Inventory management is critical for distributors as effectiveness in inventory management will lead to better sales performance with the lowest inventory carrying costs and minimal supply shortages and disruptions.

The ideal inventory management strategy is based on the Just in Time or JIT approach where the holding cost is minimal with the higher number of turns of inventory.

Manufacturers today have wafer thin profit margins due to global competition and have to stay relevant by cutting costs with the implementation of more efficient processes. For any manufacturing company having optimal levels of inventory can avoid back orders, and keep warehouse costs for storing excess products to a minimal.

The key to successful demand forecasting and planning that leads to the adoption of a JIT model of operation starts with real time access to accurate operational data, and having the right forecasting tools that automate manual calculation

An ERP can help in inventory management by:

  • Automated Inventory Management: You can minimize inventory costs by automating the management of their bill of materials (BOM) including even multi-level issues. It is easy to determine your order requirements in normal operation or when production is slowing down or even pausing. This prevents overproduction and overstocks, in line with the JIT philosophy. Moreover, inventory reconciliation is automated and figures are updated in real time greatly aiding the supply chain and the sales process.
  • Implementing Lean strategies: It will helps in reducing the fat and the waste in the system by helping you target the seven deadly wastes of manufacturing for elimination- overproduction, inefficient transportation, waiting time, over-processing, unnecessary motion, and rejects and defects.
  • Forecasting of demand is more accurate with accurate and real time data: The right ERP solutions have easy data analysis and reporting features for demand prediction and forecasting. It is easy to quickly plan your production plan and your supply chain needs ahead of time and that supports them.
  • Better coordination between functions: Inventory planning, and demand forecasting can assist with better production planning, capacity utilization and optimization of inventory carrying costs. To implement a truly JIT strategy, your forecasts of demand must be accurate in terms of actual figures in real time and this can be done with visibility, analysis and collation of data from all the operational areas of your business that only a good ERP can provide.


The main benefits of inventory management by using an ERP are:

  1. Easier planning replenishment: Your inventory quantity needs to be accurate so when the signal to buy or make more is received if it is to be effective. The right ERP inventory management system can do this easily provided the history of data is available and if the updates of data across functions is enabled in real time. One item is ordered only when there is a specific demand and can be done in exactly the quantity to meet the demand.
  2. Managing surplus inventory: One can quickly see and react to surplus inventory with your ERP inventory management system which will spot it immediately and allow you to deal with it with various options. A delay might mean addition to costs due to obsolescence or expiry instead of earning some money.
  3. Tracking inventory turnover: You can track turnover of inventory by segments and not just overall. ERP inventory management systems allow you to categorize your inventory in many ways. The numbers of turns of inventory for a component or a product will depend on the cost classification and is critical for production as well as the reliability of the supply chain that supports it. The inventory carrying costs for an enterprise are lower when the inventory turns are more. This decision on the turns of inventory for a part or product could be a complex process that could be easily automated with an ERP leading to a greater number of components and products in the supply chain with an optimal number of inventory turns.
  4. Business savings that impact the bottom line: The right ERP can easily improve inventory organization and will lead to improved efficiency and better productivity in your stock room.The firm will save time and money through better inventory management and optimized processes that support it or are supported by it. This can lead to improved customer satisfaction through better support features, faster response times and more completed transactions.

With automated integration solutions, most businesses can hope to improve turnaround times, reduce duplication of effort, and expenses related to order fulfillment which then leads to fewer missed shipments, returns, and cancellations leading to greater business success.

We at VersAccounts have created a secure cloud based comprehensive ERP solution that is e-commerce ready. It has been catered to take care of all the business needs and concerns for operating your business effectively. It addresses key issues of the distribution domain in the most effective manner possible. It is affordable and targeted towards SMB’s and is backed by a promise of dedicated support. It is being used by clients in diverse verticals and could help you redefine the way you operate and grow your business.

VersAccounts Small Business Cloud ERP system’s web based inventory management capabilities support raw materials, work-in-process, and finished goods with the added functionality of handling complex BOMs and kitting. The solution supports multiple warehouses, serial-numbered and lot-numbered items, bar coding, custom-data fields, and just about any measurement units.

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