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How Manufacturers use Inventory Management Software to Track Inventory Levels & Manage Production

How Manufacturers use Inventory Management Software to Track Inventory Levels & Manage Production
Business
– June 29, 2023

Manufacturers are constantly tracking the products they make. Having an automated process reduces the risks of mistakes and mismanagement. An inventory management system for manufacturers typically consists of several modules that help streamline and optimize various aspects of the manufacturing and inventory processes. Here are some key modules commonly found in such systems:

  1. Product Management: This module allows manufacturers to create and manage a database of their products. It includes features such as product categorization, SKU generation, product attributes, and specifications.
  2. Purchase Order Management: This module handles the creation, tracking, and management of purchase orders for raw materials and components. It helps streamline the procurement process, tracks supplier information, and manages order approvals.
  3. Stock Management: This module focuses on tracking and managing inventory levels. It includes functionalities like real-time stock tracking, stock adjustments, stock transfers between locations, and low-stock alerts. It also helps in implementing inventory control techniques such as FIFO (First In, First Out) or JIT (Just-in-Time).
  4. Warehouse Management: This module is designed to optimize the storage and movement of inventory within warehouses or distribution centres. It includes features like bin location management, barcode scanning, picking and packing, and warehouse optimization techniques such as slotting.
  5. Production Planning and Control: This module assists in planning and managing the production process. It includes functionalities like creating production schedules, tracking work orders, managing bills of materials (BOM), and monitoring production progress.
  6. Order Fulfillment: This module focuses on managing customer orders and order fulfilment processes. It includes features such as order entry, order tracking, order status updates, and order picking and packing. Integration with shipping carriers may also be included to generate shipping labels and track shipments.
  7. Quality Control: This module ensures quality assurance throughout the manufacturing process. It includes functionalities like quality inspections, testing, non-conformance tracking, and corrective action management. It helps manufacturers maintain quality standards and identify areas for improvement.
  8. Reporting and Analytics: This module provides comprehensive reports and analytics on inventory levels, sales, production performance, and other key metrics. It enables manufacturers to gain insights into their operations, identify trends, and make informed business decisions.
  9. Integration and Connectivity: This module allows seamless integration with other systems such as accounting software, enterprise resource planning (ERP) systems, and e-commerce platforms. It facilitates data synchronization, automates workflows, and enables efficient information exchange.

These modules can be customized or extended based on specific manufacturing requirements and the complexity of the inventory management needs.

Manufacturers utilize inventory management software to effectively track inventory levels and manage production processes. Here’s how they leverage such software:

  1. Real-time inventory tracking: Inventory management software enables manufacturers to track inventory levels in real time. They can monitor the quantity of raw materials, work-in-progress (WIP), and finished goods at any given moment. This visibility helps prevent stockouts, overstocking, and production delays by ensuring that the necessary materials are available when needed.
  2. Demand forecasting and planning: Inventory management software often includes demand forecasting capabilities. By analyzing historical data, market trends, and sales projections, manufacturers can predict future demand for their products. This information aids in production planning, ensuring that sufficient inventory is available to meet customer demands while avoiding excess stock.
  3. Automated inventory updates: With inventory management software, manufacturers can automate inventory updates. As goods are received, used in production, or shipped out, the software automatically adjusts inventory levels. This automation reduces the risk of manual errors and ensures accurate and up-to-date inventory data.
  4. Reorder point optimization: Inventory management software allows manufacturers to set reorder points for their materials or finished goods. Reorder points trigger automated notifications or purchase orders when inventory levels reach a specified threshold. This feature ensures timely replenishment, avoiding stockouts and production disruptions.
  5. Production scheduling and tracking: Manufacturers use inventory management software to schedule and track production activities. The software helps optimize production schedules based on inventory availability, resource allocation, and order prioritization. It allows manufacturers to monitor the progress of each production order, ensuring timely completion and delivery.
  6. Material requirements planning (MRP): Inventory management software often includes MRP functionality. MRP analyzes the production schedule, existing inventory levels, and demand forecasts to generate material purchase plans. It determines the quantity and timing of raw material purchases to support production requirements, minimizing excess inventory and reducing costs.
  7. Supplier management: Inventory management software assists manufacturers in managing their relationships with suppliers. It provides insights into supplier performance, delivery times, and pricing. This information helps manufacturers make informed decisions when selecting and negotiating with suppliers, ensuring a reliable supply chain.
  8. Quality control and recalls: Manufacturers can integrate quality control processes into their inventory management software. They can track quality assurance activities, record inspections, and implement protocols to address product recalls if necessary. This ensures product quality and compliance with industry standards.
  9. Reporting and analytics: Inventory management software generates comprehensive reports and analytics on inventory levels, production performance, lead times, and other key metrics. Manufacturers can gain insights into their operations, identify bottlenecks, optimize inventory management strategies, and make data-driven decisions to improve efficiency and profitability.

By leveraging inventory management software, manufacturers gain greater visibility, control, and efficiency in their inventory management and production processes. It allows them to streamline operations, reduce costs, avoid stockouts or excess inventory, and meet customer demands effectively. Click here to get started on an Inventory management system for your company.

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