Benefits of Integrating Inventory Management With Back-Office System
Inventory management is all about knowing what you have in your warehouse and where your inventory is. But if not integrated with your back-office system, and simply relying on inventory management systems alone can not effectively optimize your inventory, or ensure the value of inventory assets in your financial statements match what is in the physical stock – at least not without intervention and reconciliation manually.
To optimize inventory management, leading companies usually integrate their inventory software directly with back-office systems as well as accounting. This integration provides a competitive advantage with the ability to plan effectively and minimize the costs and possible errors associated with manual reconciliation.
To determine the right inventory management system for a business and a strategy to integrate it into the back-office will require an assessment of your business needs and your plans for future growth. To achieve maximum benefits, your system must be real-time, flexible and transparent.
Why Integrate Inventory Systems with your back-office?
The three main benefits for integrating your inventory management system with your accounting and back-office systems are:
- Optimize inventory to meet product availability and ROI goals
- Provide inventory visibility to supply the supply chain
- Stating inventory accurately in financial statements
While there are other benefits of inventory integration and back-office systems, they can have a significant impact on your company’s bottom line.
Inventory optimization: Customers want “fresh” products on demand, and investors prefer unregulated work capital in inventory. Balancing these conflicting goals is complicated.
Activities such as storage, calculation and reworking inventory bind additional working capital, and potentially reduce the availability of products your customers want. Planning the exact level and amount of inventory requires sales orders, ordering systems and purchase planning to have real-time inventory visibility.
Supply chain visibility: Many companies use supply chain partners to manage inventory levels and deliveries to their customers. To be able to do so effectively, the inventory system must be integrated not only with the company’s back office system, but also with third-party logistics suppliers and systems (3PL – third-party logistics). By looking at fluctuating corporate inventory levels, suppliers can make sure their products are available in your warehouse or 3PL if your customers need them.
Accurate financial statements: Ensuring accurate annual reports and tax returns are vital to investors and governments. Inventory value can be an important part of the asset value that you declared and recorded in your book and must be in accordance with the physical value in your warehouse. The only effective way to ensure financial integrity in your company’s reporting goes well is to integrate transactions in your inventory system with your back-office account chart