Inventory management is critical for any product’s success. It’s also a challenge for several young, scaling manufacturing companies—one that automation can help them overcome. It is the process of keeping track of inventory for products and supplies at various stages of production.
Manufacturing inventory management software automates the manufacturing process by continuously monitoring stock levels. It enables inventory management across numerous places, as well as the creation of bills of equipment, manufacture and production orders.
Manufacturing inventory management that is effective lessens production costs and simplifies operations. Before we get into how businesses can begin digitising their inventory processes, we should define inventory management and why CRM software for manufacturing industry is required.
What is Manufacturing Inventory Management?
Inventory management is the method of tracking and managing the progression and operation of all physical assets used in the manufacturing process. It begins with the acquisition of components and concludes with the sale of the finished product.
Inventory is more than just a storage facility for “business necessities.” It is an interactive and critical component of the overall production initiative. Inventory is a resource in the same way that equipment is, and it should be handled with the same level of attention. In fact, the worth of inventory frequently exceeds the value of production material, making it an important capitalised asset.
The inventory contains materials that must be processed or constructed, as well as supplies such as chemical solutions required for handling and full sub-assemblies, including housings, circuit boards, and other items. Inventory management encompasses raw materials to finished goods and may include work in process depending on the industry or method of production.
It is an important part of the entire supply chain planning because it includes the preparation and acquisition of materials and parts needed to generate final products, storage of products, warehouse organisation, and organisational mechanisms.
Different Types of Inventory
A manufacturing company’s inventory is divided into three categories on its balance sheet:
Inventory of Work in Process
It is an inventory that has progressed beyond the raw material stage but is not yet a finished result. The raw materials have been developed, but there are still some boxes to check before the item is available for sale.
For instance, this could be a massive vat of jelly that is still cooking and needs to be finished, placed in jars, and sealed. It could also be secured jars of jelly that have not yet been labelled. WIP inventory is anything that has passed raw materials but before final goods.
Inventory of Raw Materials
It includes all of the fundamental materials required for manufacturing inventory management. Food ingredients, plastic, metal, chemicals, stone, and anything else are used in the production of the final product. Consider a company that manufactures jellies and jams. Fruit and sugar are two of the most important raw materials.
Inventory of Finished Goods
This is the very end of the line. They have completed production and are prepared to depart the nest. A finished good is ready for sale and shipment. To return to the example, these are sealed and labelled jars of jam packaged for shipping.
These different kinds of inventory are the components that comprise the entire manufacturing inventory. However, there is an additional type of inventory that is not typically considered to be part of the big three of production inventory. That’s inventory packaging in action.
Why Is Manufacturing Inventory Management Software Important?
The most effective way to comprehend the significance of inventory and the necessity of having a reliable and precise system in place to control it is to search for the extremes, overages, and stockouts. However, this is one of the shortcomings of “old-school” inventory management, which is based on paper counting, spreadsheets, and manual inputs. Because while stockouts and overages constitute the extremes, there is little in the centre, and businesses can find themselves straying from one to the other.
The possible explanation for this back and forth between “too big” and “not quite enough” inventory management is that it emphasises both the risks of manual inventory and the importance of dependable, good, precise, and real-time stock management. While this is a burden on any supplier, it can be especially damaging to the cash flow and overall condition of small and medium-sized businesses.
Good inventory control strikes a balance to assist a company in cutting costs. With the proper material balance, money is only exerted for what is required, and even then, it is exerted as close to the date of invoice as possible. This balance enables businesses to fulfil orders while also increasing customer satisfaction. This resulted in improved customer service and increased brand recognition.
What Can Manufacturing Inventory Software Do for You?
Choosing the ideal manufacturing inventory system today is as simple as selecting the appropriate CRM software for manufacturing industry. Manufacturing inventory management software automates the manufacturing process by continuously monitoring stock levels. It enables inventory management across various locations, as well as the formation of bills of materials, production and service requests.
Everything we provided above is made easier with the right manufacturing inventory management software. You’ll be able to avoid squandering resources on slow-moving goods, understand where to double down to boost profits, and typically improve productivity.