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ERP Inventory Management Overview

This document discusses how enterprise resource planning (ERP) systems support inventory management and procurement processes. It describes the key functions of ERP related to determining purchasing needs, selecting vendors, processing purchase orders, receiving goods, and paying invoices. It also outlines the important inventory management processes that ERP systems handle, including inventory transactions, planning, and control activities like cycle counting and ensuring appropriate stock levels. Strategic inventory management techniques like vendor managed inventory and approaches to minimize costs are also covered.

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JAYPALSINH GOHIL
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32 views14 pages

ERP Inventory Management Overview

This document discusses how enterprise resource planning (ERP) systems support inventory management and procurement processes. It describes the key functions of ERP related to determining purchasing needs, selecting vendors, processing purchase orders, receiving goods, and paying invoices. It also outlines the important inventory management processes that ERP systems handle, including inventory transactions, planning, and control activities like cycle counting and ensuring appropriate stock levels. Strategic inventory management techniques like vendor managed inventory and approaches to minimize costs are also covered.

Uploaded by

JAYPALSINH GOHIL
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd

Enterprise Resource

Planning

Inventory Management
Procurement
 Procurement process
 Determining what to buy and how much
 Determining source of supply and selecting
vendor
 Purchase order creation
 Goods receipt
ERP supports procurement
process
 Determining what to buy and how much
 Determining source of supply and vendor
 Purchase order selection
 Goods reciept
 Quality inspection and self life expiration
 Under-delivery and over-delivery
ERP supports procurement
process
 Processing vendor payment and invoice
verification
 Invoice entry
 Three – way matching invoice variances
 Invoice blocking
 Parking of invoice
 credit/debit memos
 Reports of going invoices
Important functions of ERP to
procurement process
 Purchase requisition
 Contracts
 Central contract and plant specific contract
 Quantity contract
 Value contract
 Quota arrangement
 Forecast & detailed delivery schedule
 Source list
 Request for quotation
 Converting PR to purchase order
 Purchase order
Procurement of materials and
services
 Material procurement
 Service procurement
 Service cannot be inventoried
 Difficult to define a service specification
 Price comparison for service is complex
 Goods receipt is replaced by service entry
Procurement
 Procurement of direct and indirect items
 Commodity procurement
 Government/public sector procurement
 Master data for ERP procurement
 Material master record
 Vendor master record
 Terms and conditions master
 Service master record and service catalog
Inventory management
 Inventory management process
 Concept of inventory management pyramid.
 Inventory transactions and inventory control
 Inventory transactions: goods issue, receipt, stock

transfer
 Inventory control: inventory stock, inventory

valuation, minimum level, accuracy


 Inventory planning(how much to hold, when to order,
where to hold)
 Strategic inventory management processes
Inventory management pyramid

Strategic
inventory
management

Inventory planning

Inventory transactions and inventory control


Inventory management
processes in ERP
 Inventory transaction processes
 Goods receipt(ASN, receiving goods ,quality check ,return)
 Goods issue(quality inspection ,dispatch ,ASN)
 Reservations(material for particular date)
 Stock transfer(one location to another)
 Inventory control processes
 Quantity control
 Physical inventory(counting of physical inventory, variances can be

checked)
 Cycle counting(count the material at regular interval, ABCD category)

 Stock overview
Inventory management
processes in ERP
 Value control/stock valuation(ERP valuation, standard
and average pricing)
 Inventory planning processes (right time, locations, items
quantity)
 Never stock out

 Never carry access inventory

 Designing better process of inventory

replenishment(available of material)
 Supporting process of managing different inventory

exceptions(alerts)
 Taking scientific decision
 Q model(EOQ)

 Too frequently order, increase cost


decrease carry
 Too long order, increase carry decrease
cost
 Total stocking cost=annual ordering cost
+annual holding cost
 Reorder point=daily demand * lead
time(units)
P model
 Reviewed at regular intervals
 d=average period
 RP=review period(days,wks)
 L=Lead time
 SS=safety stock
 TI(Targeted inventory)= d ( RP + L) + SS
 min-max model

 Min and max for each item is determined


and ordered
 Two-bin models

 Record when one is empty


Inventory management
processes in ERP
 Strategic inventory management processes (competitive advantage)
 Process of inventory collaboration
 Instead of company vendor manage the inventory(VMI)
 Deciding inventory based on service levels
 Higher service higher inventory, lower service lower inventory
 Best practice process of inventory management like cross
docking
 Effective supply of goods
 Lean inventory management
 Less raw material wastage
 SAP and oracle supports

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