For companies to satisfy customer demands, cut expenses, and maintain seamless operations, effective inventory management is important. Nonetheless, a lot of businesses struggle to effectively manage their inventory, which can result in stockouts, overstocking, and losses.
In India, pharmacies usually earn only 2-3% profit margins, according to a survey by the Indian Retail Pharmacy Federation (IRPF), hence managing inventory is important. More than 50% of retail pharmacies experience stockouts of critical medicine, which has an impact on consumer happiness and business expansion, according to another research from the Indian Pharmaceutical Association.
Businesses can tackle these obstacles by automating procedures, enhancing decision-making, and simplifying inventory monitoring with the installation of an Enterprise Resource Planning (ERP) system.
Key challenges
Having too much and too little inventory
Finding the right balance between supply and demand is one of the most difficult problems businesses encounter.
- Overstocking results in waste, higher holding costs, and capital lockup.
- Supply chain interruptions, lost revenue, and dissatisfied customers are the outcomes of understocking.
Poor real-time visibility
A lot of companies find it difficult to monitor inventory levels in real-time, which results in poor forecasting and poor management. Businesses risk the following if they don’t have real-time data:
- Incorrect purchase orders
- Inability to identify slow-moving inventory
- Supply chain operations interruptions
Ineffective manual procedures
Many businesses continue to use outdated systems or spreadsheets for manual inventory monitoring, which results in:
- Human mistakes in stock counts
- Slow stock level updates
- Time-consuming reconciliation procedures
Problems with warehouse management
Businesses find it difficult to track stock movement, refunds, and damaged items in the absence of a centralized system. Ineffective warehouse operations result in:
- Order fulfillment delays
- Trouble tracking product location
- Increased operating expenses
How does an ERP system help in overcoming inventory issues?
A consolidated platform for effective inventory management is offered by a modern ERP system, ensuring precise decision-making and real-time tracking. According to studies, ERP systems help businesses increase supply chain efficiency while lowering inventory holding costs by up to 25%. Here’s how ERP addresses inventory issues:
- Real-time inventory tracking: ERP enables companies to avoid stockouts and overstocking by providing real-time stock monitoring.
- Automated stock management: Manual data entry is eliminated and human mistakes are reduced.
- Cost vs savings: ERP cut cost through procurement optimization, waste reduction, and automation. Long-term savings result from increased productivity, fewer errors, and improved compliance, regardless of the substantial initial cost.
- Precise demand prediction: Optimization of inventory levels is achieved through data analytics and AI-driven insights.
- Improved warehouse operation: ERP improves warehouse operations, including order processing, stock transportation, and warehouse area usage.
- Regulatory compliance management: Provides companies with easy access to batch numbers, compliance reports, and expiration dates.
Although inventory management is a difficult task, ERP systems offer a smooth method for monitoring, managing, and maximizing stock levels. Companies can increase customer happiness, boost profitability, and save losses with real-time analytics and automation.
Is your business struggling with inventory management? It’s time to consider an ERP system.
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