Manufacturing Inventory
While inventory refers to items used in any stage of creating a product, manufacturing inventory signifies raw materials, parts, work in progress and finished goods because they are all part of the manufacturing process. Packaging also plays a role as part of the inventory whether for individual items or groups of items. The manufacturer may perform kitting with finished goods by combining them together to create a package as you would find with a carton of cat food or a 6-pack of beer.
Wholesalers and retailers only deal with finished goods products provided to them by manufacturers at the completion of the production process.
At the initial stages, manufacturers are working with either raw materials or parts. If creating food products, the raw materials are ingredients, many chemically altered in the manufacturing process. If creating hardware or other machines, parts are assembled in stages to build a finished product. Typically, they are not altered in a way that cannot be disassembled and can, theoretically, be disassembled and some parts may be suitable to return to inventory, if unaltered in form.
SOS Inventory is the ideal manufacturing inventory software, suitable for handling processes for any type of manufacturing method. If you need better production inventory management tools than QuickBooks Online offers, rest assured, SOS was built specifically to integrate with QuickBooks Online.
Manufacturing Software Solutions
What is inventory in manufacturing? Inventory at the manufacturing level is much more complex; in some industries, materials are assembled and in others, combined to create co-products and by-products. The journey from the raw materials or parts stage can entail many different stages where labor is involved, the chemical composition changed, and costs are incurred. These varying stages and costs demand good tracking tools to keep the business informed of all materials used and costs incurred.
The short summary of process that apply to most manufacturers is:
- The receipt of materials or parts from suppliers which must be entered into the system either manually or by scanning a barcode or rfid.
- All the workflow processes of production, one step at a time is performed and recorded with updates to inventory and costs.
- Once the product reaches the finished product stage, additional inventory items are often used to package it which can include plastic, metal, paper, cardboard, etc.
- Finished products are entered as items available for sale and then either sent to a warehouse, out for fulfillment or to a wholesaler.
To make all these processes run smoothly, the manufacturer depends on software to perform some mandatory tasks to keep inventory levels at ideal quantities for meeting demand while limiting overages.
These techniques can include:
- Setting up minimum order quantities to trigger reorder points.
- Determining reorder points based on lead time and order quantities.
- Calculating safety stock levels to prevent shortages.
- Using the first in first out method, especially in facilities where perishables are handled to ensure only fresh product is used in production inventory.
- Conducting physical inventory to update inventory levels or using the perpetual inventory method to keep levels updated on an ongoing basis.
- Using reports to uncover waste and work to mitigate it; determining product profitability and adjusting order levels to rising or ebbing demand.
ERP for a Manufacturing Company
Although the manufacturer’s main goal is to create products, running a business involves other work functions, too, such as sales, finance, fulfillment, etc. These departments need to work with inventory quantities and costs and can only align themselves with one another if the data flows freely throughout the company, updating from any point of access. The top ERP systems for manufacturing aren’t always the most expensive ones. SOS Inventory delivers all the robust features manufacturers need at a low monthly rate with no setup costs or obligations.
Manufacturing inventory figures must be integrated with the supply chain, sales, fulfillment, and finance to keep accurate records for tax purposes, company reporting and decision making.
Making Manufacturing Inventory Easy to Manage
SOS Inventory was designed to accomplish everything a manufacturer needs to do in the process of managing inventory from the time of receipt, through production, fulfillment and following the sale. Armed with intelligent forward and backward traceability capabilities, SOS can instantly show you the trail any inventory item has made so you can recall items should it become necessary. Reduce time spent on labor to save money and generate accurate reports for all departments to stay up to date on information relevant to their responsibilities. Manufacturing inventory is easy to manage when you have the right tools and support to manage them. You will find that and much more with SOS Inventory. SOS makes manufacturing inventory management affordable at a time when all your other business costs are rising. Get started today with a free, no risk trial.
