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How Much Does Your Inventory Really Cost?

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You  invest to add to your inventory at the distribution center, but what does it really cost when it sits around the warehouse waiting to get packed and shipped to a customer?  Connecting your accounting system with inventory control could bring to light the true costs behind fluctuating inventory levels, the impact of holding on to stagnant products, and poor management of labor productivity.

Using disparate specialty software solutions may allow your accounting department to monitor income and expenses in a financial solution, while the warehouse monitors labor and inventory with their own solution.  Separately, your systems may seem to be working seamlessly but it’s difficult to match dollar figures with the true costs of inventory and warehouse activities.  An integrated solution will provide greater control and visibility throughout your enterprise, so that you can make more accurate decisions that improve cash flow and profitability.

Inventory optimization is not a new idea but one that may not be evaluated as often as it should.  Connecting your supply chain, labor productivity, inventory levels, and other warehouse operations with your financial data can be valuable in determining whether your systems are efficient or wasteful.  A robust enterprise resource planning (ERP) solution, such as Microsoft Dynamics® GP, provides  the intelligence to monitor the true costs behind inventory.  With an ERP solution, you can monitor inventory levels in real time and watch for peaks due to popular product sales or declining sales that may note when a product is becoming obsolete.  You can use this information to create realistic buffer inventory levels or specific levels of inventory that you don’t want to go below or exceed.  Running out of inventory can impact customer satisfaction, risk business relationships, and can be expensive.  Last minute orders and expedited shipping expenses to satisfy a customer order can quickly eat away at profit levels and cash flow.  Also, ordering excessive levels of inventory eats up cash flow that can be better spent on other critical business activities.  More accurate forecasting can save money and protect cash flow.

The right technology can streamline warehouse operations, control inventory fluctuations, and provide insight into associated income and expenses which you can leverage to improve productivity and profitability.  Contact Socius for more information about the ERP solutions that can connect finances with inventory, so that you know how much your inventory really costs.

By Socius, Microsoft Dynamics ERP Partner based out of Ohio

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