What is Managed Inventory with ERP Systems?

Inventory management has long been a critical aspect of running a successful business, yet it continues to be one of the most challenging operational areas for companies to master. Not only do its processes involve many complexities by itself, but the needs can differ vastly from industry to industry too. Say, a construction company would likely struggle using the solutions created specifically for ecommerce inventory management. 

ERP systems, on the other hand, are designed to address the common inventory management challenges, and be easily adapted across many different industries. This article will discuss the key features and advantages ERP software offer in order to achieve an efficiently managed inventory.

The Challenges of Inventory Management

Inventory management is primarily concerned with meeting the ever-changing demands of your customers through efficient operations and accurate forecasting. A simple miscalculation could lead to significant consequences on the business, including process delays, unhappy customers and even cash flow issues. Here are some of the most common challenges our customers experience with manually / inefficiently managed inventory. 

Inaccurate Inventory Data

Manual inventory tracking methods or outdated software can lead to data inaccuracies, causing stock discrepancies and hindering decision-making. For example, a business using manual data entry to record inventory transactions may struggle with human errors or outdated information, which can cause issues like incorrect stock levels or lost items. These inaccuracies can ripple through the entire supply chain, resulting in delays and customer dissatisfaction.

Stockouts and Overstocking

Both stockouts (running out of stock) and overstocking (holding too much inventory) can negatively impact a business, whether it’s through lost sales or tied-up capital. When a retailer fails to accurately anticipate demand for an item, therefore experiencing stockouts, frustrated customers may turn to competitors to meet their needs instead. On the other hand, excess inventory takes up valuable warehouse space and leads to higher carrying costs, waste, and obsolescence.

Inefficient Order Processing

Automation of sales and inventory management system is no longer some novelty that only well-established businesses are able to implement. On the contrary, it has become a must in order to meet the growing expectations of the customers - certainly when it comes to order processing and fulfilment times. Besides the inefficiencies and delays, businesses that rely on manual processes for managing their orders are likely dealing with higher labour costs, increased risks of errors and, ultimately, poor customer experience. 

Poor Demand Forecasting

Inability to accurately predict future demand can cause stock imbalances and hinder business growth. Effective demand forecasting requires businesses to analyse historical data, consider external factors, and leverage advanced analytics to make informed decisions about inventory levels. This issue is particularly prevalent amongst industries that rely on seasonal sales, failing to accurately account for the fluctuations in sales and, therefore, overstocking or understocking their inventories.

What is ERP inventory management software?

ERP inventory management refers to the process of managing, tracking, and optimising a company's inventory levels using an integrated Enterprise Resource Planning (ERP) system. This holistic approach to inventory management combines multiple business functions, such as procurement, sales, manufacturing, and warehousing, under a single platform. 

By streamlining operations and providing real-time data access, ERP inventory management helps businesses maintain accurate inventory records, prevent stock imbalances, improve order processing efficiency, and make data-driven decisions for optimal inventory performance. 

Key features of managed inventory with ERP systems

Real-time Inventory Tracking

Real-time inventory tracking is a core feature of ERP systems, providing businesses with up-to-date information on stock levels and movements. By closely monitoring inventory status, companies can quickly respond to fluctuations in demand, prevent stock discrepancies, and make well-informed decisions on replenishment strategies. This level of visibility enhances operational efficiency and enables businesses to maintain optimal stock levels, reducing the risk of stockouts and overstocking.

Process Automation

Automation is another crucial aspect of ERP software inventory management. Smart systems are able to automate routine tasks such as generating purchase orders, updating stock levels, and processing sales orders, reducing the need for manual intervention and minimising human error. With the help of process automation, businesses can increase their productivity and focus their time on more strategic activities to drive growth and profitability.

Accounting and Financial Management

Most business management systems will seamlessly integrate all organisational processes with accounting and financial management modules. This provides a complete view of their financial performance in a highly centralised way. With accurate financial data at their fingertips, companies can effectively track inventory costs, calculate profit margins, optimise their pricing strategies, generate dynamic reports and monitor their bottom line. 

Customer Relationship Management (CRM)

CRM integration with your inventory management processes helps further enhance customer satisfaction and build long-lasting relationships. It seamlessly combines inventory data with client information, allowing businesses to gain valuable insights into their preferences and purchasing patterns. Additionally, it helps predict sales trends as well as create personalised marketing campaigns or promotional offers accordingly. 

Warehouse Inventory Management

Efficiently managed inventory is a particularly important consideration for manufacturing and warehouse operations, with a variety of industry-specific needs involved. ERP solutions for manufacturing, such as bill of materials (BOM) management, work order scheduling, production planning, multi-location management, and serial number tracking can significantly improve the way businesses manage raw materials and finished goods. Many of the related processes can also be automated, leading to further warehouse optimisation and reduction in costs. 

Ecommerce Inventory Management

Similarly, the ecommerce industry has a set of its own needs and challenges when it comes to managed inventory. ERP systems can help maintain the required stock levels with high accuracy, reducing the risk of stockouts or order cancellations. The automation capabilities enable a faster fulfilment and delivery process, with integrated areas and departments working smoothly together. Customer loyalty is a key goal for ecommerce platforms, and ERP software boosts your chances to deliver optimal results. 

Reporting and Analytics

Finally, reporting and analytics tools in ERP inventory management software enable businesses to track key performance indicators (KPIs) and gain important insights into their inventory performance. Customisable dashboards and reports make it easy to monitor metrics such as inventory turnover, stockout rate or carrying costs. By analysing this data, businesses may identify areas for improvement and fine-tune their inventory strategies to maximise efficiency and profitability.

Other benefits of ERP systems

Implementing an ERP system involves much more than just managed inventory - it can significantly benefit your business across numerous different areas. Here are some of the most important advantages of choosing an ERP integration instead of a dedicated inventory management software. 

Process Optimization

ERP systems contribute significantly to process optimization by streamlining and automating various business functions. This increased efficiency reduces the need for manual intervention and allows employees to focus on strategic initiatives that drive growth. By enhancing productivity and eliminating redundancies, ERP integration enables businesses to operate more effectively and achieve better results.

Reduced Costs

ERP systems can reduce costs in several ways. Streamlining operations and increased efficiency leads to lower labour costs and other operational expenses. It also reduces the likelihood of errors and minimises waste. The organisations choosing to use cloud ERP are also benefiting from reduced in-house hardware and maintenance costs for their management systems. All in all, the cost reductions can have a direct impact on a company’s profitability and long-term financial health. 

Increased Supply Chain Transparency

Through integrated modules such as procurements, logistics or manufacturing, ERP systems also increase your supply chain transparency. The all-in-one business management approach enables seamless collaboration between different departments, where all relevant members of the teams are able to access the essential data. Besides encouraging more organisational transparency, it also helps identify potential bottlenecks in the process, further reducing errors and enhancing supply chain performance.

Higher Accuracy and Data Quality

ERP systems offer centralised data storage and management, helping businesses ensure consistent and up-to-date information across all levels of the organisation. By eliminating data silos, BMS can maintain high data accuracy and quality, providing the company with reliable reports and forecasting. The ability to use your data to its maximum advantages gives you a strong competitive edge through data-based decision making. 

Custom solutions

Many of the ERP systems on the market offer the ability to create custom solutions, catering to your individual business needs or industry requirements. Customisation will further optimise business management processes as well as make your existing ERP solutions much more scalable in the future. Therefore, your company can fully focus on long-term growth strategies and new ventures.


To conclude, ERP systems are not just beneficial for solving your inventory issues. Given the integrated, all-in-one nature of these solutions, they will provide an array of benefits alongside the useful functionality for managed inventory. The level of accuracy, control, and automation that is achievable with ERP systems can significantly impact businesses of all sizes and industries - from improved customer satisfaction to a boost in your bottom line. 

Chat to an ERP consultant

If you are looking for inventory management software that could help solve the above challenges in your business, Odoo ERP system is a great option to consider! This powerful, open-source cloud ERP will cover all of your business needs for the most competitive price in the industry. 

As an experienced Odoo partner in both the UK and Lithuania, our mission is to help businesses grow with optimal, custom solutions for them. Get in touch or book a FREE Odoo demo with an experienced ERP consultant to discuss how we can help meet your needs.

Achieve managed inventory with Odoo ERP system

Let's discuss how Odoo can help optimize your business - get in touch today!

Share this post