Digital Transformation Today

How ERP Helps With the Processes of Inventory Management

In part one of our Enterprise Resource Planning (ERP) series, we outlined some common inventory challenges and how to solve them by upgrading to an ERP inventory management system.

In this next part, we’re going to take a deep dive into the inventory control ecosystem, and how a corporate ERP system can affect the processes and people involved.

Uncomplicating Inventory Processes With an ERP Inventory Management System

Managing inventory processes can be complicated, so it’s not surprising that issues often arise when manual methods are used, especially if there are unpredictable fluctuations in sales. Some of the more common inventory issues that an ERP inventory management system helps solve are:

  • Over/under-selling stock
  • Discontinued stock
  • Warehouse space limitations
  • Cash flow limitations
  • Manufacturer issues

Running into an inventory problem is inevitable, but there are some actions you can take that will minimize the chances of encountering an inventory issue. They include:

  • Renting enough space to be efficient (accurately forecast)
  • Cross-checking everything in your physical inventory
  • Implementing an automated ERP management software in place allows your organization to do both of these things quickly and efficiently.

How can an ERP software system contribute to the process of inventory management control and overall success?

ERP inventory management software is capable of automating complex processes, streamlining workflows, and replacing disparate technologies —which makes for an extremely powerful platform. Some ways a corporate ERP system can contribute to inventory management control include:

Process Automation

Automating inventory management processes with a barcode inventory system, enables organizations to can easily forecast and accurately scan individual sections of inventory into your ERP platform. Let’s examine an example of an inventory management process: by Cycle Count Programs

If you aren’t familiar with the cycle count program, you should be. In the realm of ERP inventory control, cycle count programs organize your inventory management processes by creating schedules to check in on specific products at regular intervals. It enables you to reconcile small portions of your inventory on a daily basis, instead of trying to count all your stock at once.

ABC Inventory Analysis

ABC inventory analysis is a way to categorize inventory, and if used in conjunction with a count cycle program, it can help to prioritize which groups of inventory require the most attention. The ABC process of inventory management works by sorting inventory into three buckets:

A. High-value products with a low sales frequency

These products require the most attention because their impact on revenue is significant.

B. Moderate-value products with a moderate sales frequency

These products require an average amount of attention because their impact on revenue is moderate, and the turnover rate of the products is faster than high-value products.

C. Low-value products with a high sales frequency

These products require the least amount of monitoring because their financial impact is low, and the stock is being turned over quite frequently.

Using any type of ERP inventory management system, especially an ABC Inventory Analysis in tandem with a Count Cycle Program, will ensure that the products with the biggest impact on revenue are inventoried most often. But while the process of inventory management makes up a large part of the business’s efforts, without the people to move it there would be no operation.

ERP Systems Help to Build an Inventory of Professionals

We all know the adage, “a place is only as good as the people in it”. The same goes with your inventory management process! Cultivating supplier relationships is necessary for consistent and reliable success and ERP systems make it all the easier.

Using a Corporate ERP to Build Suppliers Relations

Building strong relationships with your suppliers is critical to an organization’s success. It enables you to act quickly in unpredictable economic climates, or when orders are placed or canceled last minute. Supplier relations are especially important when:

  • Returns need to be made
  • Restocks need to be expedited
  • Manufacturing issues arise
  • Quantities need to be negotiated

Having a good rapport with all your suppliers increases the chance that they’ll help address any inventory problems that arise, and work with you to meet customer demand. To keep that rapport you need to have tight control over your inventory management, which is best done with ERP inventory software.


Successful supplier relationships aren’t just about being cordial. It involves a steady stream of proactive communication from both parties. Has your marketing team forecasted an increase in sales? Notify your suppliers so they can make accommodations. You can even ask them to alert you on important events as well. Is production behind? Ask your suppliers to warn you, so you can adjust marketing tactics or find a temporary replacement solution.

Hiring the Right People Makes All the Difference

Supplier relations aren’t the only people that matter in the inventory management process. No organization wants to have to pause operations, especially not for onboarding or training purposes. Even the best ERP inventory management system is useless if no one is trained on the process of how to use it. Use the following three tips to develop a more competent, dependable workforce:

1. Hire Experienced Professionals

Inventory managers are potentially responsible for hundreds of thousands of dollars worth of product(s). To avoid issues with inventory control, hire someone with ample experience and expertise. Even better if they have prior relationships with suppliers in your organization’s industry and are familiar with how ERP inventory management systems operate.

2. Foster a Culture of Accountability

Work with upper management (or if you are upper management, HR) to really flesh out the responsibilities of inventory managers. If managers don’t have a good understanding of their role within the organization, all the ERP inventory control in the world won’t be able to help the company meet its strategic goals.

3. Train, Train, and Keep Training

If you’re thinking about, or already invested in an ERP inventory management system, take advantage of on-premise training! We can’t stress enough how much regular training sessions really make a difference in the widespread adoption and utilization of new tools and software in the inventory process. Since the ERP system you choose will likely be tailored specifically for your company, on-site instruction is a great chance to get customized training on process best practices.

The implementation of an ERP inventory management system like Netsuite or Microsoft Dynamics 365 can save an organization significant amounts of both time and money. It’s no longer necessary to halt warehouse operations for days at a time to perform manual inventory checks. Installing an ERP inventory control system will remove many barriers to growth, and aid in the overall success of the business.

In our next and last piece in this ERP series, we’ll dig into the technology and data behind the process of inventory management and discuss why an automated ERP platform is by far the best option.

Contact Us

Looking to automate your inventory management processes with an ERP inventory system? Talk to Withum’s CRM and ERP Consulting Services Team.