Inventory Management Techniques: Process and Tools with Example

Tally Solutions |Updated on: June 28, 2021

In any organization, operations are liable to become chaotic if the right decisions are not taken at the right time. Ideally, we expect things to happen by clockwork precision, but unfortunately, that is not always the case and one has to deal with unexpected contingencies. Sometimes blunders in communication occur which prove to be very costly to an organization – it could lead to a loss of precious customers which directly impacts the bottom-line profits. Inaccurate business choices could also lead to a lack of internal coordination between the various departments of a firm.

Define unlimited groups, categories, batches, locations/godowns

If your business has multiple product lines and each product line needs segregation, you can do so easily with Tally.ERP 9 by defining unlimited groups, categories, batches and locations/Godowns.

Flexible units of measure

Handling real-time complexities like ‘the requirement to buy in one unit and sell in another’, ‘Stock Items required to be quantified in more than one unit’, ‘measuring the unit of stock item with floating conversions’ etc. are some of the most crucial aspects in any organisation that need to be handled carefully and accurately. The flexible units of measure in Tally.ERP 9 allows you to manage and quantify the stock the way you want.

Manufacturing journal

Record raw materials involved, track godowns from where the raw material is dispatched and their purchase costs. Record the details of finished goods, by-products and scrap yielded.

Bill of material

The comprehensive Bill of Material (BoM) feature allows you to define the raw materials, assemblies, parts and components, along with quantities of each inventory, needed to manufacture a finished product. You can also define the by-products, co-products and scrap in BOM of finished products.

Re-order level

Using reorder level in Tally.ERP. 9, you can ensure that you never run out of stocks and in real-time get to know the stock which must be replenished along with right quantities. You can set re-order level and Minimum order level and automatically generate re-order status report along with shortfall and quantities to be ordered.

Multiple stock valuation

Tally.ERP 9 lets you value your closing stock using different stock valuation methods. The flexible stock valuation method allows you to set different stock valuation method for each item based on your requirement.  Tally.ERP 9 supports the following stock valuation Methods:

• Average Cost
• FIFO
• FIFO Perpetual
• Last Purchase Cost
• LIFO Annual
• LIFO Perpetual
• Cost
• Monthly Avg. Cost
• At Zero Cost

Job work

With Tally.ERP 9’s powerful job work feature, you can completely manage job work process both as principal manufacturer and job worker. It’s flexible to record the material issues, receipts, consumption of materials supported by job work reports to give complete visibility of job status and material status.

Manufacture and expiry date management

Manufacture and expiry date management is crucial for business dealing with products having defined shelf life or short durability. With Tally.ERP 9’s batch summary report, you can maintain batches with manufacturing and expiry dates and get complete visibility of batch details such mfg date, expiry date, no of days till expiry etc.

Additional features for easy inventory management in Tally.ERP 9

• Flexible inventory management system to handle exceptions so that no crucial information stays outside the system and help you make informed decisions
• Variety of inventory reports such as stock summary, ageing analysis report, item-wise profitability etc. help you to keep a watch on stock movement and manage your inventory more efficiently
• Using job costing feature in Tally.ERP you can track cost and revenue information like material, labour, and overhead for each job, down to the smallest detail
• Effectively track and ascertain the procurement cost, landing costs, manufacturing or production costs, order cost or profit, and job cost or profit, using Item Cost Tracking feature in Tally.ERP 9

Read More on Inventory Management

Inventory Management, Inventory Management Software, Inventory Reports, Inventory Planning, Inventory Valuation, Inventory Control, Inventory Turnover Ratio, Importance & Benefits of Inventory Management, How to Audit Inventory