Megaventory Blog - Online Inventory Management Software, Order fulfillment and Control System
This is the company blog for megaventory, an online software that helps small businesses that buy, sell and manufacture physical products to manage sales, purchasing, manufacturing and inventory. We blog about new features and updates but also about enterprise software, small businesses, cloud computing and the industry in general.

Friday, September 22, 2017

Selling or Purchasing on Consignment using Megaventory



Selling on consignment is a useful arrangement that allows a supplier and usually a retailer to create a “win-win” situation, where they both share part of the risk of holding inventory.

Consignment occurs when the consignor (the supplier) sends goods to a consignee (the retailer), who later sells them to their clients. The goods remain under the legal ownership of the supplier and the retailer is required to pay for them only after they have been sold to customers. Any leftover stock can be returned back to the supplier without facing any monetary penalties.



Consignment Accounting


From an accounting point of view, when the consignor sends goods to the consignee, there is no need to create an accounting entry related to the physical movement of the products. It is usually sufficient to record the change in location within the inventory record keeping system of the consignor.

At the same time, the consignee should keep track of the products in their own inventory management system to be able to easily create a purchase invoice for the consignor when some of the received products are sold.




What is in it for the consignor


The business owner that decides to sell on consignment can have some great benefits from a consignment arrangement. As long as logistics are considered, the inventory costs are reduced because less storage space is needed, which can be a great relief for their budget. At the same time, manufacturers can easier sell their products and reach a wider customer audience. Store owners are usually reluctant to purchase products from less widely-known brands, and a consignment arrangement might ease their fears that they may get stuck with an unsellable inventory.

Nevertheless, certain disadvantages of this model should not be overlooked. Lack of visibility on products, especially slow-moving or dead ones, can have a negative effect on the finances of the consignor. The retailer is not pressed to move the slow moving products by applying sales and offers and the supplier might end up with large quantities of antiquated and unsellable inventory.

In other words, it is a risky arrangement, a double edge sword, that can allow a new brand to get into more retail channels, but at the same time, if the retailer is not actually selling the products, your inventory investment as a consignor might not generate a return.



What is in for the consignee


The retailer who chooses to purchase products on consignment can see great profit in this model. Without the risk of paying for the stock they replenish, consignees are able to offer a wider selection of products.

Even if cash flow is slow in a given period of time, they can still have products to sell on their shelves.





Make the most out of consignment


While selling on consignment can be a highly beneficial situation for many businesses, it can have some serious disadvantages for the consignee if the arrangement has not been made on solid ground.

One such example is to have a common agreement (or not) on who is responsible for destroyed or returned products. This needs to be clear for both parties before suppliers bring their products to the retailer’s warehouse or store. Even if the original price of the products is relatively low and this seems unnecessary, a clear arrangement will reduce misunderstandings and conflicts.

In any case, the consignor and consignee have a great opportunity to support each other in a highly antagonistic business world. If both parties are feeling positive about the agreement, they can even take it a step further and follow a common marketing plan to increase sales against their competitors.

In order to enable this setting in place, an inventory management system can help achieve the desired level of transparency between the two parties that will assist the growth of their collaboration.



Consignment in Megaventory


Handling consignment sales in Megaventory is super easy.

From the consignor' s perspective you just need to create a Sales Order where the goods are shipped out in one stepped and you create invoices in a second step as required. 



The consignee's approach is similar with the only difference being that they create a Purchase Order. 

At any point then it is possible to create a filter which shows the number of orders which are to be handled with consignment and their state.



Once the bookmark card is available it can be used to filter just the Sales Orders which need processing under consignment.



It's that simple and user-friendly!



Conclusion


Consignment is an important model, cost-effective, potential, risks too. When handled properly it can be an efficient tool for business growth. It has its pitfalls but it's also worth exploring. Are you interested in becoming a consignor or consignee?

See below how you can start an account to streamline the process! 

Get started now » Signup is FREE. No Credit Card Required



Monday, September 4, 2017

New Feature: Batch & Multi-Level Work Order Actions

You asked and we listened. Work Orders have become more powerful than ever with the ability to manage multi-level and batch work orders with the click of a button.




Work orders are an essential communications part of manufacturing businesses. They inform your operations team that certain products are needed and give the green light to production.

Megaventory Work Orders, though, are so versatile that can also be used by non-manufacturing businesses that need to track processes like unboxing, repurposing product’s parts into other products, maintaining and repairing damaged inventory, and many other tasks.

With the new upgrade, these tasks become much easier to perform, saving you valuable time and preventing duplication of effort. 

So, how the updated work orders can help you?


Multiple actions with the hit of a button


Let’s imagine the story of Carol who is creating cakes for her bakery. She buys flour and other ingredients in large sacks that come in different sizes and weights but the ingredients in her recipes are in grams or ounces. How can she measure what she has available for production without doing a mathematical equation every time?

With Megaventory, it’s a piece of cake (no pun intended).

First of all, Carol needs to create a Work Order that will turn the product “5kg sack of flour” to the product “1g of flour”. In that way, the first “material” will create 5,000 finished products. And she will continue to do so for the other ingredients.

The next work order will be to turn the finished products she just created to another finished product, the “cake”. By creating a Bill of Materials, which is basically the recipe that guides Carol on what ingredients to use and in what quantity, she can easily do this Work Order again and again.

With the new upgrade, you can do all the above actions automatically with the hit of a button. 

As shown in the following screenshot, when you click on the gear icon next to the work order number, a list of available options pops up. If production has moved faster than how often you update your Megaventory account and ordered products are already finished you can now click on Allocate Components AND Receive Finished Goods or Allocate Components AND Receive Finished Goods AND Close Work Order. This is also helpful if you are unboxing items to sell them individually and the time between the creation of the work order and its completion is seconds.






Simultaneously update Batch Work Orders


On top of being able to perform multiple actions with one click, the user of Megaventory is now able to simultaneously update batch Work Orders. To do this, just select the orders you want to update and then click on Batch Update.




After that, the following a pop-up window will show up and prompt you to select the actions you want to perform. While here, it is also possible to rearrange the order in which the following orders will be completed.




Every one of the above actions will have an immediate effect on your inventory. If you receive the finished goods, this will automatically update the available stock of the related products and allow you to fulfill a pending sales order. If you select to allocate components, these will not be available to be used in other work orders.

In other words, what the batch update does is that the appropriate action will be applied to all the selected work orders or if there is not enough stock, it will stop and inform you so.

Back to the story of Carol, our baker can use this advanced feature to simultaneously unbox all of the ingredients needed and create her cake.

The above functionality can also help businesses that manufacture more complex products such machines, computers, and so on, where calculating mistakes can cause serious delays and problems in production. And since there is no theoretical limit to the levels of manufacturing you can include the production flows that can be designed can be very detailed.


But why use a work order software?


If you are not using an ERP system already, you may think that you are good with your pen and paper, or spreadsheets. Such techniques can result in production mistakes and the truth is that nothing is worse than telling a customer that their order will be delayed. 

Such incidents can jeopardize your chances of acquiring regular customers that do repeating sales from you. At the same time, the more you delay finishing an order, the more inventory you need to keep in your warehouse or factory, which actually costs you money.

An inventory management system will help automate your work orders so that you can meet the demands of your customer more easily. It will help you know what you have in stock so you don’t run out of inventory when you’re making products. If you do run out, the multilevel manufacturing module will allow you to identify which manufacturing step can't go ahead and you need to buy stock. 

And don't forget that with Megaventory you can create purchase orders in just a few clicks!

Using Megaventory for managing your manufacturing work is much more affordable than other online software solutions in the ERP industry. It’s a great fit for small and midsize businesses because of its price and flexible feature set. With this added feature?

Sign up for a free trial of Megaventory today!


Get started now » Signup is FREE. No Credit Card Required