Is Real-Time Inventory Really Real?
Process manufacturers need to place in-coming materials on hand immediately, so they can use them today. But is updating the quantity sufficient? What about the cost? Many manufacturing ERP systems boast “Real-time” Inventory, but is it really real?
Efficiency in Process Manufacturing is all about receiving Raw Materials and Packaging “Just-in-Time” for manufacture, to maximize the shelf-life of perishable products. Profitability depends on being able to sell those products immediately with certainty as to the cost of what has been produced, based on the cost of materials consumed and the added-value of the manufacturing process.
Updating the Quantity on-hand, while leaving cost updates until the Vendor invoice is received, leaves process manufacturers at a disadvantage. Frequently, material has been received, consumed in manufacture without the manufactured product being costed, and the final product sold, long before the Vendor’s invoice arrives. Managing costs is a critical requirement of ERP implementations, and delaying cost adjustments disables that needed benefit.