Challenges Businesses Face in Today’s Competitive Market
by Dani Kaplan
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Problem: Un-Automated Warehouse Business Issues:
- When inventory is received at the warehouse it is manually verified against the purchase orders, then the computer records are manually updated.
- When space is needed, half-empty shelves are consolidated. If the computer records are not updated the misplaced inventory will collect dust until the next physical inventory.
- Wrong products might be picked by not being scanned and verified by the computer.
- At shipping time, one person packs the products while a second person verifies the shipments for accuracy. This results in additional labor costs.
- Until a physical inventory is taken, the accuracy level of inventory cannot be determined.
SMC’s Warehouse Software Highlights
- Receiving
- Movement
- Order Management
- Picking
- Order Verification
- Warehouse Transfers
- Cycle and Physical Counting
Problem: Losses Resulting from Wrong Shipments:
- Wrong shipments that get returned result in double freight bills.
- Shipped inventory gets replenished and the returned inventory can become excess inventory.
- Invoices that have returned inventory items often don’t get paid on a timely basis until credit or adjustments are given resulting in cash flow problems.
- Returned Inventory creates additional work for the accounting department which has to issue credits and adjustments.
- Vendor early payment discounts are often missed resulting from the additional workload the accounting department faces when issuing credits and adjustments.
Solution: Automated Warehouse:
- Received inventory is scanned and verified against the purchase orders, and the computer records get updated in real-time mode.
- When the half empty shelves are consolidated, the inventory is scanned before being moved to different locations and the computer automatically gets updated in real-time mode.
- The picker scans the inventory to be picked in real-time mode and cannot pick the wrong quantity or items.
- Inventory to be shipped is packed and scanned by one person rather than two people resulting in lower labor costs.
- Locations can be scanned on a timely basis so misplaced inventory can be located without taking a complete physical inventory.
Problem: Buying based on “gut feeling:”
- Buying based on “gut feeling:” just because the product sold last year does not guarantee it will sell this year.
- Everybody remembered the very big order that might have been for a one-time promotion.
- When a product reaches its maturity, the sales will decline. Not taking product maturity into account will result in excess inventory.
- Buying without having accurate count of the inventory in the warehouse will result in excess inventory.
- Not having good control of open customer orders and purchase orders given to vendors will result in excess inventory.
Solution: “Buying Smart:”
- A Forecasting System that takes into account product maturity by analyzing sales from previous years to determine product maturity.
- Disregarding one-time big order and not taking it into consideration as part of product demand.
- Based on the inventory in stock, the number of open orders, purchase orders issued to vendors and product maturity, the computer system suggests what to buy and in what quantity.
- Determining vendor delivery time-table will help “Just in time” purchasing.
- Knowing who to buy from: the lowest priced vendor is not always the “best buy.” Late deliveries by vendors can result in inventory shortage and customer cancellations.
SUMMARY:
Not having the appropriate computer system will result in the “domino affect” of increasing operating costs, lost sales and additional expenses that will lower bottom line profit.
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Company History SMC Data Systems has been providing ERP solutions since 1980. Using our software solutions, our clients’ bottom line has improved by “buying smart, shipping efficiently and achieving 99% inventory accuracy.” We pride ourselves on our high level of customer satisfaction which is reflected in the testimonial letters that have been written about us.