Accurate inventory management systems can help cannabis facilities run efficiently and comply with regulations.
As a cannabis producer, when you have transparency on how much cannabis you have in production, what inventory you have on hand, and where your inventory is located, it enables you to run more efficiently and ultimately be more competitive. With detailed inventory information, you can quickly fulfil product orders, forecast and see at what stage of production your products are.
Managing inventory isn't always easy for cannabis producers. Many track inventory in spreadsheets, paper records and outdated seed-to-sale systems, making inventory information time-consuming to access. That's why we wanted to talk about inventory solutions in this blog post.
Cannabis producers need an inventory system that is accurate and accessible, allowing teams to make sound business decisions and have visibility into their operations quickly. This article covers how digital inventory solutions can help cannabis producers achieve this and shares insights from experts in the space. To note, this post specifically refers to inventory management systems used within a cannabis facility as opposed to tracking within a dispensary.
What is cannabis inventory management?
Cannabis inventory management includes keeping track of cannabis shipments and sales, as well as granular movements along the supply chain (from clones through to harvest, processing and beyond). Within a cannabis facility, many teams keep track of inventory through documentation such as batch records, work orders, waste records, and purchase orders. In addition to paper records, many producers track inventory in spreadsheets and software solutions like Seed-to-Sale, Manufacturing Execution System (MES) and Enterprise Resource Planning (ERP) software.
Why is inventory management important to cannabis producers?
Cannabis cultivation and the production of cannabis products are very complex. An inventory management system gives your business insight into the type and quantity of inventory on-site (everything from plants and extracts to nutrients and packaging materials). A robust inventory solution will enable you to track production yield and waste data and identify efficiency opportunities.
A strong understanding of the inventory you have on hand and how it's used can improve forecasting and result in less inventory sitting in your storage. Storage space is limited in cannabis facilities, so having excess inventory around isn't ideal. As cannabis sits in storage, it becomes less valuable. Ultimately, good inventory management means you can get fresher products into your customers' hands faster.
Another reason why inventory management is so important is compliance. In cannabis industries across the world, governments require cannabis inventory to be tracked and reported (e.g. Health Canada CTS reports) to stop products from entering the illicit market.
These regulations require cannabis facilities to have an inventory management system to keep track of inventory on-site, including raw materials, work in progress, finished goods and any cannabis that's shipped or received. Failure to maintain traceability can lead to non-compliance observations and repercussions from the regulators.
What is the best way to track cannabis inventory?
Just-in-time inventory methodology
The just-in-time inventory methodology aims to have the minimum amount of inventory on hand at any given time to meet demand. Not only does this method allow cannabis facilities to meet demand, but it also prevents waste from expired inventory.
Cannabis producers that can successfully execute just-in-time methodology have a really clear picture of the inventory they have on hand. They have data on how much they produce and how long it takes, which informs demand planning and enables them to move cannabis quickly along the supply chain.
This methodology requires strong coordination between teams within a cannabis facility, as well as with suppliers.
To manage a just-in-time inventory system, your organization needs to adopt lean manufacturing principles and streamline processes such as room resets, preventative maintenance plans, and a strong level of organization.
Organize your storage space
Another strategy that shouldn't be overlooked is proper labelling and organization within your secure storage space.
Storage areas can be segmented by substance types, such as retained samples, bulk cannabis, bulk cannabis extract, and finished products. It’s important that everything is clearly labelled to make it easy to find things.
In addition, make sure you know how to categorize the different cannabis intermediates - this is extremely important for reporting cannabis inventory to Health Canada.
Audit your inventory regularly. Errors in inventory counts can develop over time. Physically counting everything you have in your secure storage and grow rooms can help you rectify any problems. With routine cycle counts, mistakes don't extend month over month and lead to significant inventory discrepancies and issues.
Adopt digital inventory solutions
Many cannabis producers are using a variety of systems to manage their inventory. Often we see piecemeal inventory management consisting of seed-to-sale software, spreadsheets and paper records.
As you can imagine, it isn't easy to have complete visibility into your inventory because the information is not all stored in one place. You're also going in and out of spreadsheets and software, manually updating inventory, and transcribing it from one place to another. It's only a matter of time before you make a mistake. A slight discrepancy can carry over and become a problem over time, and it's tough to spot these mistakes.
As you can imagine, it's not a very efficient system. What we see producers do to prevent these issues is turn to digital inventory solutions.
A dedicated system that stores cannabis and non-cannabis inventory in a single platform gives you visibility into operational inventory that can't be achieved with a fragmented system approach. Digital cannabis inventory solutions can also give you the traceability of what happened to your inventory in your facility, giving you a clear audit trail of how it moved along the supply chain and what happened to it during each stage.
Producers can also use QR/barcodes or RFID tags to upload inventory straight into the system with a scanner instead of physically counting products. Similarly, digital scales that connect with your digital inventory system are a great way to avoid transcription errors.
What is a digital inventory solution?
A digital inventory management system is a type of cannabis software that helps you keep track of your inventory. It works by digitizing your existing inventory system and consolidating it into one platform, freeing you from insufficient seed-to-sale software, spreadsheets, and paper forms.
Cannabis and non-cannabis inventory (inputs, ingredients, packaging, etc.) are tracked within your digital inventory solution. The system will track your inventory throughout the production process via work orders.
A work order is a cannabis process event. This can include events like moving cannabis from the vegetative to the flowering stage or converting cannabis from one form to another (e.g. processing dried cannabis into cannabis extract). In these work orders, you have an input (e.g. dried cannabis) and an output (e.g. cannabis extract), additions (other ingredients) and subtractions (waste) - with each having a certain weight or inventory count.
In digital systems, work orders automatically subtract inventory from lots and create new ones, all while tracking waste. It will also keep an audit trail of all work orders associated with the batch or lot.
There are various digital inventory solutions out there servicing the cannabis space. This includes MES, Seed-to-sale, ERP and QMS, to learn more about which is best for your business, check out our free buyer’s guide.
What are the benefits of digital inventory solutions?
A digital inventory solution consolidates your inventory into a single platform, allowing you to access inventory and view its lifecycle throughout production quickly.
Governments require cannabis producers to be able to track cannabis from production through to its sale. Digital inventory solutions allow full traceability in the case of government audits as well as recalls.
Real-time visibility into facility operations
The power of digital inventory systems is that the information is available in real-time and can be accessed anywhere. Cannabis teams no longer need to sort through piecemeal inventory systems or rely on other staff to see what's in production and the state of current inventory levels. This improves communication across teams and enables effective forecasting and order fulfilment.
Save time on inventory management
Inventory can be very time-consuming to manage. Staff are slowed down by digging through spreadsheets, software, and forms to determine inventory numbers. Once they do manage to determine the inventory, there are discrepancies, and it doesn't match up with the physical inventory - sending them down a winding path of investigation and correction.
Digital inventory solutions are much more accurate, consolidate your inventory data, and allow less room for error with pre-fixed fields on forms.
When combined with excellent storage room organization and regular cycle counts, inventory requires much less time and resources to manage.
"In my experience, the use of inventory software greatly decreases the amount of work needed to manage a facility's inventory levels. For example, inventory software functions such as creating a bill of materials (BOM) can help adjust inventory levels automatically. For each finished product produced, all raw materials and in-process materials listed in the BOM will be removed from the system. These functions mean that your inventory can match your processes which is the most efficient way to ensure it is always accurate."
- Atiyyah Ferouz, AgCann Consultancy.
Identify efficiencies and reduce waste
When your inventory is tracked and visible on a single platform, it allows teams to see how much they produced in a batch and compare which batches performed and which were wasteful. With this insight, cannabis producers can identify opportunities for process improvement and make better business decisions about which SKUs are profitable.
For example, you can see how many inputs were used in the production of cannabis and the amount of waste and yield produced for a single batch. When you compare all the different cultivations and batches, you have insight into which are the most profitable for your business.
Digital inventory solutions make tracking this data possible, and it is all accessible through downloadable reports, no more sorting through spreadsheets to find the correct data point.
Is implementing digital inventory solutions easy?
The time and effort required to implement an inventory solution depend on the complexity and usability of the software, and the unique needs of your cannabis facility.
In general seed-to-sale systems and cannabis Manufacturing Execution Systems (MES) are much quicker to implement than ERP software.
Seed-to-sale systems and MES are more targeted to the cannabis industry and standard processes. In contrast, ERPs are more rigid and are best suited for operations where processes don't change (e.g. manufacturing automobiles and pharmaceuticals).
It's not uncommon to see failed ERP implementations for cannabis facilities. They typically take a lot of time and resources, these systems aren’t usually granular enough for cannabis operations and don’t provide the flexibility required for cannabis processes.
The implementation also comes down to a team's internal change management plan and the software provider's level of support and training.
When looking for an inventory solution, make sure that you ask the vendor about typical implementation times and what training and support they provide.
Implementing Elevated Signals
Elevated Signals is a cloud-based Manufacturing Execution System (MES) designed specifically for licensed cannabis producers. It offers all the functions of a seed-to-sale system and much more. Elevated Signals digitalizes and automates quality processes, streamlines inventory management and enables access to high-quality operational data. Its software helps businesses eliminate paper records and spreadsheets and provides visibility into operational inventory.
Elevated Signals has a specialized customer success team dedicated to helping your team implement software. Our customer onboarding consists of training your key staff on our software, helping set up your digital inventory and assisting in setting up your digital forms tailored to your process.
Our team can provide support with Health Canada CTS reporting the first three months after your onboarding date. After you're all set, we're always available for support tickets and to answer any questions.
Learn more about how Elevated Signals can help you manage your cannabis and non-cannabis inventory.