Inventory management makes or breaks a manufacturing operation. Without a firm grip on the flow of raw materials, components, and finished goods, you’ll battle bottlenecks, stockouts, and wasted resources — a recipe for disaster.
It all starts with properly managing your raw material inventory. If you don’t have a handle on those parts, the negative effects will cascade throughout the rest of your organization. But if you optimize your inventory, you’ll keep costs in check and enjoy smoother production runs.
The process is easier with the help of a raw material inventory management software solution. Let’s explore why managing raw materials inventory matters and the ways this software streamlines operations, then compare some of the best solutions on the market.
Understanding raw material inventory management
There are two main types of raw materials:
- Direct materials: These are the essential ingredients that become part of your finished product. Think wood for furniture, steel for cars, or flour for bread.
- Indirect materials: Things like machine lubricant or cleaning supplies play a supporting role. They’re crucial for the production process but not physically present in the final product.
What these materials have in common is that they’re the unprocessed but essential ingredients, materials, or components required to create your finished goods. That’s why raw material inventory management is the foundation of your entire production process — the science of ensuring you have the right materials in the right quantity at the right time.
The “right quantity” part of that statement is worth repeating. Because it’s not just about having enough materials; it’s about having the perfect amount. Too much and you’ll waste valuable capital and storage space. Too little and you risk production delays or missed deadlines.
Effective raw material inventory management helps you walk that tightrope, ensuring a smooth and efficient production flow while minimizing waste and maximizing profitability.
The importance of raw material inventory management for manufacturers
Leveraging a comprehensive inventory management system for your manufacturing operations offers many benefits. Here’s a look at the biggest perks.
Cost savings
Storing unsold finished products, overstocking raw materials, and production delays can be costly. Good manufacturing inventory management eliminates these costs by helping you optimize stock levels through things like reordering alerts and advanced forecasting.
A better customer experience
With effectively managed inventory, you’re always up to speed on the state of your current stock. This knowledge avoids issues like customers purchasing out-of-stock products or orders being delayed due to insufficient supply.
More efficient operations
By optimizing stock levels, raw material inventory management hits the sweet spot between meeting demand and avoiding costly overstocking. That means fewer production delays due to missing materials, less money tied up in excess inventory, and reduced risk of obsolescence or spoilage.
Accurate forecasting based on historical data
Inventory tracking gives you access to the data you need to make smarter decisions about production amounts based on trends, customer demand, and other variables. These insights help prevent understocking and overstocking, saving you money and ensuring you can ship on time to keep customers happy.
Scaling support
Using cloud-based manufacturing inventory software to manage your raw materials lets your inventory management system grow without steep costs. You can scale without the additional hardware or labor costs you’d have to dedicate to manual inventory management methods.
Common challenges of raw materials inventory management
Knowing why you need a system for managing raw materials is one thing; knowing how to implement it is another. To avoid issues, you’ll need to put a plan in place for dealing with the challenges that trip up even the most seasoned manufacturers — challenges like:
- Accurate demand forecasting: Unexpected spikes or dips in demand can leave you scrambling with either too much or too little stock.
- Supplier reliability: A production process is only as strong as its weakest link. Supplier delays, inconsistencies, or quality issues throw your entire operation off track.
- Storage and handling: Raw materials come in all shapes and sizes. Finding space, maintaining optimal conditions, and managing the flow can be a logistical puzzle.
- Waste and obsolescence: Minimizing losses from expired, obsolete, or damaged materials requires careful tracking, proper handling, and smart inventory turnover.
- Data accuracy: Manual data entry or outdated systems can lead to costly errors and inaccurate stock levels, resulting in poor decision-making.
- Lack of traceability: Quality control, recall management, and industry compliance require traceability — the ability to track materials across their full lifecycle.
The 7 best inventory management software solutions for raw materials
Manufacturing inventory software helps manufacturers streamline processes and gain real-time visibility into their operations. Unlike the old-school inventory management processes that require manual counting, encoding data in spreadsheets, and reconciliation, cloud-based manufacturing inventory software removes the tedium of manual inventory while eliminating the possibility of inconsistencies due to human error.
But which software solution should you choose? Here are seven of the best options on the market today.
1. Fishbowl
Fishbowl is a cloud-based or on-premises inventory management solution for manufacturers, wholesale distributors, and other businesses with complex inventory needs.
Features
- Converts manufacturing orders (MOs) to purchase orders (POs)
- Tracks works in progress (WIPs), finished goods, production schedules, and multi-level bills of materials (BOMs)
- Makes reordering easy with advanced inventory control functionalities like reorder points and low stock alerts
- Create, track, and scan barcodes with a barcode scanner or mobile device
- Seamless QuickBooks integration, among dozens of other integrations
Cons
- Required implementation package not included with Fishbowl Drive
2. QuickBooks Enterprise
While it’s best known for its business accounting applications, QuickBooks Enterprise also offers inventory management capabilities.
Features
- Automatic PO creation
- Raw material item record creation
- Available-to-promise feature to project realistic delivery dates
Cons
- Limited scalability for growing businesses
- Doesn’t support organizations that handle job production
3. Odoo
Odoo is a highly customizable open-source Enterprise Resource Planning (ERP) system with a modular design and a wide range of integrations.
Features
- Automatic PO proposal or creation
- Automated vendor follow-ups
- Supports barcodes, QR codes, and scanning for products without barcodes
Cons
- Complex implementation with a steeper learning curve than other solutions
4. Cin7 Core
Cin7 Core is a cloud-based inventory management software solution designed for small businesses with multiple sales channels.
Features
- Automatic PO proposal or creation
- Automated vendor follow-ups
- Supports barcodes, QR codes, and scanning for products without barcodes
Cons
- Ineffective reporting tools
- Poor customer support
5. inFlow Inventory
inFlow Inventory offers user-friendly inventory management alongside sales and purchasing capabilities.
Features
- Intuitive barcode integration
- Advanced reporting
- Optional BOM and work order add-ons
Cons
- Limited integrations
- Not cost-effective for businesses with more than 30,000 orders per month
6. MRPeasy
Specifically designed for small manufacturers, MRPeasy is a cloud-based material requirements planning (MRP) software solution that offers production planning and scheduling.
Features
- Accurate production planning
- Real-time reporting
- BOM creation and importing
Cons
- Limited integrations
- Not ideal for larger businesses
7. Unleashed
Unleashed is a cloud-based, manufacturing-focused inventory management software solution that offers batch tracking and support for multiple warehouses.
Features
- Supply chain costing and management
- BOM creation
- Disassembly feature that returns unsold products’ components to raw inventory
Cons
- No demand forecasting
- May be too complicated for small businesses.=
Streamline your raw material inventory with Fishbowl
Tracking and managing raw materials in real time ensures accurate records, reduced waste, and optimized production. And no one can help you do it like Fishbowl, the all-in-one inventory management solution designed to help you control stock, warehouse operations, manufacturing workflows, and more — not to mention raw materials inventory.
Are you ready to streamline your raw material inventory and gain end-to-end visibility over your operations? Schedule a demo of Fishbowl, the intuitive, scalable, and user-friendly inventory management platform.