{"id":10997,"date":"2022-05-05T08:55:55","date_gmt":"2022-05-05T06:55:55","guid":{"rendered":"https:\/\/us.syspro.com\/blog\/?p=10997"},"modified":"2022-05-19T18:35:23","modified_gmt":"2022-05-19T16:35:23","slug":"how-manufacturers-and-distributors-can-improve-inventory-management","status":"publish","type":"post","link":"https:\/\/us.syspro.com\/blog\/erp-for-manufacturing\/how-manufacturers-and-distributors-can-improve-inventory-management\/","title":{"rendered":"How manufacturers and distributors can improve inventory management"},"content":{"rendered":"

Complete halts result in backlogs and delays, which will impact warehouses and more importantly, their inventory management. As we have seen over the past 20 years, disruptions to supply chains<\/a> have global impacts on all industries.<\/p>\n

Inventory takes many forms, ranging from raw materials to finished goods. While holding large amounts of inventory enables a company to be responsive to fluctuations in customer demand, there are associated costs to consider. The ultimate success of these businesses is often dependent on their ability to provide customers with the right goods, at the right price, at the right place, at the right time.<\/p>\n

Inventory<\/a> exists because a buffer is needed to balance out the uncertainties between demand and supply. On the supply side, constraints such as large manufacturing batch sizes and supplier delivery lead time force organizations to hold some raw materials or components in stock so that products can be delivered to customers. The demand side is affected by inaccurate information and the fact that 100% accurate demand forecasts are not possible all the time. This means that some inventory should be on hand to satisfy service levels.<\/p>\n

Different parts of the organization require inventory for different reasons; while inventory can be viewed positively, holding inventory creates problems. Physical space needs to be allocated for stock and this space comes at a cost. The financial view on inventory is that it ties up cash and working capital which could be deployed more effectively elsewhere. Inventory also appears on a company\u2019s balance sheet under assets, so reduced inventory results in a higher return on assets.<\/p>\n

This is why the role of inventory management<\/a> is to coordinate the actions of all business segments so that the appropriate level of stock is maintained to satisfy customer demand.<\/p>\n

Navigating and embracing change with inventory management<\/strong><\/h2>\n

The supply chain disruptions experienced throughout the pandemic have led to an increase in spending in this area, as reported in 2021\u2019s CFO 4.0 Survey findings<\/a>. The report underlined a growing impetus and trend in business to pursue both new markets and novel innovations. The lessons learned over the past few years have been clear: Companies must diversify their products, offerings, and services to survive in the post and present COVID paradigms.<\/p>\n

Business and society are being dramatically influenced by exponential technologies, and manufacturing is no different. From the report, over the next 5 years, industries will focus on :<\/p>\n