Manufacturing inventory is the raw materials needed to produce the final product. On the one hand, organizing a continuous manufacturing process without inventory is impossible. On the other hand, it requires maintenance costs and an investment that will be frozen during the entire technological cycle. This raises the need for effective manufacturing inventory management, which implies determining their optimal volume and reducing the cost of their purchase and storage.
This article will discuss manufacturing inventory management software, key integrations, and steps to develop custom inventory software.
- What is manufacturing inventory management software?
- When to opt for custom inventory software solutions?
- Key integrations for manufacturing inventory management software
- Functions that custom inventory management software must have
- 5 steps to develop custom inventory software
- Achieving business growth with SoloWay Tech: how we can help
What is manufacturing inventory management software?
Manufacturing inventory management software is designed to help manufacturers effectively manage and control their inventory. It provides a comprehensive set of tools and features to streamline inventory tracking, optimize stock levels, and enhance overall efficiency in the manufacturing process.
Inventory at the enterprise is divided into three types:
- Raw materials inventory – raw materials, semi-finished products, auxiliary materials, components
- WIP inventory – products that are in the process of production
- Finished goods inventory – not yet sold products
Another classification of inventories is based on the reasons for their occurrence:
- Current inventory. It is necessary for stable production operation, fulfillment of plans, and timely delivery of finished products to the client.
- Anticipation inventory. It allows you to avoid shortages of raw materials in case of unforeseen circumstances: delayed deliveries, receiving a new order, etc.
- Fluctuation inventory. It allows the company to ensure the manufacture of products in terms of seasonal increases in demand.
Thus, inventory is necessary to ensure manufacturing activities. Workplaces should always be provided with raw materials and semi-finished goods so that there would be no downtime and finished products could meet demand under possible fluctuations.
However, excessive accumulation of inventories leads to financial losses. These may include interest on credit funds invested in the purchase, storage costs, spoilage of raw materials, and products stale in the warehouse.
The manufacturing inventory management system aims to ensure enough inventory to produce the planned quantity of goods on time at the lowest possible maintenance cost. The company must not incur losses due to deficit or excess inventory.
Manufacturing inventory management models
The need for inventory management to save money has led to the emergence of many models and methods. The best-known inventory management models:
- Wilson model or EOQ (Economic Order Quantity). It is considered the simplest because it does not involve uncertainties. The model allows you to determine the optimal level of inventories for the entire assortment. The criteria are the level of demand, the cost of placement, and storage costs. It assumes replenishment of the warehouse with a certain periodicity in equal batches. The formula is suitable for companies manufacturing products with stable demand when there is practically no risk of unforeseen situations.
- Just-in-Time (JIT) model. It implies just-in-time delivery of raw materials, i.e., exactly when they are needed on the production line and in the required quantity at delivery time. To reduce costs, the model virtually eliminates the availability of reserves in stock, but its use increases the enterprise’s dependence on suppliers. Any supply failures can lead to raw material shortages and forced equipment downtime.
- ABC model. It distributes reserves into 3 groups based on their importance to the business. Group A includes reserves needed for the most expensive products with a long cycle of use. They account for most of the money, so Group A has strict control and accurately determines the necessary volume and costs. Group B includes raw materials for medium-priced products. Category C is the cheapest inventory with a high turnover rate and minimal markup.
At SoloWay Tech, we can assist you in manufacturing inventory software development.
When to opt for custom inventory software solutions?
Opting for custom inventory software solutions is beneficial in the following scenarios:
- Unique business processes. Custom software is beneficial if your business has specific inventory management requirements that off-the-shelf or pre-built software solutions cannot adequately address. It allows you to tailor the system to match your unique workflows, processes, and industry-specific needs.
- Complex inventory management processes. Suppose your inventory management processes are complex and involve multiple locations, advanced inventory tracking, demand forecasting, production planning, or integration with other systems. In that case, custom software can provide the necessary flexibility and functionality to handle these complexities effectively.
- Scaling. Custom software solutions are designed to scale with your business as it grows. If you anticipate significant expansion or foresee changes in your inventory management needs in the future, custom software can be built to accommodate scalability and adapt to evolving requirements.
- Need for competitive advantage. Custom inventory software can give your business a competitive edge by providing unique features and capabilities to your operations. It allows you to differentiate yourself from competitors and align the software closely with your business strategies and objectives.
- Search for long-term cost efficiency. Custom software development requires a higher upfront investment than off-the-shelf solutions but can lead to long-term cost savings. With a tailored solution, you eliminate the need for additional software licenses, reduce manual workarounds, minimize operational inefficiencies, and avoid potential vendor lock-in or limitations of generic software.
It is vital to assess the cost-benefit analysis, consider your business’s specific requirements and long-term goals, and consult with software development experts like Soloway Tech to determine whether custom manufacturing inventory software is the right choice for your organization.
Key integrations for manufacturing inventory management software
Integrations are essential for inventory management software to seamlessly connect with other systems and enhance functionality. Here are key integrations for inventory management software:
- Enterprise Resource Planning (ERP). Integration with an ERP system allows for seamless inventory data, orders, and financial information synchronization. It accurately reflects inventory levels across different departments and enables comprehensive reporting and analysis.
- Customer Relationship Management (CRM). Integration with a CRM system enables better customer management and order processing. It allows for synchronizing customer information, order history, and sales data, providing a holistic view of customer interactions and facilitating efficient order management.
- Point of Sale (POS). Integration with a POS system is crucial for businesses that sell products directly to customers. It ensures that inventory levels are updated in real-time as sales are made, minimizing the risk of overselling or stockouts. POS integration streamlines the order fulfillment process and provides accurate sales data for inventory analysis.
- Warehouse Management System (WMS). Integration with a WMS enables real-time inventory tracking, order fulfillment, and warehouse optimization, such as efficient picking, packing, and shipping processes.
- Shipping and Logistics. Integrating with shipping and logistics providers enables automated shipping label generation, real-time tracking of shipments, and seamless communication with carriers. It streamlines the shipping process, reduces manual data entry errors, and enhances visibility into order fulfillment and delivery.
- E-commerce Platform. Integration with e-commerce platforms (such as Shopify, Magento, or WooCommerce) allows for the synchronization of product catalogs, inventory levels, and order information between the inventory management software and the online store. It ensures accurate stock availability on the website and automates order processing.
- Business Intelligence and Reporting. Integration with business intelligence (BI) tools or reporting platforms allows for comprehensive data analysis, visualization, and reporting on inventory-related metrics. It helps gain insights into inventory performance, demand trends, and forecasting accuracy.
- Financial Software. Integration with financial software or accounting systems ensures accurate financial reporting and provides insights into the financial impact of inventory management. It allows for seamless synchronization of inventory valuation, cost of goods sold (COGS), and financial transactions.
These integrations streamline data flow, enhance accuracy, improve operational efficiency, and provide a unified view of inventory management processes across different systems. The specific integrations needed may vary depending on the nature of your business, industry, and existing software infrastructure.
Functions that custom inventory management software must have
The inventory management model should primarily consider the specifics of a particular manufacturer, so we can’t talk about a universal algorithm for all. But it is possible to distinguish several basic functions:
- Demand forecasting. A forecast should be made for each manufactured product group based on current sales volumes and excess demand.
- Sales planning. Based on demand forecasts, you must determine how many products you should manufacture to meet buyers’ needs.
- Manufacturing volume forecasting. It should consider floor space, equipment, number of personnel, possible losses, defects, and the availability of finished products in the warehouse.
- Inventory amount. Determining the optimal quantity based on the manufacturing plan is necessary to ensure the continuity and rhythm of the manufacturing process, but you should avoid surpluses.
- Purchases schedule. The optimal purchasing schedule should consider the work conditions with the supplier, including the minimum batch volume, delivery cost, the order of settlement, etc.
- Control. It is essential to build an effective control system over the movement of raw materials and semi-finished products, which will stay within the optimal indicators.
We have deep expertise in inventory management optimization. Feel free to assess our case studies.
5 steps to develop custom inventory software
Developing custom inventory software involves five key steps:
- Defining requirements. Start by defining and documenting your inventory management requirements. Identify the functionalities, features, and workflows that the software should support. Consider aspects such as inventory tracking, order management, reporting, integrations, user roles, and any specific industry or business requirements.
- Planning and designing. This step includes defining the project scope, timeline, and budget. Work with software developers or a development team to design the software architecture, database structure, user interface (UI), and user experience (UX) design.
- Developing the software. The development phase involves coding and building the software based on the defined requirements and design. Regular communication and collaboration between your team and the development team are crucial to ensure the software is being developed as per your expectations.
- Testing. This step includes functional testing to ensure that all features and functionalities work as intended, as well as performance testing to assess the software’s speed, reliability, and scalability. User acceptance testing (UAT) involves testing the software with end-users to gather feedback and ensure it meets their needs.
- Deploying. Once the software passes all testing phases, it is ready for deployment. Choose the appropriate infrastructure to host the software, whether on-premises or in the cloud. Ensure that the necessary hardware, software, and security measures are in place to support the software’s deployment.
Effective communication, collaboration, and involvement of key stakeholders are essential throughout the development process. Working with an experienced development team or software development company like SoloWay Tech help ensure a smooth and successful development journey for your custom manufacturing inventory software.
Achieving business growth with SoloWay Tech: how we can help
At SoloWay Tech, we are dedicated to helping businesses achieve their growth goals through our comprehensive range of services and expertise. Here’s how we can assist you in achieving business growth:
- Custom software development. We specialize in developing custom software solutions tailored to your specific business needs. Whether you require a custom inventory management system, CRM, ERP, or any other software application, we can design, develop, and deploy a solution that aligns with your unique requirements.
- Integration services. We offer integration services to connect your systems and software applications, ensuring seamless data flow and information exchange. Integrating inventory management software with other systems such as ERP, CRM, or e-commerce platforms can enhance productivity, eliminate data silos, and provide a unified view of your business processes.
- Data analytics and business intelligence (BI). Our data analytics and business intelligence expertise allow us to help you derive valuable insights from your inventory and business data. We develop customized dashboards, reports, and analytics tools that provide actionable information, aiding in data-driven decision-making and improving your overall business performance.
You can leverage our technical expertise and industry knowledge by partnering with us. We are passionate about delivering innovative and reliable software solutions that empower our clients to achieve their full potential.
Modern enterprises are forced to operate under conditions of unstable demand, resulting in inventory management becoming much more complicated—the number of factors to be considered in determining the optimal volume increases. There is a need to adjust daily to the changes taking place.
To effectively solve the problem of inventory optimization, it is necessary to introduce automated systems. They allow not only to calculate the optimal volume of reserves but also quickly make all the necessary adjustments.
If you are looking for a reliable development company, you have found one.