Does all the inventory in your warehouse have the same reordering guidelines? For most distributors, the answer is no, because certain items often require different restocking policies based on item type and historical usage. When you’re trying to manage sets of inventory that need to be treated differently, you can either rely on mostly manual tracking, or automated systems that reorder based on pre-set triggers. If you’re doing this manually, it means your warehouse manager is tasked with physically taking stock of your inventory and updating a spreadsheet, or entering the data into an inventory management system. On the other hand, if you rely on automated forecasting tools, they may not be “smart” enough to apply different reordering rules to different sets of inventory. Both options come with risks – neither provides you with a clear picture of what’s available to promise at all times. So what is the best way to properly manage sets of inventory that all play by different rules?
To solve this problem, you would ideally have a business management solution capable of handling multiple formulas for different sets of inventory – regardless of whether some items use an EOQ formula or another type of reordering policy. This means your purchasing manager wouldn’t have to stay in constant contact with the warehouse every time an order is placed, because everyone would be able to see exactly how much is in stock and when it will be replenished. If you run a Microsoft Dynamics solution such as Dynamics NAV, GP or AX, it can provide this type of functionality and will benefit your business in several ways:
Increased visibility – Imagine having access to real-time information about your inventory throughout all stages of the supply chain. You will always know the status of each item in stock – plus, better visibility creates a solid foundation for valuable Business Intelligence and analytics.
Multiple formulas – When you have different sets of inventory with their own unique reordering policies, Microsoft Dynamics solutions let you manage this more accurately with multiple formulas. It can also adapt to unexpected changes and make adjustments to reflect real procurement requirements.
Improved cash flow – Since inventory is usually the largest expense for distributors, being able to forecast accurately means you only order what you need, when you need it – which reduces carrying costs and increases your margins.
With the advancements in forecasting technology, you can now rely on automated solutions for inventory tracking and forecasting. There are flexible forecasting tools available through Microsoft Dynamics solutions that allow you to make better decisions about your inventory based on historical usage, lead times, seasonality, and even customer-provided forecasts. Since Microsoft Dynamics solutions are capable of using multiple formulas, different reorder policies can be applied to different sets of inventory. With access to the flexible forecasting tools available today, you can create a realistic picture of your inventory needs while reducing dependence on manual processes.
Interested in finding out how you can improve forecasting for your business? OmniVue can take a look at your current systems and processes, and identify inefficiencies that may be costing you money. We use our unique
VueFinderTM approach to define what success looks like for your business; then we create a plan to get you there. Contact us to learn more about how we can help streamline your inventory management processes.