Inventory management: How do you take control of your business?

Supply chain management includes effective inventory management. Modern competitive logistics management services can be provided only by ensuring a functional balance between product variety and optimal stocktaking.

What is inventory management?

Inventory management refers to all the actions that determine, monitor and evaluate the requirements of raw materials or finished products according to production or customer needs.

Inventory management includes activities to optimize storage space and expenditure on storage, preservation, sorting, redistribution and use of products.

How is inventory management done?

The recording in the company’s accounts of operations relating to the management of stocks can be carried out using the perpetual inventory method or the intermittent inventory method.

Perpetual inventory

Perpetual inventory means the recording of all incoming and outgoing products and shows at any time the updated status of stocks, both in terms of quantity and value. The perpetual inventory method is the best known and most frequently used method of stock management.

Although it involves a lot of work, since each inbound and outbound flow of goods requires related logistical and accounting operations, perpetual inventory has a number of major advantages. And it’s not hard to explain why. With a permanent check of stocks, the number of errors decreases, the risk of theft or fraud is reduced, and depreciation and losses can be easily tracked. Companies can thus exercise tight control over stocks and have a much clearer record of stocks, updated whenever changes occur.

What’s more, the automation of warehouse and stock management has removed the main drawback of using this method. Today, software solutions simplify and make the work of those in charge of inventory and procurement considerably easy. Handheld terminals can be used to enter data into applications that also track stock, such as WMS, and process it automatically, significantly reducing the workload of recording inbound and outbound flows of goods and eliminating calculation errors. Under these circumstances, the reason why perpetual inventory is now an extremely popular method is very clear.

Intermittent inventory

The intermittent inventory method is based on the determination of outbound flows of products and their recording in the accounts at the time of the stock check which takes place at the end of a set period (a month, quarter, year). This means that it is not possible to determine the stock of a product at a certain point in time, but only at the end.

Intermittent inventory is a lesser known and rarely used method, although it is easy to use and does not require a large amount of work.  Why? Because it does not allow the constant checking of goods whenever changes occur. Lack of permanent stock control increases the risk of theft, fraud and error, and tracking depreciation and losses cannot be effective.

This is why the disadvantages of this method are considered too great by many companies. In addition, the development of powerful software applications that drastically reduce the workload of those managing day-to-day stocks has tipped the balance in favour of perpetual inventory.

What are the components of inventory management?

Stocks comprise several elements, the most important of which are grouped into three main categories:

• raw materials;
• WIPs and semi-finished goods (SFGs);
• finished products, made for sale by a company or purchased for resale.

All departments of a company are in some way involved in inventory management, from production and distribution to logistics. And not only that. This is why inventory management is of strategic importance for the efficient organization of the company’s entire activity.

What is the role of inventory management?

This complex process has the main role of improving logistics services so that performance targets for delivery time, number and volume of orders executed or delivered, level of warehousing and transport costs are achieved.

Inventory management is therefore an important tool in controlling the business by balancing demand with supply of products, reducing operational costs and protecting the company in case of unpredictable market fluctuations, seasonal lags, economic crises, etc.

What is an inventory management program and how can Axes Software help you?

The complexity of business activities makes it necessary to use specialized software solutions for warehouse and inventory management, such as WMS (Warehouse Management System), production planning and execution, such as MES (Manufacturing Execution System) or returnable packaging management through PMS (Packaging Management System).

Axes Software’s xTrack WMS for automated warehouse management

The application developed by Axes Software provides customers with special modules and functionalities that reduce the time required to process orders and allow the doubling of the number of orders to be delivered using the same material resources (the equipment used, shelving, storage space, etc.) and human resources (staff employed).

Axes Software is also constantly focusing on the use of new technologies to increase the performance of the solutions it provides to its clients, by integrating the xTrack WMS application in the cloud alongside xTrack TMS. In addition to a much faster stocktaking in warehouses, this also ensures increased stability and scalability as well as lower operating costs by eliminating maintenance costs of physical servers which become redundant.

Axes Software’s xTrack MES for automating production logistics processes

Stock synchronization and automatic control of material movements between machines are just two of the benefits of this MES solution, a software application that enables production planning, automation of manufacturing operations, order status tracking and product traceability.

By implementing the xTrack MES application that automates manufacturing operations, the necessary data is collected simply and quickly by scanning the codes of the materials used on the production lines, thus making the connections between “from where, where, when, what, who and to whom”, i.e.: the location of origin, the storage location, the times of recording of raw materials and processing results after each manufacturing operation, the types of input raw materials and the finished products made on each production line, the persons responsible for production and the customers to whom the products are delivered.

Axes Software’s xTrack PMS for returnable packaging inventory management

xTrack PMS is another inventory management software solution, but this time the stocks concerned are those of returnable packaging that some companies (3PLs, manufacturers, etc. – generally companies that manage either their own stocks of returnable packaging or those received from other companies) use to ensure optimal transport conditions for products to be delivered or returned.

The type of returnable packaging used varies according to the products to be transported to the distribution companies’ warehouses or directly to customers (supermarkets, etc.): pallets, crates, medical transport boxes, etc.

Given their importance, real-time tracking, with the additional help of the xTrack POD application, of the returnable packaging circuit by the companies handling them must be effective, in order to reduce the amount of avoidable losses caused by theft or by forgetting them at the customer’s premises. Keeping track of outgoing and returned physical packaging and recording vouchers in the xTrack PMS system (vouchers that indicate the location of those temporarily left with customers) thus leads to a significant reduction in replacement costs.

Immediate recording of all returnable packaging transactions in the application and automatic processing of the data entered gives users a clear picture of the available packaging stocks at any time. In addition, it quickly provides them with solutions to deal with situations where available stocks do not cover packaging requirements (transfer of packaging between warehouses, change of ownership, compensation, etc.) so that daily activities can be carried out without unexpected, unwanted and costly interruptions.

With automated inventory management, whether it’s about stocks of raw materials, WIPs and SFGs, finished goods or returnable packaging, you are in control of your business at all times and benefit from increased sales and profits, transparency in the running of production activities, storage and delivery of goods, more efficient delivery times and the elimination of human error during recording and control operations. All the Axes Software solutions (including xTrack TMS and xTrack POD) ensure a high degree of automation of goods and service flows in companies operating in various sectors: manufacturing, warehousing, 3PL services, transport and courier, distribution, retail, e-commerce, etc.

The warehouse inventory management software, as well as the software for managing logistics activities in production, distribution, transport and delivery, are tailored to suit the needs and requirements of clients, being designed for easy integration with various applications in the IT systems they already use. By interconnecting software applications, the integrated management of multiple processes and operations specific to the supply chain is achieved and data accuracy is improved.

And the end results are better efficiency and accuracy as well as more time, effort and money saved.

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