Use of ERP in Inventory Management

Inventory management software is made up of several key components working together to create a cohesive inventory for many organizations' systems. These features include:

Reorder Point

Once the inventory reaches a specific threshold, the system should indicate to the managers to reorder that product. This helps companies avoid running out of products or tying up too much capital in inventory.

Asset tracking

When a product is in the warehouse or store, it can be tracked via its barcode and/or other tracking criteria, such as serial number. Nowadays, inventory management software often utilizes barcode, radio-frequency identification (RFID), and/or wireless tracking technology.

Service management

Companies that are primarily service-oriented rather than product-oriented can use inventory management software to track the cost of the materials they use to provide services, such as cleaning supplies. This way, they can attach prices to their services that reflect the total cost .

 Product identification

Barcodes are often the means whereby data on products and orders is inputted into inventory management software. A barcode reader is used to read barcodes and look up information on the products they represent.  RFID tags and wireless methods of product identification are also growing in popularity.

Modern inventory software programs may use QR codes or NFC tags to identify inventory items and smartphones as scanners. This method provides an option for small businesses to track inventory using barcode scanning without a need to purchase expensive scanning hardware.^[

Inventory optimization

A fully automated demand forecasting and inventory optimization system to attain key inventory optimization metrics such as:

·         Reorder point: the number of units that should trigger a replenishment order

·         Order quantity: the number of units that should be reordered, based on the reorder point, stock on hand and stock on order

·         Lead demand: the number of units that will be sold during the lead time

·         Stock cover: the number of days left before a stockout if no reorder is made

·         Accuracy: the expected accuracy of the forecasts