With good inventory management software, your supply chain operations are more logistically and financially efficient. Having a thorough understanding of your stock levels and location allows you to use your supply chain to meet customer expectations, balance supply and demand, and build good supplier relationships.
The link between supply chain and inventory management
Inventory management is controlling stock movement in way that supports business goals.
The term 'supply chain' refers to anything that contributes to receiving and redistributing raw materials or the products you sell. Your inventory is those raw materials and products, and inventory management is how you control their movements in way that helps you achieve your business goals.
Naturally, you can only maximise your supply chain efficiencies if you have a thorough understanding of what you have in stock now, where it needs to be, how much you'll need to order in future and the timelines your suppliers work to.
Supply and demand
Your organisation is likely in the middle of relationship between your supplier and your customer. You have to balance the expectations, demands and decisions of both to ensure everyone gets what they want.
This becomes particularly complex in global supply chains, or those with long delivery timelines. You don't want to keep too much stock on site in case you never sell it, meanwhile you need to manage your storage facilities to minimise costs. However, you may have to deal with customs clearance or any number of political issues such as union strikes affecting transport.
In order to ensure you receive your supplies just when you need them and you hit your own delivery targets, you need to have a detailed overview and understanding of your inventory.
Of course, getting supply and demand right doesn't just keep external stakeholders happy – it keeps internal costs down by ensuring efficiency in the supply chain.
The most basic example is that without understanding your inventory, you may have more trucks or drivers rostered on for delivery than you actually need. Keeping a close eye on your inventory allows you to adjust these types of operational needs accordingly and minimise costs.
Similarly, a closely monitored inventory allows you to maximise your supply chain by adapting it to current needs. You might be able to reduce delivery costs by looking at the locations you're currently working in, or minimise project downtime by ordering raw materials to arrive on the same day.
Data-driven decision making
In essence, the reason a good inventory management system so strongly impacts the efficiency of your supply chain is the data insights it provides that allow you to make more efficient business decisions. This is where you can maximise impact by not only have an inventory management system, but by choosing a platform that works with you to provide the most useful and powerful data possible.
A good inventory management system provides key data that drives decision making.
Good inventory management systems provide the ability for you to customise the type of information you record for each product and create inventory analysis that's specific to the way you operate across multiple locations.
Using inventory management to improve its effect on the supply chain
Cross department collaboration
Access to such detailed business data isn't just a win for your inventory warehouse team. It allows wide reaching, cross-department collaboration that can impact operational decisions across the company.
By sharing this information with departments such as marketing or operations, for example, they can adjust their strategic priorities accordingly. They can plan on the basis of the information you provide, or put in place new initiatives to support your inventory needs. Your operations team could change manufacturing arrangements to fit better with your delivery timelines, while marketing could adapt their approach to align with realistic service standards.
Generating meaningful inventory reports and predictive analytics
It's not just data that comes out of a good inventory system – it's meaningful information too. People with different responsibilities can access data that enables them to make effective decisions without having to waste time trawling through information that doesn't help them.
However, now the most sophisticated inventory management systems are able to generate predictive modelling. With a computer's ability to process significantly more data than a human can and at several times the speed – it can draw conclusions on the basis of thousands of data points that show operations managers exactly how their business is operating now, and how they stand to perform going forward.
To see what good inventory management software looks like, and learn more about how it can improve your supply chain – request a free demo with Advanced Business Manager.