INVENTORY CONTROL ???
Of all of the Accounting Modules, Inventory Control tends to be the biggest problem for most companies. There are numerous reasons for this, but most have simple remedies.
Most companies pay particular attention to Invoicing & Receivables because they immediately affect cash flow and your ability to do business. Likewise Payroll demands attention or your employees stop working. Fail to pay your Vendors and eventually supplies stop arriving at your door.
Inventory on the other hand does not seem quite as critical, even though its proper management can be vital to the long term health of your business. Because of its low profile on the importance meter however, it often suffers from an acute lack of attention.
For Inventory to work, companies need to develop good routines and proper paper flow. Packing Slips must be entered promptly to keep inventory up to date and prevent duplicate orders from being placed. Customer Orders need to be Allocated and Purchase Orders placed On Order to indicate accurate and up to date Inventory Status.
When Inventory is managed correctly, out of stock situations happen less frequently. This often results in higher sales as customers do not have to turn to an alternate supplier for goods they need immediately. Stock levels more closely reflect customer demand so that companies do not end up with large quantities of products that they are not going to sell and ultimately have to write off.
When companies are sure that their Inventory transactions are being entered correctly they can more easily analyze sales patterns, negotiate better pricing from vendors and accurately identify shrinkage problems due to waste or theft of goods.
Most good Inventory Systems combine the best features of a number of accounting modules to provide good management. These modules typically include:
- Inventory Control
- Supplier Purchasing
- Process Management
- Customer Order Processing
- Product Sales Analysis
Inventory Control allows you to set up parts and ultimately track orders from suppliers, allocate customer orders and shipments. It uses this data to produce a variety of reports. Stock minimums, maximums, order points and lead times can be established to help facilitate an efficient distribution process.
Purchasing allows you to order products from your suppliers producing Purchase Orders and tracking them as product is received to update Inventory accordingly. Reports help expedite supplier deliveries by highlighting overdue product orders.
Process Management allows the creation of Recipes or Bills of Material needed to create products. As Production Orders are placed, raw material components in Inventory are allocated alerting operators to any potential shortages in the materials required to fill the production orders for the next week.
Customer Order Processing allocates Inventory for products ordered or their raw materials in the case of manufactured products. Pick Lists or Work Orders are created to facilitate the production and shipping of the products ordered. Reports help manage the production and shipment of goods based on inventory availability.
Sales Analysis helps identify sales trends and patterns to maintain inventory levels.