Inventory Management Systems
Modern day inventory is managed by sophisticated system applications that are designed to manage complex inventory plans and to a large extent contain processes that initiate and streamline the operations and inventory management.
In the wake of improvements in the communication technology, companies are deploying one single ERP system across all factories, offices, departments and locations, thereby ensuring seamless transactions, visibility and controls.
Inventory in the earlier days used to be managed by a system known as cardex system. Bin cards were printed and kept in every bin location. Whenever inventory was put into the bin or removed, the card had to be updated. Apart from the bin cards, books or registers were maintained to note down the transactions and reports were prepared manually. The system was basic and did not provide flexibility to manage warehouse locations as dynamic locations. The operations being manual were time consuming.
In the next phase come the basic inventory management systems, which were a replica of the accounting books containing debit and credit entries along with the balance and the Cardex System continued to be used to manage the shop floor operations.
With the ERP System introduction, MM modules are deployed which work in tandem with procurement and other modules. Inventory modules contain intelligent applications that manage the inventory, help in analysis, categorization and to a large extent initiate actions and processes based on auto inputs derived from other sources.
ERP systems do contain WMS modules, which can be deployed along with the inventory module to manage the warehouse operations. Basic inventory modules in ERP do contain location management of inventory but do not support warehousing operations in detail. WMS System applications are designed to work like an extension of the inventory system but are stand alone applications that help in warehousing, control, direct and manage inventory and operations.
In fact a robust system suite comprising of ERP and WMS with interfaces built in between the two systems can play a major role in managing inventory efficiencies.
Both the systems need to be robust, strong and built to suit the business operations requirement as well as logistics operations requirements. While the inventory management efficiencies depend upon the ERP functioning and features, the inventory operations management is heavily dependant upon WMS System.
WMS system is different from an ERP based inventory system in the sense that WMS manages inventory but manages inventory operations and warehouse operations. Though it mirrors the inventory that lies in ERP, the rest of the operations that are carried out through WMS are different and operations intensive.
Until a few years ago the inventory operations used to be carried out with basic WMS where most of the operations were manual. Put away lists and pick lists had to be printed and issued to the operators, who had to note down the bin location and the pallet ID etc on the slip and give it back to the operator to do the data entry into the WMS and update the systems.
With the introduction of scanning technology things became a lot more easier where barcodes labels could be pasted on the inventory which could then be scanned via hand held or wire less scanners and the data could get uploaded into the WMS. This was further replaced by RF scanners, which work in real time basis. Today most of the warehouse operations are carried on through RF Scanners, which are like the extension of the WMS and are connected to the system on real time basis. The operators can now download tasks, carry out the tasks and upload confirmation of task completion into the system through RF scanners. This has not only improved operations efficiencies and ensure better house keeping but has greatly improved the inventory as well as data efficiency.
Both ERP and WMS systems along with RF technology have helped improve inventory visibility, accuracy and operations efficiency, resulting in faster operations, leaner inventory and good warehouse management practices.
RF Tag IDs have made an entry into the inventory and supply chain arena and are currently being adapted by retail and textile industries as well as aero spares industry etc. Tag IDs will provide inventory visibility at all times through out the supply chain and thereby ensure inventory accuracy. They are expected to help cut down and ease a lot of operational processes too. However exorbitant cost of the RF tag IDS has been the entry barrier that kept the industries from adapting this technology. The rates are dropping fast making it viable for all industries to adopt these into the inventory management and operations systems.
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The article is Written By “Prachi Juneja” and Reviewed By Management Study Guide Content Team. MSG Content Team comprises experienced Faculty Member, Professionals and Subject Matter Experts. We are a ISO 2001:2015 Certified Education Provider. To Know more, click on About Us. The use of this material is free for learning and education purpose. Please reference authorship of content used, including link(s) to ManagementStudyGuide.com and the content page url.
- Inventory Management - Introduction
- Inventory Management Concepts
- Need for Inventory Management
- Finished Goods Inventory
- When to avoid Holding Inventories
- Types of Inventories
- Components of Inventory Costs
- Inventory Classification
- Finished Goods Inventory Classification
- Inventory Control
- Inventory Inefficiency Factors
- Factors affecting Inventory Operations
- Challenges in Inventory Management
- Inventory Health
- Company’s approach to Inventory Health
- Inventory Turnover & Inventory Health
- Need for Inventory Operations
- Inventory Planning
- Inventory Management Practices
- Inventory Management Systems