Why Do We Need ERP Software For Inventory?

Posted by Errin O'Connor on May, 09, 2021 01:05

Several inventories around the globe have started to realize the importance of ERP software for their companies. Many businesses consider that managing their inventory using ERP software should be the top priority for them.

Fortunately, the ERP software inventory functions can handle the stocks present, providing the yearly or the quarterly reports, required processes, tracking of the goods, and even the intelligent stocking location. This helps to improve the picking and packing of the goods for a company.

Some primary reasons why companies prefer to use ERP software for their inventories are:-

Planning the Replenishment of the Orders 

Using ERP for business allows businesses to plan the replenishment of the orders they receive effectively. The inventory quantity of any company must be accurate enough and be ready so that anytime they receive a green signal for buying or selling, they are ready to go on with the work at the same minute. Having ERP software in the inventory allows the business to categorize the goods into several parts, which automatically allows the inventory to order the correct quantity required. 

An item is collected only when the company receives a specific demand in the exact quantity so that it is ready to meet the demands of the business and the customers. The ERP software is ready with another item which is ordered only when it is considered to be at a lower cost and can be easily procured. This process can be monitored using ERP analytics.

The goal of the business here is that they deal with fewer transactions, so they get to order enough goods for satisfying all the demands which is expected to be seen in the upcoming next three months for the business. Optimizing the replenishments for the inventory automatically means fewer transactions, which often results in enhanced inventory accuracy for the business.

Surplus Inventory Management

When using ERP software, a business can immediately respond to the surplus inventory issues using ERP automation, which they regularly face. The ERP software would immediately help the business identify whether the surplus inventory was caused by an unexpected decrease in the demand for the items sold by the company or the company realizes that the economy of the good buy was noted economically as the company expected it. 

The ERP software in the inventory systems will easily help to find out the excess quickly. With the help of ERP software, the company can look for an immediate response to such problems by asking several questions like Whether the Company should return the item or they can get in touch with the customer and offer them another order to sell the surplus inventory.

There are plenty of options a company can be open to when having the surplus of inventory is found and can work on that quickly. Delay of such problems might mean that the company will have to move the surplus into the trash pile, and obviously, the disposition would cost money instead of making money.

Business Central ERP Uses
Microsoft ERP uses

Inventory Tracking Turnover

It becomes difficult for any company to track its inventory turnover on an overall basis. The ERP software Microsoft ERP Products allows the company to track the inventory turnover by dividing them into several segments so that the company can categorize the inventory in many ways according to their wish and determine whether the company’s inventory assumptions are true. By this method, the company would be able to identify some issues and start asking themselves a lot of questions. 

Like why one part of the inventory is turning over much more rapidly as compared to the other part? Why several parts for one customer are continuously gathering dust on the shelves and maybe it is time to rethink the relationship with that customer. Are the shelf-life of products near, before they expire and can the company look forward to buying in smaller quantities? Can the company look forward to increasing the shelf life by storing the goods in a better environment. 

The company’s accountant might say that the company’s inventory is getting expired ten times per year. By this method, the company would be able to identify some items in the company inventory that can turn over daily. While there might be others present, they may never move away from the inventory. There is numerous ERP system available in the market, among many the most recommended ERP system is from Microsoft. You can check the Microsoft Dynamics ERP pricing.


The ERP software for the inventories in a company can positively change the company’s work. A company would easily identify their flaws and sins in their inventories and take further actions accordingly by perfectly knowing where to put up extra efforts to bring out additional profits and decrease the extra costs. Also, don’t get confused between ERP vs CRM, as they might have similar functions but have huge differences when it comes to business automation

About the Author

Errin O'Connor

With over 25 years of experience in Information Technology and Management Consulting, Errin O’Connor has led hundreds of large-scale enterprise implementations from Business Intelligence, Power BI, Office 365, SharePoint, Exchange, IT Security, Azure and Hybrid Cloud efforts for over 165 Fortune 500 companies.

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