How to improve management Stock and my Almacenes with an ERP (and limitations)


Stocks or stocks, can be definircomo the set of materials and / or items that are stored for both the production process and for sale. Management of these stocks has to reconcile two basic principles: customer service and maintenance costs (putting face to face, Commercial Department and Logistics). Also it constitutes one of the key activities within the management of the supply chain, as the stock can represent more than 50% of the asset value of the company.

Warehouse Management for its part, deals with the processes of reception of goods, storage and movement (within the same store) to the point of consumption of any material, as well as handling and reporting of data generated.

Due to changes in demand, increased supply and / or flexibility of markets, the storage function has developed a lot in recent years, seeking greater efficiency. This situation has led to the function of storage and all activities in the stores carry a flow of much larger and more complex information.

Proper maintenance of stocks (which is key rotation) and optimization of the processes that are generated in the store will mean not only a major cost savings for businesses, but also guarantee quality customer service. The main challenges to achieving these goals can be grouped into four blocks:

1. Control and Inventory accuracy: In units (and value, since it affects the profits of the company), and in real time.

Some key indicators:

Inventory accuracy: Difference value / Total value of inventory x 100
%-Sale inventory differences: Differences Inventory / Sales x 100
negative effects of the lack of inventory accuracy:

Excess inventory
Increased Inventory Shortages desconocida.- loss caused by external or internal theft and / or administrative errors
Increased obsolescencia.-Technology, for revocation of the product, changing fashion, etc.
Picking errors
2. Level of service will be marked by client.- not send the customer the ordered goods, send it incorrectly or not within agreed time. There are two causes:

Stock.- breaks consequence of the lack of inventory accuracy, often not stocked up properly, and therefore does not have a suitable product for customer service. Keep in mind that break stocks in many sectors translates into a loss of sales.
Some indicators:

% Break stock: Orders dissatisfied / Total orders x 100
% Service Level: Total items served / Total items ordered x 100
% Level of perfect deliveries: Orders delivered perfect / Total orders delivered x 100
Orders delivered perfect: Complete delivery on the date specified by the customer, with the correct documentation and the product in perfect condition

Picking.- mistakes made errors in the process of preparing orders and have reached the customer saving all controls available issuing warehouse

% Return Customer units per item or wrong in the order picking units: Total-returned wrong / units Total units served x 100

Negative effects on customer service causing breakage of stock and errors in picking:

Lost sales
Loss of image and customer confidence
3. Minimize errors in operational and administrative processes almacén.- Analyse any incidents that occur in internal warehouse processes and generate operating losses of time and rework:

Errors in entries: Incidents that occur in the process of entry of goods in our warehouse.

% Units in erroneous entries: Total units wrong / total inputs input x 100 units

Errors location: Incidents that occur in the process of placement and internal movements of it in stock.

Errors in location% Total misplacement / units Total units located x 100

Picking errors: Incidents that occur in the process of preparing orders and have been detected in the process of issuing merchandise.

Errors picking% Total bad picking units / total units picking x 100

4. Batch control and traceability of products (necessary for certain sectors such as pharmaceutical, food, … ..). The company must have mechanisms that allow batch control (in addition to the expiration date) for the purpose of:

Comply with current health regulations in each country
Minimize obsolescence of products

% Damaged or expired in stock Mercadería: Differences Impairment / Total Value of Inventory x 100
Deteriorada-% Merchandise sales: Differences Impairment / Total Sales x 100
The effects of not controlling the batch are loss of traceability of any product since the purchase until it is delivered to the customer.

Some companies do not need to control the batch and traceability but if the product serial number. Companies manufacturing and / or marketing of machinery or tools are required to keep maintaining the serial numbers to control their warranty process.

ERP provides improvements in inventory management and Almacenes.-

The ERP produces an overall positive effect, which is not usually valued and that is very important to me: the impact of integration and automation of business management processes (purchases and sales) with the flows store, generating all the information on real time. This effect guarantees the traceability of the movements of stocks, which can also lead to user level. Therefore, duplications losses while increasing process efficiency and productivity of people are eliminated (often become errors) and.

These are some of the improvements that we provide ERP (and its limitations):

1. Accurate Inventory Provides inventory almost complete control (and always administrative errors will occur, receiving, picking, etc.), and therefore on the unknown loss. From its quantification can be designed actions or measures with the aim of:

Reduce inventory (it is estimated that between 15% and 25%), easing tensions in our treasury, because when the inventory is controlled not there is a tendency to have more than what is needed (not to lose sales)
Reduce shrink
2. Level Customer Service: Most ERP provisioning tools available (automatic calculation of maximum and minimum, the optimal batch, order point, etc.) that allow us to approach an optimal level of stock, minimizing breakages. As for picking errors, will have to settle with a good warehouse organization, process design and training of personnel, here the ERP will help us rather little (unless you have a WMS? Warehouse Management System module)

3. Errors in operational and administrative processes almacén.- Unless the entry process or receipt of stocks, other processes (movements or material flows), often poorly controlled by an ERP. This is because most ERP do not have a WMS module, ie, a system of monitoring and controlling the movement of materials within the warehouse, which allows to manage locations (not just know how much we have, but where we have , The ubication). Some ERP available at most locations in a field on the tab of merely descriptive article (static) to know where to locate when you come back and perform the picking order preparation. Therefore we must make a special monitoring indicators and the cost of incidents of this block to evaluate the need to purchase a WMS and integrate with the ERP. Developing this interface should not cause any trauma as long as ERP and WMS providers will have to “connect” (that will, it is sometimes hard to find).

4. Batch control and traceability of products.- Most ERP Lot control and traceability of products, allowing stocks have separate each item. It depends after staff training and warehouse management (processes) that traceability is not lost. The incorporation of Lot and traceability becomes a positive factor in inventory accuracy, preventing work with negative stocks. There is one aspect to consider this point and are complicated returns.

Finally, another point to consider in Inventory Management, is the accounting inventory valuation, its impact on the profitability of the company and its relationship to the processes of movements in the warehouse. ERP facilitates this assessment (from management, regardless of the accounting area), allowing the use of different criteria: PMP (weighted average price), FIFO (first in, first out), LIFO (last in, first out) or price actual cost. If you do not have a correct assessment of the stock, can not be accurately quantify the assets of the company, nor its profitability. A point to consider in the accounting inventory valuation is the tendency of many companies not to cancel or make depreciations stock obsolescence, leading to “artificially inflate” the active thereof. In this regard, it is noteworthy that some ERP tools have to depreciate stocks automatically, depending on the tax rules of each country.

How to improve management Stock and my Almacenes with an ERP (and limitations).

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