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Adopting a new warehouse inventory management system can be challenging and exciting at the same time. The new technology and solutions are filled with dozens of possibilities, and to explore these possibilities, the new ways for warehouse management need to be implemented in your work. Inventory management is one of the most important aspects of having a successful business.
Right from small stores to large-scale manufacturing companies, everyone follows inventory management. In simple words, inventory management is to have the proper inventory at the right time in the right place. There are numerous components attached to inventory management, such as record keeping, the flow of goods, sales points, customers, etc. Everyone in the company has a stake in inventory management.
For example: If you ask the sourcing department, they will propose that the companies buy in bulk from the suppliers to secure a maximum volume discount. On the other hand, if you ask the manufacturing department, they will want to make big production runs of the same product before switching to another product in order to achieve optimal efficiency and lower cost per unit. Similarly, if you ask the warehousing department, they will tell you that there is no more room for new products.
After all, a warehouse bodes a similar look to the storerooms present in our houses. Sourcing, manufacturing, and warehousing might be the departments that physically take care of the inventory. However, the warehousing department is the one responsible for complete inventory management. The more accurately a company manages its inventory, the better profit margins it can achieve, along with an organized sales process leading to a healthier overall business.
The road to improving warehouse operations doesn’t have to be complicated. A well-operated warehouse utilizing digital technology reduces costs on the floor while processing orders quickly and effectively. To efficiently manage your inventory, we have put together a list of some of the best ways through which you can effectively manage your inventory.
Ways to Effectively Manage Your Inventory
A study conducted by the University of California Los Angeles found that 43% of American small businesses don’t track their inventory or do so manually. Meanwhile, 30% of the industries shipped an order late because they accidentally sold an out-of-stock product. The average retail store across the United States operates with an inventory accuracy rate of 60%.
Each year, worldwide business companies perform complicated labor-extensive physical inventory counts that typically reveal a variety of inventory inaccuracies. As a result, it is crucial to manage your inventory effectively to help the business grow and make the company prosper. Here are some of the best ways for effective inventory management.
1. Cycle Counting for Improved Inventory Accuracy
Over the past few years, companies worldwide have started implementing customized cycle counting programs to effectively increase their inventory data accuracy and further enhance their customer service levels. To do so, companies have replaced the traditional method of using handwritten paper tickets with automated data collection software and tools.
Similarly, instead of doing an annual inventory check, companies have now set up a quarterly cycle in order to keep track of their inventory. This has led to better efficiency in the overall functioning of the warehouse employees while helping the company maintain better track of their inventory data. A cycle counting software allows the company’s warehouse management system to count, verify, and update data in real-time. Business is no longer required to shut down their operations for ten days straight to do an inventory check.
2. Facility Space Planning
Whenever you ask your warehousing department to store new products, they’ll often say that there is no more room for new products. At times, ineffective space management can also end up taking unwanted space in your company warehouse. In such cases, facility space planning becomes an essential factor to take into consideration.
Space planning includes having adequate space to maneuver products for relocation, making it easier to retrieve them from their shelves for delivery. Labeling each segment of products and storage space and placing the right directions for navigation can leave the company with adequate space for storing new products.
Knowing which products are being shipped most often through your warehouse will be critical in determining how you can use your space effectively, including changes such as reducing aisle widths and introducing a floor plan based on data.
3. Automation
An average retail store in the United States spends around ten days manually tracking their inventory and matching it with their data. However, being shut for several days costs the company a great deal of money. Despite trying their best to match the inventory with their data, the retail industry across the United States has an inventory accuracy rate of just 60%.
In such cases, automation can primarily reduce human efforts and can be used in any warehouse inventory control processes. This can help save the company time while improving their inventory accuracy, which can prove to be beneficial whenever an average warehouse employee is searching for a particular product in an ocean of stocks.
When data is centralized, supervisors and managers can make decisions quickly while also providing visibility into what’s in transit, being manufactured, or currently in inventory.
4. Identifying the Company’s Most Productive Inventory
Every company has that one product or product line that fetches them more profits than any other of their products. In such cases, the company shouldn’t focus on leveling out the quantities across all of their products.
If the company is making a good deal of money from one particular product, then the company should purchase more of their best-selling products so that they are never at risk of running out of stock. There is no point in wasting valuable storage space on too many slow-selling products.
5. Tracking Movable and Fixed Inventory
Using movable tracking options allows a company to see where they have placed a particular product, how they can access it, and check whether the product is ready for shipping. Similarly, movable tracking enables you to track your product location at all times, making the entire inventory management process faster, easier, and more intuitive.
At the same time, by keeping track of how long you have had a particular inventory, you will know when to dispose of it the minute it becomes unsellable. This is often the case with overstocked products that have considerably less demand in the market. In such cases, tracking can help you locate the distressed goods at all times so that you can either donate the unsellable inventory or otherwise dispose of it - this can further be reflected in your tax returns.
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