Inventory Visibility – Beyond ERP

Inventory Visibility

Inventory Visibility

Inventory is a key part of any business. Manufacturing, Distribution businesses depends on availability of correct inventory. Important feature of inventory is its visibility. If the inventory lies in a corner of the warehouse and not visible to Planners, it will add to inefficient resource utilisation

 

ERP and Inventory Visibility

Most of the business today, depends upon their In-house ERP system for inventory visibility. WMS (Warehouse Management system) linked to ERP system provides a good visibility into the inventory inside the company. However, ERP alone is not able to provide an accurate visibility of the inventory position. Why?

Inventory beyond ERP

Generally, below types of inventory will not be captured in the ERP hence limiting the visibility of inventory in any ERP system

  1. In-transit inventory : This is the inventory shipped by Suppliers and on its way to the warehouses. If a company has implemented Advance Ship Notice (ASN) process and its suppliers are following it, this inventory will not be visible in the ERP. This is a very important source of inventory as it is a confirmed source of inventory and any planning system should take this into account as expected inventory
  2. Inventory with 3PL: Third Party Logistics providers (3PL) are part of large supply chains. 3PL stores inventory and ships on behalf of the customer. The current inventory positions with 3PL may not be captured in the ERP and even if it is captured, it may not be accurate as 3PL providers will be maintaining their own system of records for inventory management
  3. Inventory with Distributors: Distributors will be holding inventory of finished goods for consumption by end customers. As distributors do not use the same ERP system, current inventory at 3PL locations will not be visible in the ERP
  4. VMI Inventory: Vendor Managed Inventory (VMI) is maintained by Suppliers on behalf of Customers. The current inventory held by the suppliers for VMI will not be available in the ERP system
  5. Consigned Inventory : This is the equivalent of VMI on the sales side. Customers might be holding the inventory that belongs to suppliers. This consigned inventory will not be visible in the ERP system.
  6. Remote Locations Inventory: Inventory held at remote locations or storage facilities may not be accurate and real time in the ERP system as these remote locations will not have access to the ERP system
  7. Inventory with Subsidiaries: As the subsidiary companies may be using a different ERP system, the inventory available with subsidiary companies will not be visible with in the ERP system. Also the item codes or SKU numbers used by subsidiary companies might be different than the parent company. So the inventory visibility is not available in this case.

Unified Inventory System for Visibility

It is necessary to have an unified inventory system that is beyond the ERP system. A cloud portal for inventory visibility is a good solution for this. The main advantage of a cloud portal for ERP is that it sits on top of the ERP system and is accessible to all the parties including both with in the company and outside the company

Getting data into the Cloud Portal for Inventory Visibility

A cloud inventory portal will be useful only if the current inventory data from various sources flow into this system seamlessly from various sources. It is possible to get the data into this system using various methods

  1. Manual data entry into the portal: This is an easy method for small inventory transactions. For example let us say a remote location maintains one or two SKU and they need a quick way to update the current inventory every day. They can simply login to the cloud portal for inventory and update the inventory position for the limited SKU
  2. Bulk Upload: This is another fast and efficient method. Whoever is maintaining the inventory, will prepare the inventory positions in a spreadsheet and upload into the portal. This is very fast and efficient method as most the ERP systems will export the current inventory into a spreadsheet format
  3. Electronic Direct Integration (EDI): This approach needs more effort on the initial stage but in the long run it is very useful. IT effort needed to develop the integration of external systems to the inventory cloud portal. There are many technologies available for the integration
    1. Simple Flat file transfer using text files with comma or TAB delimiters. The files will be automatically sent by the source system to the cloud portal periodically
    2. EDI X12/EDIFACT: Predefined standards by X12 or EDIFACT standard format. This is similar to the flat file approach above but it follows pre defined standards
    3. XML files transfer
    4. API (Application Programming Interface) real time data extraction using API calls

In-house or Outsourced Inventory Visibility Portal

While it is possible to develop a cloud inventory portal for visibility and integrate to all external system, it makes sense to quickly deploy a third part inventory visibility solution like TPSynergy Inventory Portal.

The main advantages of deploying a ready built Inventory visibility portal is

  1. Quick Deployment. Within few weeks, the inventory portal can be up and running. Building a similar solution in-house may take many months
  2. Cost. Deploying a ready built portal will only cost the fraction of cost it will take to develop it in-house
  3. Risk. Any software development comes with potential bugs and learning curve. A ready built third party system would already have gone through the weather and seasoned
  4. Flexibility. Using a third party system makes it easy to switch to different solution if needed. As there is no huge upfront investment, it is easy to switch to a different solution when needed
  5. Maintenance: The third party cloud portal is being maintained by the provider. So the in-house IT team can focus on the internal systems rather than supporting the external parties to maintain the system.

Conclusion

It is clear from the above that ERP alone is not able to provide the inventory visibility for the modern supply chain today. Also it is easier and wiser to deploy  a ready built solution rather than trying to develop and maintain in-house system.