Inventory Management

The Role of Inventory Management

Inventory management plays an important role in the success of your manufacturing company. It combines various vital elements, including planning, control, and the optimisation of products and materials held in stock. 

In the 21st century, few companies use physical systems—such as manually updated forms and stock books—to monitor their inventory. Instead, they use inventory management software to improve accuracy and efficiency. 

For example, inventory management software ensures you have the correct number of raw materials, the right amount of work in progress, and an optimum amount of finished goods to meet production costs. 

Here are some of the main benefits of inventory management software:

1. Managing Parts

Inventory management software guarantees meticulous management of parts, components, and raw materials that are fundamental for the manufacturing procedure. 

Using inventory management software can help you streamline your entire production process and guarantee your parts are always organised. Similarly, a software system will impose rules on a warehouse or store location, enabling you to easily retrieve parts and components when needed for production. 

2. Managing Approved Suppliers

To guarantee a streamlined inventory process, your business needs to monitor approved suppliers and their specifications. This includes understanding the quality and reliability of each supplier, something that can be time-consuming and challenging. 

Modern stock management systems allow you to upload accurate price lists and lead times from approved suppliers. As a result, you can make more informed purchasing decisions and keep an eye on your profit margins.

Likewise, setting warning levels for inventory items guarantees that the inventory manager is notified when the stock falls below a certain threshold; in turn, this will help to prevent production delays that can significantly harm your business. 

3. Bill of Materials (BOM)

A Bill of Materials (BOM) is a prominent component of any inventory management system. It involves building and maintaining complete lists of components and raw materials needed for each product or assembly. 

These lists outline the quantities of each item needed for production, which is fundamental for accurate inventory control and the success of your business. 

4. Purchasing Help

Inventory management closely integrates with the purchasing process. Maintaining an approved supplier list and easily raising Purchase Orders (POs) for replenishment or Material Requirements Planning (MRP) is crucial. 

For example, your business must guarantee a seamless flow of materials from suppliers to production lines; that way, you can maintain a steady cash flow.

A good inventory management system will also forecast stock attrition based on stock assigned to production or current usage rates. As such, you can forecast periods where you may require more cash available to replenish your stores and prevent overstocking. 

5. Track Revisions & History

Managing product revisions, movements and other changes is vital in manufacturing, and an activity log of all changes to your inventory is an integral part of inventory management. 

This helps ensure that the right materials are used for the correct product version and aids in maintaining quality control.

6. Stock Adjustments

Your stock management software should make stock adjustments easy to complete—either on an individual basis or in bulk stock takes.

For example, this can involve correcting inaccuracies in stock levels, moving materials between different locations within a facility, or conducting bulk stock takes to guarantee that inventory counts are accurate and up-to-date.

7. Live Dashboard for Decision-Makers

A live dashboard is a valuable tool for inventory managers and decision-makers; it allows them to customise their dashboards to show real-time reports and fundamental performance indicators related to inventory. 

Flowlens users can create custom dashboards that make it easy to visualise their area of the business and get the stats that matter in a few seconds. This includes inventory overviews and low stock warnings at a glance.

Final Thoughts 

Manufacturing inventory management software is essential for your manufacturing company. You can plan, control, and optimise your inventory—guaranteeing that the right materials are unrestricted when required. 

Ordering the optimum amount at the right time allows you to make better purchasing decisions, save money and take the stress out of stock management. Reducing overstocks helps bring costs on warehousing down and frees up more cash for the business. 

Finally, eliminating stockouts can remove production delays, improve delivery times and avoid the reputational damage that comes with missing deadlines.

Download our free stock management Ebook today if you want to learn six key strategies for improving your inventory and purchasing processes.