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4 Strategies for Smarter Inventory Control
/in Blog, Distribution Industry, ERP Software /by lindsayInventory control affects a range of business outcomes, including profitability, operational efficiency, product quality and customer satisfaction. Despite its importance, inventory control is often neglected, perhaps due to the traditional difficulty of doing it well. With the advent of cloud-based Enterprise Resource Planning (ERP) solutions with dedicated inventory management features, this is starting to change.
Acumatica recently published a paper on the topic, highlighting four strategies for smarter inventory control: 1) Maintain accurate records; 2) Proactively plan to avoid shortages; 3) Focus on improvement; and 4) Reduce lead times and lot sizes by reducing fixed ordering costs. This article offers an overview of these strategies.
Understanding the Financial Impact of Inventory Control
Before getting into smarter inventory controls, it’s worth taking a moment to review three prominent cost impacts of inventory management.
Quality is an indirect, often intangible issue associated with inventory management. If a vendor ships defective inventory, that creates an administrative burden for returns and refunds. If customers receive defective merchandise, that magnifies the admin problem and adds customer relationship problems to the mix. Generally, the longer inventory sits on the shelf, the harder it becomes to locate the defective goods.
Strategy #1 – Maintain Accurate Records
Record-keeping is essential to effective inventory control. This is a well-known fact, but it’s still surprising how challenging it can be to implement good inventory records at many companies. The culprit is often systemic in nature, with manual processes and re-keying of inventory data from one system into another, e.g. from a warehouse management solution into ERP. Alternatively, record-keeping falls apart due to physical/digital handoffs. For example, if the warehouse receives a shipment of inventory and then places it on multiple shelves, the storage locations may get lost, or at least not tracked, by any central system. Accidental, unnecessary reorders or unawareness of defective goods may result.
Strategy #2 – Proactive Planning
Proactively planning for replenishment is a wise practice in inventory control. But, when is the right time to replenish? This is a simple but highly challenging question to answer. At stake are issues like the business risks of running out of an item, which can affect production and customer satisfaction. Per-unit costs, which may go up in smaller orders, can be a factor, as well as shipping lead times, shipping costs and so forth. Learn more about measuring warehouse productivity.
Material Requirements Planning (MRP) software offers a solution that enables proactive planning. It calculates replenishment quantities and optimal order timing—in alignment with the master production schedule. Distributors can use comparable Distribution Requirement Planning (DRP) tools. Both types of software work from a sales forecast and work backward in time through the distribution network (DRP) and Bill of Materials (BOM).
Strategy #3 – Focus on Improvement
Innovations in inventory management software also make possible an ongoing focus on improvement. Businesses that are successful at inventory control seldom sit still. They are always looking for ways to get better at the process. Plus, the dynamics of the business are always in flux, so the inventory control approach that worked last month may longer be optimal. Software for inventory control enables users to improve their inventory accuracy. Users can also get better at forecasting replenishment quantities and reducing order lead times.
Strategy #4 – Reduce Lead Times and Lot Sizes
The ideal inventory order lead time is zero. The instant the item is needed, it shows up on the shop floor or in the distribution warehouse. Of course, zero lead time doesn’t happen, though software can get a company pretty close. “Just in time” or same-day delivery of needed inventory are now common. The challenge is to predict variability. One day, a company might need 10 units of a particular SKU. The next day, it will need 12. If it orders 12 every day, it will start to accumulate a backlog, with carrying costs and all the other problems that come with inventory.
Control Your Inventory With Cloud ERP Built for Distribution
As these four strategies suggest, software and data analytics capabilities are at the heart effective inventory control. Making fast, smart decisions about inventory—and leveraging technology to automate inventory management processes across multiple systems, is only possible with the right software tools. Acumatica Distribution Edition embodies these capabilities. We have extensive experience working with companies on the implementation of Acumatica for inventory control. To discuss how this technology could benefit your business, or to see a demonstration of Acumatica’s inventory control features, please reach out to arrange a meeting.
Two-Factor Authentication Has Vulnerabilities as Well as Benefits
/in Blog, Security /by lindsayAchieving information security is a never-ending challenge as bad actors find ways to get around every new protective layer. Like all other information security technologies, two-factor authentication can be bested by a determined intruder.
Two-Factor Authentication Means Users Need More Than a Password
The idea behind two-factor authentication (2FA) is that passwords by themselves are relatively weak security. Instead of users needing just a password, they need to prove their identity in two different ways. These ways include:
It’s important to note that a password plus security questions is not an implementation of 2FA; the security questions and the password are both “something you know.” In effect, the security questions are simply secondary passwords.
Two-Factor Authentication Is Vulnerable to Attacks
Although 2FA adds an extra layer to security, that doesn’t make it invulnerable. There are several approaches a hacker can use to get past it:
Making Two-Factor Authentication Effective
These vulnerabilities don’t mean that you shouldn’t use 2FA to increase the security of your systems, but it does mean you need to be smart about how you implement it.
In particular, there’s an implementation of 2FA that is not vulnerable to SIM hacking or phishing. Instead of a user providing a token that was sent to them, this implementation requires a hardware key to be plugged into the user’s device. Because of the extra cost and potential inconvenience, this may be most appropriate when you have highly sensitive data to protect. It’s also important to note that at least one version of a hardware key was itself found to be improperly implemented and vulnerable to attacks.
Two-factor authentication should also be integrated into an effective overall information security strategy. Employees need to be trained to detect and avoid phishing emails. Your infrastructure should include firewalls, blacklists, filters, and other controls that help protect employees and their credentials from dangerous sites.
CCS Technology Group provides comprehensive information security services that protect your valuable data. Contact us to learn how to use 2FA as part of an effective information security solution.
Additional Information Security Resources
Everyone Is a Participant in Information Security
Discover the Dangers of the Dark Web
Different Kinds of Malware Need Different Kinds of Defenses
Key Questions to Consider When Migrating Data to the Cloud
/in Blog /by lindsayThere’s a lot to think through when planning your cloud migration, including many aspects that are easy to overlook. Data is too obvious to be missed, and because it’s so important, you should expect to spend a significant amount of time thinking about the best migration strategy.
There are a number of questions you should ask yourself before migrating any data set to the cloud:
Do we need this data set?
Much data in any business is duplicate data that’s no longer needed, such as copies of data created for development projects that are complete. You may have multiple datasets housing customer information that could be combined. Some data may be old and rarely needed; consider migrating it to an archival storage tier instead of expensive, fast storage.
Do we need this database?
Distinct from the data itself is the database it’s housed in. Some data is stored in conventional SQL databases and you may want to migrate directly to that vendor’s cloud version. Other data is stored in homegrown systems and cloud migration may present an opportunity to transition to a supported platform. For some data, this might be the time to try out a NoSQL database.
Do we need this data model?
You may need the data and the database, but you may not need it in its current format. The data model may no longer serve your purposes, or the data may be incomplete, inconsistent, or incorrect. Depending on how well it fits your needs and the time you have available before migrating, you may want to invest in a database clean-up or redesign project.
How big is the data?
The size of your data determines how practical various data transfer methods are. For truly large databases, copying the data to another drive and physically shipping the device may be the only way to complete the transfer within reasonable time.
How do we validate the migration?
Once you’ve transferred the data, you’ll need to verify that it transferred completely and without any corruption. In addition, you may need a way to sync the migrated data with any changes that were made after the transfer process started. You’ll need to validate that process as well.
How do we protect the data?
Cloud increases the potential for third parties to access your data, whether by the cloud provider’s employees, hackers who access the malware, or accidental exposure of data to other users of the shared resources. All data should be protected both at rest and in transit to reduce the risks. Investigate how to implement this and whether you or the cloud provider will have control of the encryption keys. Learn about ways to keep your cloud secure.
Get help getting your data to cloud with cloud services from CCS Technology Group. Contact us to learn how to think through the important data migration questions and develop a strategy that succeeds.
Additional Cloud Resources
Calculating the ROI of Moving to the Cloud
Choose the Right Cloud Model to Meet Your Business Needs
Choose the Right Approach for Moving Applications to the Cloud