Four elements that should be included in every inventory software workflow setup.
In a world where accurately managing inventory has become an imperative for all product-centric businesses, creating the ideal inventory software workflow is a critical step in optimising this key asset.
A repeatable pattern of the steps or sequence of activities that are completed on a regular basis, software workflow clearly defines the tasks, information, data or documents that are passed from one department (or employee) to the next.
Using inventory software, organisations efficiently organise and track all of the goods that they have in their possession at any given time. Then, once those goods are sold, that inventory becomes revenue.
A wholesale distribution business that specialises in maintenance, repair and operations (MRO) products, for example, relies on the successful operation of multiple functional areas, including:
- Warehouse management
- Inventory management
- Inventory transfers
- Cycle counts
When developing the ideal software workflow, begin by identifying the start and end points for your specific operation. Then, determine what needs to happen to complete the process, outline the related tasks and activities, and identify the order in which those tasks must be completed.
Specific to inventory software, these tasks should include:
Set reorder points, safety stock levels, preferred stock levels and lead times for all inventory items. Establish an inventory location reorder point, safety stock level, preferred stock level and lead time for every inventory item. This takes the guesswork out of the procurement process and allows the inventory software to automatically create purchase orders (POs) for items when stock levels start to run low. If less than six months of transaction history is available, use static values to define those thresholds. If you do have more than six months of transaction history, use auto-calculate to determine the preset values for each inventory item.
Establish transfer orders for intra-company inventory movements. This step addresses the goods that are moved between locations and don't require “official” shipping and receiving actions. For example, you can use transfer orders to manage product movements within your warehouse to track the movement of assets between company stockrooms. You'll want to use item cost for all transfer orders (when possible) and define the prices in your inventory software platform. If your firm's transfer order process requires some level of criteria to be authorised and/or if you want to be able to differentiate responsibilities across different users (i.e., the person entering the transfer order versus the person who processes it), create an approval workflow to systematically enforce this process.
Use inventory adjustments to account for theft, loss, breakage and errors. Inventory adjustments help you match inventory levels with a particular item's actual on-hand quantity. This helps alleviate worry over whether an item is actually on the warehouse shelf when it's time to pick it up (or, if it was damaged and thrown in a pile in the corner). By incorporating inventory adjustments into your software workflow, any item increase or decrease made to the inventory will automatically match what you have in stock (right down to the single-item level).
Develop a cycle count strategy to clearly classify items, based on movement velocity and the frequency at which those items should be counted. An inventory auditing process whereby a small subset of inventory—located in a specific place—is counted on a particular day, cycle counting helps you determine whether your inventory records align with what's actually in stock. By making cycle counting a part of your inventory software workflow, you'll be able to accurately count a small amount of inventory and more frequently. You can, for example, divide that inventory into groups (i.e., by location or product type), set a schedule to count one group a week, and then adhere to that schedule.
Take the Holistic Approach
Within your inventory software, you can use demand planning functionality to generate formal demand and supply plans and to help drive procurement activities. A supply chain control tower provides a clear snapshot of current inventory levels of specific items, based on existing transactions within the inventory software.
Finally, establish key performance indicators (KPIs) and leverage reporting to track item performance, and use 360-degree dashboards to monitor overall operating performance and item availability.
By taking a holistic approach to inventory software workflows, organisations are developing very efficient, customised inventory management approaches that meet their individual needs. In return, they're seeing real benefits in the form of better business visibility, improved financial management, faster audit completions and lower IT costs.