Key Capabilities to look for when Evaluating ERP for Inventory Control

Maintaining adequate inventory control can make or break a company that works with substantial inventories. If you’re a manufacturer or distributor, effectively managing your inventories is critical to profitability, customer service, and operational efficiency.

Inventory systems perform two basic functions:

• Manages the quantities of inventory purchased, stored, and sold
• Values owned inventory and calculates costs of sales

To be effective at controlling inventory quantities, an inventory system has to be able to perform these functions:

• Adequately report and control quantities by location, site, bin, etc.
• Provide adequate transaction types to match the physical movement and activities of inventory items
• Provide an effective way to conduct physical counts and update inventory records with results
• Provide direct links to purchasing, sales, and manufacturing systems that impact inventory quantities
• Track serial numbers and lot numbers if needed
• Provide information on incoming inventory purchased but not yet received, and inventory sold but not yet shipped
• Record transactions for every physical inventory movement and maintain adequate audit trails

To effectively maintain inventory valuation, an inventory system needs this functionality:

• Directly link to purchasing systems to access actual costs of incoming inventory
• Allow for inventory revaluation in case of value impairment
• Maintain accurate valuations of on-hand inventory and sold inventory based on GAAP valuation methods
• Automatically create financial transactions that post to the general ledger

There are a number of mid-range ERP systems that provide the above functionality, most notably Dynamics GP.

One thing to be aware of is there can be a substantial amount of record keeping involved in keeping an inventory system up-to-date, but this is a critical for accuracy. Record receipts when they arrive, record shipments when they leave your warehouse, and record the results of stock accounts as soon as they’re analyzed. If the system isn’t well maintained, the information it provides won’t be worthwhile.

Additional business value can be derived from a well-managed inventory system. These are a few benefits:

• Identify inventory shrinkage so you can investigate and reduce it
• Identify slow moving inventory to adjust purchases and free up storage capacity and reduce other related inefficiencies
• Identify fast moving inventory to take advantage of new sales opportunities and to manage inventory to reduce stock-out situations that lead to lost sales and lost customers
• Manage inventory levels to effectively meet customer requirements and reduce working capital investment

Armanino can help you evaluate whether a Dynamics  ERP solution will meet your inventory requirements.  Additionally, our finance experts developed the Stock Count Import Module to streamline your inventory reconciliation process by reducing manual data entry. To learn more, contact us.

About Armanino LLP

Armanino is a Gold Certified Microsoft Dynamics AX, GP and CRM Partner with five California locations (San Ramon, San Jose, San Diego, Irvine, and San Francisco) as well as offices in Portland, OR, Bellevue, WA, and Naperville, IL.

Our team understands the unique business processes, common pain points and compliance issues many high-tech manufacturing and life science companies’ face and can assist you with integration to front or back office systems, deployment, data migration, and training.

We encourage you to call us with questions and let us know about your company and business goals. Visit us online at: http://www.amllp.com/microsoft-dynamics

The post Key Capabilities to look for when Evaluating ERP for Inventory Control appeared first on goERPcloud.