{"id":7291,"date":"2025-05-26T02:11:41","date_gmt":"2025-05-26T02:11:41","guid":{"rendered":"https:\/\/sblog.seebiz.com\/blog\/?p=7291"},"modified":"2025-05-26T02:11:41","modified_gmt":"2025-05-26T02:11:41","slug":"manufacturing-inventory-management-system","status":"publish","type":"post","link":"https:\/\/sblog.seebiz.com\/blog\/manufacturing-inventory-management-system\/","title":{"rendered":"What is a manufacturing inventory management system? A complete guide"},"content":{"rendered":"

Congratulations on starting your manufacturing business!\u00a0<\/span><\/p>\n

Now, getting started means you need products, but how do you figure out how many will be just right?\u00a0<\/span><\/p>\n

It can be a bit tricky to determine how many products you\u2019ll need in the first month, and then as you continue into the second month and beyond.\u00a0<\/span><\/p>\n

The good news is: You can find this out by tracking your inventory. In fact, up to <\/span>36% of supply chain professionals <\/span><\/a>are investing actively in inventory management to help with this exact challenge!<\/span><\/p>\n

While some businesses still track their inventory manually or have<\/span> 67.4% of small businesses<\/span><\/a> relying on Excel sheets, this approach can lead to mistakes. It may surprise you to learn that <\/span>43% of small and medium-sized businesses <\/span><\/a>don’t track their inventory at all!\u00a0<\/span><\/p>\n

Ignoring inventory management can really hurt your business finances in the long run. Thankfully, there are many manufacturing inventory management systems available today that make it much easier to track, optimize, and control your inventory so you can run a successful business!<\/span><\/p>\n

What is a manufacturing inventory management system?<\/span><\/h2>\n

A MIMS or <\/span>manufacturing inventory management system<\/b> is software designed to help manufacturers track, control, and optimize inventory in different production stages, from raw materials to finished products.\u00a0<\/span><\/p>\n

This system combines real-time tracking, automation, and analytics to make operations smoother and more efficient.<\/span><\/p>\n

Why is inventory tracking important?<\/span><\/h2>\n

Because poor inventory tracking wastes your resources, delays orders, and causes cash flow issues. According to <\/span>Supply Chain Dive<\/span><\/a>, up to 62% of business finances are affected by poor inventory tracking. However, only a small percentage (17%) use inventory tracking to prevent such a situation.\u00a0<\/span><\/p>\n

Simply by not investing in MIMS, businesses are wasting a lot of their capital due to stockouts, overstocking, and order delays due to longer lead times, just because they do not have the system in place to keep track of all this on automation. Up to 74% of businesses face delays in their shipments due to longer lead times. Research also showed that by just managing stockouts and overstocking, businesses can reduce their inventory costs by 10%.\u00a0<\/span><\/p>\n

So what are we thinking? When are we gonna stop losing our capital and invest it in something that gives us results?<\/span><\/i><\/p>\n

Type of inventory being tracked by the manufacturing inventory management system<\/span><\/h2>\n

A manufacturing inventory management system tracks, optimizes, and controls three types of inventory divided into stages.\u00a0<\/span><\/p>\n

1- Raw materials<\/b><\/p>\n

This is the first stage of inventory production: Raw materials<\/span><\/p>\n

For a manufacturing business, keeping raw materials in check is important for the timely manufacturing of finished goods. A delay in raw mayerila production can slow down the whole supply chain cycle.\u00a0<\/span><\/p>\n

Manufacturing inventory management software forecasts demand for raw materials to prevent stockouts. Using inventory management software, you can set order levels, thresholds, and restock points. When stock reaches that point, the system automates the demand, and an order is placed for the restock.\u00a0<\/span><\/p>\n

With on-time forecasting, businesses can shorten lead times and keep their customers happy. No customer wants to see the \u201cStockout\u201d label on their hot-selling product.<\/span><\/p>\n

2- Work-in-progress (WIP) inventory<\/b><\/p>\n

This is the second stage of inventory production, where the raw materials are used to make products that will be used to make the finished goods.<\/span><\/p>\n

When multiple products are made, the MIMS helps monitor all the production stages and know exactly what\u2019s being made.<\/span><\/p>\n

Here, businesses use RIFD tags or shop floor terminals to get live updates on products and help workers log in properly without using excessive manual work.\u00a0<\/span><\/p>\n

3- Finished goods<\/b><\/p>\n

This is the third stage of production, where the WIP products are used or assembled to make the end product.\u00a0<\/span><\/p>\n

Here, the strategy most business use is <\/span>ABC analysis<\/span><\/a> to prioritize high-value products first.\u00a0<\/span><\/p>\n

MRO inventory:<\/b>
\n<\/b>It’s the type of inventory that is repeatedly used to facilitate the manufacturing process but is not a part of finished product. MRO stands for Maintenance, Repair, and Operations inventory. Therefore, to keep business operations running smoothly, businesses set a separate threshold for these inventories on automation so they don’t go out of stock.\u00a0<\/span><\/p>\n

Top 4 Inventory Management Strategies for manufacturing businesses.\u00a0<\/span><\/h2>\n

1- Just-in-Time (JIT):<\/b><\/p>\n

Just-in-Time, or JIT<\/span><\/a>, is a system that helps businesses order materials exactly when they need them. This method reduce excess inventory and save money on storage.\u00a0<\/span><\/p>\n

How It Works:<\/b>\u00a0<\/span><\/p>\n

This system, first introduced by Toyota, is known as Toyota\u2019s Kanban system. It uses simple visual cues, like colored cards, to signal when it’s time to restock materials.\u00a0<\/span><\/p>\n

\"Inventory<\/p>\n

Source<\/span><\/a><\/p>\n

Who It’s For:<\/b><\/p>\n

JIT is especially beneficial for industries that have fast-moving products, like electronics, where demand can change quickly. This approach helps keep things flowing smoothly and efficiently.<\/span><\/p>\n

\"Inventory<\/p>\n

Source<\/span><\/a><\/p>\n

2- Push vs. Pull Systems:<\/b><\/p>\n

Push Systems:<\/b><\/p>\n

In a push system, companies predict what products will be needed in the future. They base their production on forecasts, trying to stay ahead of demand. A classic example is Ford. In the 20th century, they used this approach to manage their vehicle parts supply. They analyze trends and produce parts in bulk to ensure they have enough stock when the time comes to assemble their cars.\u00a0<\/span><\/p>\n

Pull Systems:<\/b><\/p>\n

On the flip side, pull systems react to actual customer orders rather than forecasts. This means production happens as needed, based on real-time demand. Custom furniture makers often follow this model because they create pieces only after receiving specific orders. This way, they can tailor their products closely to each customer’s prefrences, reducing waste and providing satisfaction.\u00a0<\/span><\/p>\n

\"Inventory<\/p>\n

Source<\/span><\/a><\/p>\n

    \n
  1. Perpetual Tracking:<\/b><\/li>\n<\/ol>\n

    In perpetual tracking, the inventory is tracked and updated in real time. Inventory management software uses IoT Sensors for this 24\/7 monitoring.\u00a0<\/span><\/p>\n

    For example, you have set the threshold for some product at 100. When the product hits 100, it will periodically send signals for restocking.\u00a0<\/span><\/p>\n

      \n
    1. Cycle Counting:<\/b><\/li>\n<\/ol>\n

      Another system is cycle counting, where the team regularly checks the count of physical inventory to ensure it matches the recorded inventory. Most businesses audit 10-15% of their inventory weekly.\u00a0<\/span><\/p>\n

      \"inventory<\/p>\n

      Source<\/span><\/a><\/p>\n

      Common inventory challenges in manufacturing<\/span><\/h2>\n
        \n
      1. Manual tracking:<\/b> Spreadsheets are prone to human error and lack real-time visibility.<\/span><\/li>\n
      2. Delayed data:<\/b> Without real-time updates, decision-making becomes more like a guessing work.<\/span><\/li>\n
      3. Integration isues:<\/b> Disconnected systems create data silos and communication breakdowns.<\/span><\/li>\n
      4. Scalability:<\/b> As you grow, basic systems can’t keep up with demand.<\/span><\/li>\n<\/ol>\n

        What to look for in a manufacturing inventory management system<\/span><\/h2>\n