Why Better Inventory Management is Vital for Manufacturers

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Inventory management (IM) is an often-overlooked area of business operations that can hold the key to improved performance and profitability. This is especially true for manufacturers. IM pervades all of the main areas of the manufacturer’s operations: tracking inventory from when it is first obtained from suppliers, through the production process, and finally when it is sold to the customer.

What does it mean to improve inventory management?

A business can improve its IM by improving the efficiency and effectiveness of how it stores and tracks its inventory. This could be done in many ways (but probably not Excel), but the most significant step in improving IM in the modern business climate is to implement a system with specialized inventory software such as Unleashed. These systems have many advantages over less sophisticated IM systems, such as giving real-time information about a firm’s inventory for various users, synchronizing with a firm’s customers and suppliers, and providing data that can be analyzed to correct past errors or plan for the future. For a manufacturing business, the benefits of such a system would flow through all main business operations.

Obtaining inventory

Upgrading to an IM system that utilizes IM software allows a manufacturer to view inventory levels in real-time, meaning that new orders can be placed with a supplier at exactly the right time. This allows the manufacturer to keep the optimum levels raw materials: not too much so as to incur high levels of holding costs, yet not too little that there could be a shortage when an order from a customer comes in. If suppliers have the capability, then the software can link in with their systems such that orders can be made automatically when needed, and instantly received by the supplier when made.

Implementing IM software can also allow a manufacturer to track the reliability of its suppliers, with respect to statistics like faulty products and delivery times. Since finding the best suppliers can be critical to the long term success of a manufacturer, having the data to make informed choices about which suppliers to use will allow for improved performance and success.

Production process

IM software also offers multiple benefits for the production process. As inventory is tracked through various stages of production, a manufacturer has the data to analyze what processes can be modified and improved. For example, there may be some areas where bottlenecks occur, or production phases that are too slow and could be tweaked to improve efficiency. Or some production lines may be being produced too fast relative to customer demand, such that resources could be shifted to another area that is more in need. Such analysis can be undertaken without modern software of course, and a manual assessment may be a cheaper alternative in the short term. However, investing in the software is worthwhile as it can allow for ongoing monitoring where potential changes are identified immediately at no cost or disruption.

Customer Integration

Whether a manufacturer sells on to another business, or acts as its own retailer, an advanced IM system provides multiple advantages. For retail, sales staff are in a better position to close sales as they will know exactly which items are in stock and where they are located at any time (for example the requested item may be at another store or warehouse). They are then able to give an accurate estimate of when the item can be delivered to the customer. If the customer is another business, then similar to above, IM software can integrate with their business so that orders can be placed automatically. This will benefit both businesses: the customer will have stock as soon as they need to, and the manufacturer can organise its production efficiently, with minimal cost due to delay.


Implementing a modern IM system with IM software is a sure way for a manufacturer to improve its business performance. The benefits of such a system flow through to obtaining inventory, the production process, and customer integration. While some of the above-mentioned benefits can be obtained by strengthening IM in other, perhaps cheaper ways, if your business has not already invested in IM software then it would be worthwhile to at least consider this, given the lasting benefits that the software can provide.

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Melanie - Unleashed Software

Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.

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