Enterprise Resource Planning and Its Role in Inventory Management

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Enterprise resource planning (ERP) is a business management process software that is usually developed as an integrated applications suite. Businesses use it to collect, manage, store, and use data from core business activities such as manufacturing, product planning, and inventory management. ERP is a reliable software for inventory management as it lets you track resources like cash, production capacity, raw materials, and the status of purchase orders and orders more efficiently. Using an enterprise resource planning software in your distribution systems may help improve your inventory management. 

Benefits of ERP in Inventory Management 

Inventory management in an enterprise resource planning software can provide your company with the following key benefits: 

1. Manage costs accurately – With ERP, you can accurately track the costs of sold goods and the costs for holding inventory. An efficient software lets you choose different valuation methods for every inventory item. Likewise, it lets you create GL entries right from inventory transactions. 
2. Manage multiple warehouses – ERP makes sense when you are running two or more warehouses. It lets you manage every warehouse by assigning specific inventory allocations, costs, and quantities. Moreover, it makes it easier to redistribute inventory automatically to other warehouses from your central warehouse upon receipt.
3. Use multiple methods for valuation – Use moving average, item-specific methods, FIFO, and standard cost for valuation, or assign a different valuation method for every inventory item. The software lets you adjust the physical inventory count and cost directly using inquiry and report screens. 
4. Organize your inventory further with sub items – Inventory sub-categories can be assigned to make it easier to track inventory characteristics, like style, color, and size. The software comes with tools that allow you to relate quantity information with every sub item, or view aggregated totals and detailed segment information. 
5. It comes with all the important features for an efficient way to manage your inventory – The best ERP software lets you track your inventory by serial or lot number. Expired items can be eliminated automatically from your available inventory, or you can let the software issue items that will expire the soonest to minimize your losses. ERP comes with features for inventory bin and location control, purchase order automation, CRM integration, two-step transfers, transaction reason codes, and sales order promotions and discounts. 

A reliable ERP software should help improve your profitability and customer service by providing real-time access to inventory costs, inventory in transit, and available inventory. Inventory management with ERP makes it easier to control and manage system-wide inventory, so you can efficiently manage all distribution processes while keeping track of costs. The software can provide you with a one-stop source for all the data on your inventory no matter where you are. Likewise, it lets you change details about your inventory, such as the accounts, valuation methods, and default lot or serial numbers while on the go. 

About The Author: 

Ray Rebello, the Director of Product Marketing, Acumatica shares his valuable inputs on the effective use of cloud accounting software and enterprise resource planning. Acumatica.com is a leading provider of cloud business management software that delivers fully integrated applications such as Financials, Distribution, Manufacturing, Project Accounting and CRM. In our interconnected world, Acumatica's highly functional and flexible SaaS solutions enables customers to take full control of their business at anytime, anywhere and on any device.