Best Practices – Inventory Management

Picking the Right Inventory Management Software for your Small to Medium-sized Business

Often smaller to mid-sized businesses try to use the inventory software that comes with their accounting system to manage their warehouse. Most accounting systems aren’t set up to handle the details required for optimum inventory management, including tracking of lots or serial numbers, multiple units of measure, multiple locations and/or multiple warehouses, issuing to jobs, the capability of using barcode data entry, etc.

Stand-alone inventory management software can bring all the functionality your company requires and is affordable. You understand your business better than anyone – make a list of your “must have” and your “would be great but not required” features, then evaluate based on your list. The reports you will get from the system will be an important management tool. Make sure the information you need is readily available either in report form or as a query.

A list of potential requirements:

• Easy to use, requires minimal training and start-up time (watch out for companies that quote weeks of installation time)

• Uses barcode for accuracy

• Flexible item set-up – can modify terminology to fit my business

• Has all the basic functionality – Receiving, Shipping, Counting

• Has a Purchasing Module • Can accept a Sales Order

• Can print barcode labels for items

• Can use the manufacturer’s SKU and barcode or my SKU and barcode

• Can attach a picture of the item if necessary

• Can hyperlink to or attach drawings

• Allows for multiple units of measure (each, box, quart, inch, etc.)

• Can track inventory by multiple locations and multiple warehouses

• Can set minimum/maximum levels by item and by warehouse or location

• Allows for “blind” receiving or receiving against a purchase order or other document

• Can move inventory from one location to another with minimal steps

• Automates the inventory counting process – allows for periodic and cycle counts

• Can issue inventory to work orders or jobs

• Has a Bill of Materials and Manufacturing Order

• Has the costing method I can use

• Has the reports available that I need or the ability to create them as queries

• Help Desk average response time is good

• Company has experience with barcodes and labeling requirements

• Offers connectivity to other software modules that I need (for example, manufacturing job costing)

• Offers connectivity to my accounting system

Conclusion

A well-designed and effective inventory management system will have a major impact on the health of your business. It will save you money, improve customer service, and help comply with traceability regulations. The use of barcode in the warehouse increases accuracy of data entry to over 99% and efficiencies by over 80%. Taking the time to plan for the system and include your people will assure the success of your installation.

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