Inventory Management Best Practices with ERP

A Guide for Food and Beverage Businesses

Effective inventory management is crucial for any business that deals with physical products. Poor inventory management can make your business susceptible to common pain points like poor cash flow, high costs, and customer dissatisfaction. For food and beverage businesses, the need for inventory management best practices is especially important, simply because they are subject to some of the strictest mandates to ensure the health of their product and consumers.

Enterprise Resource Planning (ERP) solutions are designed to target and optimize every aspect of the business that leads to success, including inventory management. When you work with a team of trusted advisors like Adroit who have systemized transformation best practices, you can expect success in managing inventory effectively, minimizing waste, and maximizing profits.

In this blog, we’ll explore common inventory challenges among food and beverage businesses, how to tackle them with optimized technology, and what you can expect from implementing inventory management best practices.

Food & Beverage Inventory Challenges

Food and beverage businesses operate in a volatile industry due to frequent changes in customer demand, a shifting competitive landscape, and ever-changing product safety and traceability mandates. Additionally, many food and beverage businesses may have different SKUs at different times of year to capitalize on limited and seasonal supply. These moving parts create nuanced complexities in the supply chain and, therefore, inventory challenges.

An ERP solution gives the user the ability to access critical information and make important business decisions based on a universal set of data. Data accuracy is paramount in this industry, especially if your business has grown to include multiple sites and locations, and inventory decisions involve coordinating with multiple external parties.

Overcoming Industry Challenges

Even though operating a food and beverage business can involve multiple parties from varying stages of the supply chain, all parties must be functioning from the same set of data. At Adroit, we help our clients remove silos and tackle problems head-on by making sure our clients are following inventory management best practices.

Inventory Management Best Practices:

  • Regular Audits and Cycle Counts: Conduct regular audits and cycle counts to ensure that your physical inventory matches your recorded inventory levels. This helps identify and rectify discrepancies promptly.
  • ABC Analysis: Classify your inventory into categories based on their importance. The ABC analysis typically categorizes items as A (high-value, low-quantity), B (medium-value, medium-quantity), and C (low-value, high-quantity). Focus more attention on A items to optimize stocking levels.
  • Safety Stock: Maintain a safety stock level to account for unexpected increases in demand or delays in supply. This buffer helps prevent stockouts and ensures you can fulfill customer orders even in unforeseen circumstances.
  • Ordering Policies: Implement effective ordering policies, such as Economic Order Quantity (EOQ) or Just-In-Time (JIT), to optimize order quantities and frequencies. This helps in minimizing holding costs while ensuring product availability.
  • Regularly Review SKU Performance: Regularly analyze the performance of each SKU (Stock Keeping Unit). Identify slow-moving or obsolete items and make decisions on whether to phase them out, promote them, or adjust stocking levels.
  • Forecasting: Use historical data and market trends to forecast demand. Accurate demand forecasting helps in maintaining optimal inventory levels, and preventing stockouts or overstock situations.
  • Supplier Relationships: Build strong relationships with suppliers. Negotiate favorable terms, and consider establishing long-term agreements. This can lead to better pricing, reliable deliveries, and improved overall supply chain efficiency.

Our team has experience in implementing inventory best practices across multiple platforms, including Aptean Food & Beverage ERP and Microsoft Business Central.

Benefits of Improved Inventory Management

After successfully implementing an ERP solution to optimize inventory management, you can expect the following improvements:

  • Streamlined operations
  • Improved efficiency and accuracy
  • Ability to maintain food safety standards
  • Compliance with industry regulations
  • Higher visibility into forecasting
  • Organized inventory
  • Reduced costs

Ultimately, an ERP solution with inventory management capabilities will help your business maximize profits, reduce waste, and manage inventory effectively, leading to an improved bottom line.

Tools to help with Inventory Management

One of the biggest challenges when managing inventory is warehouse space. Space in these facilities is highly coveted and often limited in the food and beverage industry. Additionally, many food and beverage businesses deal with perishable items. Businesses must follow inventory management best practices, or you could be wasting essential business resources on finding creative solutions for these issues. A misstep in inventory management could lead to considerable losses in materials and funds.

In addition to the systems themselves, specific tools can integrate with your ERP solution, improving the process even further. These include hardware solutions like handheld barcode scanners and mobile computers that instantly read, transact, and pull up an item’s essential data, such as its location within the warehouse.

When working with Adroit to implement a new ERP solution that fosters inventory management best practices, you can expect the following:

  • Cross-Functional Collaboration: We teach you how to foster collaboration between different departments, such as sales, marketing, and operations. This ensures that everyone is aligned with inventory goals and has access to real-time information.
  • Employee Training: We train your staff on proper inventory management procedures. This includes accurate data entry, handling of products, and understanding the importance of maintaining organized and clean storage areas.
  • Ordering Policies: We put effective ordering policies in place, such as Economic Order Quantity (EOQ) or Just-In-Time (JIT), to optimize order quantities and frequencies. This helps in minimizing holding costs while ensuring product availability.
  • Lead Time Management: We help you understand the lead times associated with your suppliers. Factor in these lead times when placing orders to avoid stockouts and ensure timely deliveries.

If you are a small or medium-sized food and beverage business and are ready to realize the many benefits of improved inventory management, contact Adroit today.

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