Inventory is arguably the most important asset for any business - it's the materials, work in progress, and the end product that businesses sell to generate income. Without inventory, there is no business. But keeping track of inventory is just as important to running an efficient and profitable business as purchasing it; Poor inventory management is one of the top eight reasons small businesses fail, according to SBA.gov. Thus, inventory software Philippines has become a fundamental tool for entrepreneurs.
What is inventory management software?
Inventory management software consists of business applications that track, manage, and organize product sales, material purchases, and other production processes. Gone are the days of pen-and-paper inventory tracking - companies can now use barcode-based systems or radio frequency identification (RFID) to see when shipments arrive, where raw materials are located, and when they have been sent your products. By using inventory software, companies reduce the time and effort previously spent on basic tracking and instead focus on analyzing, finding, and reducing inefficiencies in their model.
Why is inventory management software important?
Without accurate accounting of how much inventory a business has, where that inventory is located, and what it will take to fill incoming and future orders, no business can function efficiently enough to generate profit and generate growth. Surprisingly, inventory inefficiency is common for many businesses. According to an analysis in Management Science, the figures were inaccurate for 65 percent of the nearly 370,000 inventory records observed at 37 retail stores.
Inventory turnover, a key metric for small businesses, is the cost of goods sold divided by the average inventory on hand. If your turnover rate is too low or too high, your business may be overstocked or unable to keep up with demand. Either scenario can cost you. Low turnover leads to duplicate orders or deterioration in value when products are left on the shelves or in warehouses; The high turnover rate often results in excessive shipping costs to quickly replace out-of-stock parts, wasted time physically locating necessary inventory, and eventually incomplete orders. Companies like Precision Drilling in Edmonton, Alberta, have found that a more balanced turnover rate leads to greater efficiencies, including built-in lead times for items that go to this website sell out quickly and days of hours saved previously reserved for working on worksheets. manual calculations. That kind of efficiency has a ripple effect that can even lower payroll costs, as employees no longer have to waste time tracking individual parts or orders.
What is ERP?
Enterprise Resource Planning (ERP) is a system of integrated software applications that standardizes, streamlines, and integrates business processes across finance, human resources, procurement, distribution, and other departments. Typically, ERP software operate on an integrated software platform that uses common data definitions that operate on a single database.
ERPs were originally designed for manufacturing companies, but have since expanded to the service industries, higher education, hospitality, healthcare, financial services, and government. Every industry has its own ERP quirks. For example, government ERP uses contract life cycle management (CLM) instead of traditional purchasing and follows government accounting rules instead of GAAP. Banks have back-office settlement processes to reconcile checks, credit cards, debit cards, and other instruments.
The benefits of an ERP system
ERP systems improve business efficiency and effectiveness in several ways. By integrating financial information into a single system, ERP systems unify the financial reports of an organization. They also integrate order management, making order-taking, manufacturing, inventory, accounting, and distribution a much simpler and less error-prone process. Most ERPs also include customer relationship management (CRM) tools to track customer interactions, thus providing deeper insights into customer behavior and needs. They can also standardize and automate manufacturing and support processes, and unify procurement across the various business units of an organization. An ERP system can also provide a standardized HR platform for time reporting, expense tracking, training, skill matching, and the like, and greatly enhance an organization's ability to present the reports required by government regulations, in finance, human resources and the supply chain.
Well-functioning ERP software Philippines systems allow companies to reduce the time required to complete virtually all business processes. They also promote collaboration through shared data organized around common data definitions, resulting in better decision making. The standardization and simplification offered by ERP systems result in fewer rigid structures, thus creating a more agile business that can adapt quickly while increasing the potential for collaboration. A centralized database of ERP systems, while a larger goal, is easier to protect than data spread across hundreds of systems.