Inventory Synchronization and Reconciliation: What’s the Big Deal When It Comes to WMS Integration?
Integrating your warehouse management system (WMS) with your enterprise resource planning (ERP) system lies at the cornerstone of effective warehouse and distribution center management. From an inventory perspective, an ERP is typically the system of record, and it obtains its information from your WMS. However, these systems may get out of sync due to data problems, user errors, exception processes, or other system issues. As a result, inventory reconciliation, or inventory synchronization, is essential to keeping everything on the same page.
What Is Inventory Synchronization or Reconciliation?
Inventory synchronization or reconciliation refers to the analysis of inventory discrepancies between the systems, identifying stock keeping units (SKUs) affected and the variances in terms of dollars, units, and direction (positive or negative). Inventory synchronization between a WMS and an ERP should have matching numbers for all items across similar categories tracked in each system. For example, an ERP may track locked inventory in a single category called ‘unavailable’. The WMS may track locked inventory in multiple categories such as ‘damaged’, ‘quality’, and ‘pending putaway.’ For a given item, the number of units in the ‘unavailable’ category in the ERP system should match the total units of the same item in all 3 WMS categories of ‘damaged’, ‘quality’, and ‘pending putaway.’
Why Do Warehouse Managers Need Inventory Reconciliation?
Out of balance inventory between the ERP and WMS can cause many problems. Overstated available inventory on the ERP side may lead to order demand at the distribution center that the WMS is unable to fulfill. Alternatively, damaged inventory reflected inaccurately at the ERP level can result in lost sales as well as unnecessary orders to vendors for products not actually needed. In the world of the omnichannel supply chain that has a continuous influx of orders, processes, and moving products, it is critical that inventory remains in sync between all systems.
How Are Inventory Discrepancies Resolved?
Most ERP systems generate a report containing all items out of sync between the ERP and WMS daily, if not more often or, on demand. The resulting discrepancies are resolved by analyzing each item, the amount of inventory in each system by category, and the degree to which they differ. Clues in the data will suggest more advanced areas to troubleshoot which often include system interfaces and the detailed messages between the systems, or specific warehouse processes such as cycle counting or picking.
How Often Should Inventory Reconciliation Occur?
Inventory synchronization and reconciliation should occur on a daily basis so issues with inventory are resolved before impacts to order fulfillment can occur. Typically, items with the highest dollar amount variance are targeted first, but that could change based on item demand or a special item or holiday promotions. Today’s warehouses have a continuous flow of inbound and outbound freight, including both ship-to-store and customer-specific, single-item orders to complete so any downtime related to out of sync inventory needs to be avoided.
Choose a Qualified, Experienced Partner to Better Manage Inventory Synchronization
Control and management of inventory reconciliation requires diligence and having solid resolution procedures in place. To ensure your company is not losing money from inadequate inventory reconciliation processes or lack of knowledge on resolution procedures, work with an experienced partner in inventory synchronization, like Veridian.