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cloud based inventory management

The Pros and Cons of Cloud-Based Inventory Management

Posted by Goldin Peiser & Peiser on Mar 6, 2018 1:54:19 PM

These days, the cloud is where the action is. More and more business systems that once resided on in-house servers or computers are now offered as cloud-based services. That applies across a range of industries—and manufacturing is no exception.

Manufacturing companies today are embracing cloud-based inventory management systems in increasing numbers. These systems help manufacturers and distributors manage inventory throughout their operations. In fact, according to Automation Alley’s 2017 Technology Industry Outlook, more than half of all national manufacturing executives report that their company has a dedicated budget for Industry 4.0 technologies, which include cloud-based computing technologies.

If you’re a manufacturer, you may already have transitioned software platforms like accounting into the cloud. Have you considered moving your inventory management system there as well?

If not, there are several pros and cons to consider before making a decision. We highlight several of these below.

Pros:

  • Improve inventory management by accessing data from any internet connection on any mobile device – having your inventory management processes in the cloud means that you’ll be able to access your data anywhere, track inventory levels in real-time, and help ensure that supply meets demand.
  • Customize with ease – cloud-based inventory management systems are highly customizable. Yours can (and should) mirror your inventory workflow to improve overall efficiency, and meet complex and unique inventory challenges.
  • Achieve scalability without a large up-front cost – it’s easier to grow and expand locations and operations with cloud-based inventory management software.
  • Forecast more accurately – manufacturers know how challenging it can be to create accurate forecasts without real-time supply chain information at hand. Inventory management solutions solve that challenge, and in doing so, help manufacturers make decisions that enable growth.
  • Automate backups and updates – cloud-based providers can handle system backups and software updates without having to involve your IT team or other employees.
  • Lower your associated costs – a cloud-based inventory management system can reduce the cost of hardware and IT services.
  • Eliminate maintenance headaches – generally speaking, hardware upgrades and issues are a thing of the past once you migrate your inventory management system to the cloud.

Like anything, there are also some cons associated with cloud-based software systems—including inventory management systems. 

Cons:

  • Potential downtime – cloud computing leaves businesses largely vulnerable to the reliability of their internet connection. When it’s down, your inventory management system could be down as well. If your facility (or multiple facilities) experiences frequent internet outages or slow speeds, a cloud-based inventory management solution may not be suitable.
  • Security – cybersecurity is a big concern for businesses in every industry. Your business should not integrate cloud-based solutions that involve using or storing data you are not comfortable having online. After all, cloud data is accessible from anywhere on the internet; if a data breach occurs, your business data could be at risk.
  • Cost – we touted lower costs earlier as they relate to scalability and hardware, yet the actual process of customizing an off-the-shelf inventory management solution could be a costly proposition for your company. Additionally, if you currently utilize custom-developed in-house software, migrating it to the cloud could entail an expensive rewrite.
  • Customer service – we’ve all heard horror stories about customer service in nearly every industry. Cloud computing is no exception, and while vendors have worked hard to improve in this area, better service often comes at a premium price. Therefore, if your manufacturing business demands a quick response to customer support issues, you’ll need a solution that includes a variety of technical support options—from phone and live chat to email, user forums, and more.

Considerations When Choosing Cloud-Based Inventory Management Solutions

There are lots of factors to consider at the front end of this decision—and we’ve highlighted several of them above as potential benefits and costs. Overall, when considering cloud-based inventory management software options, make sure the solution you select has the features your team will need to manage your manufacturing or distribution business properly. Specifically, some of these features include:

  • Accounting system integration
  • Real-time inventory visibility, both internally and externally to supply chain participants such as vendors and shippers.
  • Rigorous procure-to-pay purchasing capabilities
  • Integration with manufacturing systems and equipment
  • Barcode and RFID tracking
  • Multilocation part tracking
  • Order management, including invoice and billing
  • Reporting and analytics
  • Additional functionality that includes, but is not limited to:
  • Fulfillment and replenishment including lead-time tracking and re-order levels
  • Lot control and shelf life
  • Serialized inventory
  • Return material authorization
  • Consignment inventory

Whatever your needs may be, it is important that you clearly define them up front. Pay special attention to pricing plans and details for each application under consideration, taking future expansion into account.

As mentioned, cloud-based inventory management solutions offer manufacturers great potential. Just be sure to consider the potential costs and weigh them accurately against the benefits as you evaluate your options. 

Questions about valuation or other manufacturing issues? Contact the manufacturing team at Goldin Peiser & Peiser at 972-818-5300.

Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article. 

Topics: Manufacturing