For businesses to increase customer satisfaction, grow margins, and improve revenue, warehouse inventory management should be a priority. Inventory management in a warehouse may seem to be about keeping your products organized so that they can be quickly located. however, warehouse inventory management involves much more.
Inventory management is not simply a matter of putting things where they belong. The goal is to maximize productivity while saving time and money to increase the efficiency and productivity of inventory. Several conflicting objectives must be balanced by a warehouse inventory management plan. These include managing overstocking/understocking, shorter lead times, rapid order completion, smooth product transfer, fluidity in workflows, enhanced visibility, better selectivity, improved productivity, and capacity maximization.
Listed below are the 10 best ways to manage warehouse inventory that can help you achieve your key warehousing objectives.
Table of Contents
- Organize the warehouse
- Stocks levels to be defined
- Make use of cycle counts
- The arrangement of racks for easy access
- Keeping order picking errors to a minimum
- Create an area for receiving
- Ratio of inventory turnover
- Make your space ready for the next day
- Tracking shipments in real-time
- Outsourcing warehouse inventory management to a 3PL company
Organize the warehouse
It is not uncommon for libraries, bookstores, movie theaters, shoe stores, and any other business that has needs to maintain a large inventory of products for rent or sale, to have everything neatly divided into categories and the selections clearly marked to make finding what you’re looking for simpler. That’s a real convenience. Clearly label your inventory and use proper signs so your personnel knows exactly where the inventory is and how to get to it, ideally without needing to keep bothering supervisors with questions.
Stock levels to be defined
Neither overstocking nor understocking are efficient for inventories. In the first case, warehouse efficiency is lowered and in the second case, customer satisfaction is decreased. Forecasting demand accurately is necessary to determine the minimum level, maximum level, re-order point, danger point, and the average level of stock that should be held for various categories of goods.
- Re-Ordering Level: The point at which the storekeeper initiates a purchase order. This level falls between the maximum and minimum inventories.
- Maximum Level: The maximum number of units that can be stored in a warehouse at any given time.
- Minimum Level: As a rule, the stock should never fall below this threshold.
- Average Stock Level: The average quantity of stock held in a warehouse for a given period of time.
- Danger Level: Stocks should never fall below this point, otherwise, you risk losing customers if you are unable to meet the demand.
Make use of cycle counts
Performing regular inventory control audits is important in advance of the annual physical inventory count. Conduct cycle counts and analyze their discrepancies, so that you can determine the optimal time to complete all locations. Cycle counting is a method of perpetual inventory counting that occurs in waves over time. The inventory is only counted in small quantities each time. Cycle counts should be conducted every quarter at all locations to make sure the back-office system is accurate.
Arrangement of racks for easy access
Warehouse rack locations provide exact rack/shelf numbers as well as spatial information about where a product can be found at a specific warehouse location. Create rack location plans according to the items or product profiles. Physical and transactional characteristics of a product are included in the profile, with the demand characteristics receiving top priority. If there is a high demand for a product, put it in racks where it can be picked and shipped promptly.
You can color-code orders and pick lists for convenience. Due to the color priority markings, your material handlers will be able to determine which products go to your most valuable customers. You can analyze order information using your warehouse management system to identify high-selling products or fast-moving items. It’s important to place these units correctly so that stocks and workflows run smoothly. Optimizing warehouse operations by planning rack locations according to product demand is another way to improve warehouse efficiency.
Keeping order picking errors to a minimum
In addition to being error-prone, manual processes can add to warehousing costs. Mistakes in order picking result in additional fulfillment costs and can lead to customer losses and a negative brand experience. By placing SKUs strategically, you can reduce order picking errors dramatically.
Make sure not to put similar products in close proximity to minimize the chances of your order pickers picking the wrong item. It is also possible to reduce error rates by using simple technologies like barcodes or RFIDs. By barcoding each product, picking and packaging become easier and inventory accuracy improves significantly. Flexible and accommodating, these methods allow for changes in picking processes easily.
Create an area for receiving
Warehouse personnel who do not have adequate workspace can make costly inventory errors. Don’t expect your workers to perform well in a crowded or cluttered space at the end of your warehouse. Improve labor productivity and eliminate receiving errors by using ergonomically-designed workspaces and equipment.
“Warehouse personnel who do not have adequate workspace can make costly inventory errors. Don’t expect your workers to perform well in a crowded or cluttered space at the end of your warehouse. Improve labor productivity and eliminate receiving errors by using ergonomically-designed workspaces and equipment.”
Ratio of inventory turnover
This metric indicates how quickly inventory is used up or turned over in a given timeframe. As this ratio rises, companies are able to sell more and earn more, as they have a shorter turnover of stocks. Every warehouse item needs to be closely monitored for inventory turnover. The demand for the product will fluctuate throughout its life cycle, causing logistics to vary. To optimize product replenishment calculations, it is essential to accurately track and forecast demand patterns.
Make your space ready for the next day
Before they clock out, let your warehouse staff finish processing orders and cleanup. Plan a time when processing orders will cease, perhaps 30 minutes before the end of the day, and set aside the remaining time for cleaning exclusively. Observe how fast your employees will clear up at the end of the day in an effort to get home quickly as compared to how slow it will be in the morning. When the day is done, your warehouse will be organized, and your inventory will be exactly where it should be. You should organize your warehouse the night before so that order processing can begin early the next day, instead of being held up due to the disarray or chaos from the day before.
Tracking shipments in real-time
Is it not until the dispatched product reaches its intended destination that a warehouse operation is considered complete. Activating shipping notifications allows you to track delays and damages to shipments. Such notifications rely on geolocation technology to provide real-time product location informaation.
When there is a disruption in the supply chain, real-time updates can ease the burden on warehouse managers. As a result, fewer miscommunications about shipment information occur, particularly during inter-warehouse transfers.
Outsourcing warehouse inventory management to a 3PL company
Our 3PL warehousing services are here to help you achieve your goals from start to finish. Managing inventory, expanding into new markets, and reducing logistics costs are just a few of the services Logos Logistics delivers. Providing our clients with innovative warehousing solutions, we act as their in-house logistics partners. With our powerful warehouse management system, you can view inventory online in real-time and create reports that improve accuracy, flow, and efficiency in your inventory management.
Regardless of what commodity your company deals in, we will ensure it is shipped, stored, and safeguarded with our equipment and third-party logistics support. Our services are available to a wide range of industries, such as automotive, food, paper, plastics, consumer products, industrial products, containers, packaging, and electronics. Work with our 3PL warehousing experts to help you grow your business.
A variety of warehouses with distinct stock characteristics can benefit from the above tips for better inventory management. Regardless of the product mix in your warehouse, the shelf-life of your SKUs, or the volume of your products, you can rely on these tips to boost inventory productivity.