at a certain time – may get impatient and become unsatisfied.
The inventory system will thus tell everybody concerned that x number of x materials are needed within a specific number of days. This especially applies if the orders come at a regular basis, or in specific times within a month or year. As a consequence, the company is able to begin production immediately to the satisfaction of the customer. The desired effect is customer loyalty.
If the company can afford to stock up on raw materials in anticipation of the order, it can begin to do so even before the orders actually come in. However, one can only stock so much and only for so long. There are also consequences of having too much inventory. Materials can rot or spoil and may end up as wastage. This means additional unintended costs.
Another example would be in warehousing and distribution. A company may have a specific volume of finished products ready for shipping. While awaiting their turn to be brought to customers or to middlemen, they could be in some warehouse facility for easy deployment, in anticipation of deliveries.
It is an inventory system that ensures that the right volumes of the right products are on hand. How much can be committed for distribution on this particular day? How much will be available tomorrow, or the next day?
Again, if the deliveries are not made on time because there is lack of inventory, customers will be unhappy. An inventory system will make sure this does not happen.
Conversely, a warehouse has only limited space and the finished goods may have some expiry date. If a company stores too much, so that the inventory greatly exceeds the deliveries required to be made, it is also not good for the company. Inventory will pile up, and the goods may not be in their optimal condition when delivered to the customer. Wastage may happen, translating into additional expenses and lost revenue. Or, when the products do get delivered, the customers may find that they are in their less-than-ideal conditions. This will also result in dissatisfaction and potentially loss of future business. Again, a good inventory system will prevent this from happening.
The principle then is to have the materials ready just in time.
The just in time principle is a tricky part of business because it necessitates good timing and near-perfect coordination between and among the various business units of a company, suppliers, distributors and customers.
An inventory system need not be computer-based. Even a manual style of keeping track of the flow of goods in and out of the company may also be deemed some sort of inventory system. This especially applies to very small businesses and whose main actors are not inclined to employ technology tools, or when such aids are unavailable to the location of business.
More and more, however, there is a need to computerize inventory systems. This is because simply relying on crude methods may be counterproductive. They may be tedious, taking up most of the employees’ time. They may also be prone to human error. In this case, the objective of having an inventory system no matter how simple may be defeated. In fact, mistakes can entail additional cost, lost revenue, redundancy and customer dissatisfaction.
Most companies have thus decided to employ an inventory system software that would help them perform this function efficiently and seamlessly. Because of the popularity of an inventory system software, even up and coming, small and medium enterprises as well as the more established, bigger and multi-location companies have invested in this kind of tool. Increased competition in business have prodded executives to consider making the investment.
To be sure, it does not come cheap. The cost of acquiring an inventory system software may seem prohibitive in the beginning. After all, it’s not just the software that you are buying. You also have to have the minimum computer hardware specifications. If you don’t, the software would be worthless. You may have to shell out additional money in buying equipment that would make you meet these minimum requirements. You have to have the software implemented, and that means hiring consultants and service providers. Your employees will have to be familiarized with the inventory system software and trained on how to use it to your best advantage. This will mean that they will have to stop doing productive (i.e., revenue-generating) work for the company so they will have the time to be trained.
Sometimes, an inventory system software is a stand-alone tool. In other times, it is part of a more comprehensive suite of software designed to cover the company’s entire operations, from beginning to end. (In which case, the cost would even be bigger. So would the benefits.)
In the long run, however, any outlays made to acquire an inventory system software will be well-rewarded. The advantages in the long run greatly outweigh the costs.
The just-in-time principle will be mainstreamed into the company, and as a result the wastages on one hand, and shortages on the other, will be significantly minimized. This will have impact on financials and on customer relations.
Over the long term, sustained minimization of expenses, increased revenues and happy customers will push the company to sustained profitability and growth.
There will be less tedious work of manually keeping track of the movement of materials, so that employees can use their time and channel their energy to more productive activities. Less error would also prevent unnecessary expenses and keep customers satisfied.
Decision makers will stand to benefit the most. The inventory system will allow them to analyze the sales and distribution system of the company and anticipate accurately the issues therein. They will be able to see where the weak links are in the chain and address them. They will also be able to plan both the short and the long term, taking into consideration the information provided by the inventory system software.
Any type of business and any size needs some kind of tracking. The need increases with the complexity of the operations. It is impossible for anybody to perfectly keep tabs of the movement of goods so the inventory system acts as some kind of eye that would ensure everything flows smoothly.
With regard to those providing the inventory system software and after sales services, there are now numerous software companies that serve diverse markets all over the country and even the international market. They have the network and the expertise to help companies pick out the right brands to serve the unique needs of the industry. They also have qualified people to give professional advice and provide implementation, staff training and other after-sales services.
Competition has become tough especially in this age when information and mobility have enabled people to push their limits to exceed expectations. The inventory system software is no doubt an indispensable tool in doing business especially for those who want to stay in the game, and stay ahead.