Why Having Effective Inventory Management is Only Part of the Story

Inventory 12 Sep

According to reports out this week, SMEs are still struggling with the ongoing manpower shortage and an increase in employee salaries and rents, while they also suffer declining profits. The results from an annual SME survey conducted by the Singapore Chinese Chamber of Commerce & Industry (SCCCI) indicate that 83% of the 645 companies surveyed said that their business costs have increased (up 9% from last year), while 46% reported a decline in profit margins, up 7% from last year.

In a bid to counter growing costs, while still remaining innovative and wanting to invest in the latest technologies, SMEs often ask Blue Ocean Systems to implement SAP Business One with just one vital module – inventory management – because they see this as key to their business growth.

There are several reasons why this is not a viable option – including SAP Business One automatically granting full access to the suite of modules available in the solution, and the need for these base models to be incorporated to provide you with a transparent view of your entire enterprise. But more important than this, is that we feel your business would severely miss out on the wider benefits that can be realised through an enterprise resource planning solution such as SAP Business One.

Inventory management is only as effective as your last order fulfillment, but it’s a never-ending requirement to have optimum stock across all locations with the capability to deliver on your promises to retain your competitive edge.

Best in class supply organisations are able to improve inventory levels by 20%-50% by employing sophisticated analytics tools, resulting in savings for years.


Optimum inventory levels impact all areas of the business, including:


Previously, companies thought that achieving optimum inventory levels was only brought about by effective sales forecasting. This is often a misguided conception, although there is some truth that sales and inventory need to maintain a strong link, but it’s more than just sales pipeline.

Being able to track inventory based on geographical requirements, with real time analytics can transform your inventory levels beyond what you thought possible. Shifting stock between warehouses, reducing or streamlining delivery plants and optimising inventory around seasonal, ad-hoc or crisis events is becoming the normal expectation of companies today.


Customer service

When your contact centre talks to customers more often, and through increasingly engaging channels, your inventory needs to be able to respond accurately and quickly.

Your customers are also expecting much quicker delivery rates, especially in retail, as these examples show.

Increasing customer interaction leads to more sales, returns etc. so your inventory needs to be able to back up your promises.



Inventory levels can be thrown into a tailspin when an unplanned situation crops up in your manufacturing plant. A vendor lets you down with raw materials, a natural disaster occurs close to your factory affecting operations, staff go on strike. Having your inventory in check will not prevent such incidences occurring, but an effective enterprise resource planning solution will equip you with best practice back up plans and complete oversight on contingency plans to keep your business running.



Marketing and inventory cross over when a successful marketing campaign is executed and demand for products increases. A spike in marketing activity might occur at set times throughout the year, enabling sufficient inventory to be prepared, but it might also occur as an ad-hoc response to current consumer trends. Either way, the inventory needs to be there to support the business.



Having a solid procurement structure in place enables organisations to better negotiate and obtain competitive prices that they can pass on to their consumers. Planning inventory means planning purchasing cycles effectively to ensure each warehouse has the right stock, when needed and can obtain more or less, as needed.



Each business is aware of the intrinsic link between cash flow and every other business function! Buying unplanned inventory, or wasting stock has a direct flow-on effect to cash flow so the more aligned the systems and processes can be between these two functions, the better.

We appreciate that poor inventory management might be the driving force behind your company’s decision to look into ERP; this is quite common. But limiting your vision simply to securing an optimum inventory system at the detriment to the rest of your business will not help you grow in the long-term.


If your company is wondering how to get around this problem, whilst keeping investment costs down, contact the Blue Ocean Systems team today to discuss your options.


Note: This story has also been adapted for publication in Steemit.

Alternatively, you might work with a company who you know could benefit from an effective resource planning solution. If so, send us a message with their details so we can share this information with them.


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