What is Inventory Management?
- What is an inventory?
Inventory refers to the raw materials and finished goods of a company that is considered an asset. Accountants use inventory data to record the work in progress of its production.
- Inventory vs. Stock
Both the terms are used rather interchangeably in the business world. Inventory is often referred to the stored sales goods and raw materials, while ‘stock’ is primarily used to refer to the goods intended solely for sale.
Inventory management is an advance solution to treat all the stock-related problems of a company. It allows them to track
- Which stock to purchase
- When to order new stock
- How to source the stock
- How to store the stock
- How to sell the stock
It, therefore, helps a businessman to make sure that there is always enough, quality stock in inventory to meet the customer’s needs and demands. This stock may be in the form of raw materials or finished goods/products.
‘In business terms, inventory management means the right stock, at the right levels, in the right place, at the right time, and at the right cost as well as price.’ – Quickbooks.
Before being sold, stock inventory is seen as an asset for the company that ties up cash while after being sold, it brings in revenue. Hence, its management is deemed utterly crucial for a business to run smoothly and maintain its standards.
Hence, a good business would never want more stock than sales. Poor or unsupervised inventory turns to deadstock (unsold stock) which might harm the company’s standards and reputation.
Economic Order Quantity (EOQ) formula is one way to figure out the optimum number of products one should purchase in order to reduce the total cost of ordering the stock.
Keeping track of large stocks for a company in terms of when, where and how can be rather complicated. As a result, inventory management software, systems and apps came into being. These inventory tracking systems simplify the entire processes through advanced ways of keeping checks for the company in order to avoid errors.
The Importance of Inventory Management in Meat Processing Plants
In order for a goods-based business to run smoothly and efficiently, there is a dire need for an inventory management software that would overlook and supervise all the stock-related activities inside and outside of the warehouse.
An inventory management system helps in
- Reducing costs
- Optimizing fulfilment
- Improving customer service
- Reducing chances of theft and wastage of stock.
For a businessman, this optimized management system provides insights into
- One’s financial standing in the market
- The ever-changing customer behaviours and demands
- Business/product opportunities
- Future expected trends, etc.
An IMS is a very crucial element in meat processing plants due to the following inventory management software features:
- Robust software system: An automated inventory management system drastically reduces chances of errors, as opposed to traditional ways of record-keeping and through an efficient back-end system that interacts with plant-floor hardware in real-time.
- Recall Management: Food recalls are considered an important threat to meat and poultry processing plants. Each recall can constitute to heavy costs and prove risky for the business. IMS make sure to do a quick recall before moving on to the next step in the procedure. Additionally, they also amplify a processor’s ability to perform sales and order fulfilment.
- Better efficiency and productivity: IMS allow companies to integrate their inventory data with their supplier’s availability. This ensures that the line of communication between all the parties is free from miscommunication and misinterpretation.
- Full visibility: For products like meat that have a very short shelf-life, it is imperative for a plant to have an inventory tracker system that could track, trace and account for each item in the stock. This is achieved through an automated inventory management system that provides total visibility into all the movement related to the stock at hand; this, in trn, creates a ripple effect that promises greater efficiency.
- Barcoding and radio-frequency identification (RFID) technology make the picking process more efficient. It organizes with barcoded storage locations and item numbers, which can be especially helpful for distributors with multiple warehouse locations. This allows distributors to fulfil orders more quickly.
Methods for Improving Inventory Accuracy in Meat Processing Plants
There are many ways meat processing plants can improve their inventory accuracy. A few of them are listed below.
- Setting up a benchmark: Set up a benchmark and create a mental goal that would dictate all the steps henceforth on the plant in order to maintain quality standards and reduce cost, waste and errors.
- Ordering the supply chain: Measure and create a perfect order on the supply chain from the point of production to the market in order to keep track of all the activities and movements to ensure the least possibility of meat spoilage. This ensures accuracy throughout the supply network.
- Choose the right program: There are plenty of software programs intended solely for the purpose of managing inventories for business owners, but only a few are programmed to operate acceding to the needs of a meat processing plant. Hence, in order to ensure accuracy, companies need to know which ones cater to their present needs in order to abide by the set standards.
- Stick to tracing: Measuring and recording data, when it comes to processing meat, is not enough. One would need to track, trace and manage it as well in order to avoid costly wastage of meat by learning from previous records and also to maintain newer ones.
- Cycle counting: Daily counting and supervising records of the inventory ensures accuracy. It also promotes better decision-making. Comparisons between products and progresses can also be made to maintain quality standards and trends.
The Benefits of Accurate Inventory Management for Meat Processors
Efficient inventory management has numerous benefits; some of which are listed below:
- Proper inventory management tells how much, where and till when one can store meat until it is delivered to its destination. This allows business owners to keep less, more important stock at a time which, in turn, decreases the cost and saves money. It also decreases chances of waste.
- It improves cash flow as when less money is wasted, accuracy and efficiency is maintained, more monetary profit comes back in return to the company. Hence, the cash is always flowing in a proper cycle.
- Managing inventory helps companies maintain and adhere to safety standards by keeping traceability in check and never missing a single loophole through which a possible might crawl through. Thus, avoiding public health-risk problems.
- By constantly staying connected with the supply chain, companies can easily manage to put the meat on the shelves faster to avoid spoilage and maintain quality.
How Can Inaccurate Inventory Lead to Lost Profits and Decreased Efficiency?
In order to maintain accuracy, one must supervise the inventory records. If the supervision is not strict enough, with one single mistake, the entirety of data can be lost and then there will be no way for the businessman to know what to move where and when.
Inventories, when not maintained, can also lead to indirect, excessive cost losses as inventory management systems do not record each and every moment across the supply chain and these small costs might disturb the overall financial balance of the company.
If an inventory is not tracked and stored properly, it can lead to huge losses. Poor logistics, therefore, can harm a company’s reputation, which may bring in lesser profit and sales. Loss of potential customers can also help.
If the respective stock is not traced properly, and the users lose track of the meat stock, they might not be able to meet the current customer demands which will bring back lesser revenue.
Inaccurate inventory management can disturb the process of record keeping. If one stock is not yet sold, due to poor inventory management, stocking new products can possibly go in vain and cause more damage than benefit. Sometimes, even immediate inventory turnover takes place that leads to lesser profitability and efficiency.
Implementing an Effective Inventory Management Software
Need help choosing the right inventory management software for your company? Well, look no further because Folio3-Dynamics is here to solve all your problems!
While the internet is stuffed with numerous software solutions such as:
Folio3 has expertly come up with the best solution to all the problems a meat processing plant might face.
‘Our development teams have successfully integrated Microsoft inventory management solutions for businesses from various industries. By incorporating sophisticated inventory management, tracking and monitoring processes, we are helping companies to rapidly manage sales orders and returns while streamlining their business processes through automation.’
Folio3’s Microsoft Dynamics Inventory Management is enabling companies all around the globe to improve business processes by eliminating manual inaccuracies and helping create excellent customer services.
As compared to other software systems, Microsoft Dynamics Inventory Management provides greater control over
- Cross docking
- Associate messaging
- Quality Assurance
These features deem it as the most convenient software to be used on meat processing plant where tracking and supervising is the key and no risks can be taken in terms of maintaining meat quality and minimizing waste.
The flexible and purpose-built retail functionality of Microsoft Dynamics AX inventory management offers:
Therefore, evidently, this very software combines all the necessary and most crucial features in order to provide the most comprehensive and efficient framework to companies that are aiming towards getting all the solutions under one roof; while maintaining accuracy and quality standards.
Choosing an inventory management system that encompasses all the most common and necessary features to keep all the processes on the plant running smoothly can be the key to not just achieving success but also maintaining it.
Q: What are the tips for reducing waste and improving efficiency in a meat processing plant?
For efficiency and reducing waste,
- Choose right inventory management software
- Integrate inventory data with the supplier’s availability
- Keep lead times minimum
- Keep lines of communication free from misinterpretations
- Ensure timely and accurate accounting records of the inventory
- Ensure real-time visibility