Operating a warehouse requires knowing where inventory is at all times. Warehouse workers receive products, take orders and retrieve them from the shelves every day. Within this hustle and bustle of activity, however, products can and do get lost in the shuffle. Workers may place items from the loading dock in the wrong aisles or picking zones or push other products out of reach on back shelves where they may be forgotten until they become obsolete. However, the problems with inventory are not just restricted to the receiving and storage areas.
If products get lost or misplaced, your inventory records are no longer accurate. As a result, you may end up purchasing too many products. You may begin to overstock on items that are not big sellers, which could lead to overcrowded shelf space where you cannot order anything more.
Other times, the lack of inventory visibility could cause you to under-order products for customers. Since inventory records show the item is available, sales reps will continue to take orders for that item. By the time the issue is discovered, your warehouse may not be able to fulfill the orders. In these cases, you either force customers to wait for the backordered items or force them to find other companies that can fulfill their needs.
What Is Inventory Management?
Inventory management is a technique designed to provide more transparency and clarity throughout the supply chain. It allows you to track products through every step of the process, such as during procurement, receiving, storage, sales, picking/packing, and delivery. A good inventory management system provides real-time data to all departments to deliver up-to-date inventory levels at all times. This system ensures that inventory does not become lost, misplaced, damaged, or stolen.
Inventory management can help streamline numerous processes in the warehouse. It also provides greater accountability if something does go wrong. With a good inventory management system, you can instantly monitor and identify where the problem exists and take the necessary steps to rectify it. By minimizing or removing the issues, you can enhance the customer service experience to create a loyal customer base.
Why Is a Balanced Inventory Management System Important?
A balanced inventory management system should allow you to have the right products at the right time in the correct amounts. It can also ensure you sell them at appropriate prices. When you have accurate inventory data accessible at all times, you can generate transaction history reports and identify the big-ticket sellers for your company. You can see in the report when customers purchase the item at which specific quantities and at what price. Then you can adjust how much of this product to order during peak seasons and decide on the best price to achieve a positive ROI.
In addition, a balanced inventory management system can help you save on warehousing costs. You can eliminate waste and obsolete products that take up shelf space, further streamline picking/packing processes, and boost product turnover rates. With a balanced inventory management system, you can reduce overhead warehouse costs because you are not spending more money housing too much stock. Also, your company can make a higher profit by maintaining enough inventory to fulfill all orders.
How to Obtain a Balanced Inventory Management System?
Your company’s steps to achieve a balanced inventory management system will depend on the issues you want to solve. If the issues lie with inaccurate inventory data, you may want to consider a few solutions. For example, you could streamline receiving processes, improve the layout of the warehouse for better barcode scanning, or invest in inventory management software that allows automatic data updates of inventory levels.
If the problems are with product suppliers, you may have to look at your procurement procedures and logistical strategies. The delivery routes may need to be changed to receive products in a timely fashion and avoid delays. You may want to modify order contracts to better align with your product inventory and sales cycles. Another possible avenue to take is reevaluating suppliers and ensuring you are working with the best partner for your company.
What Should I Look for in Inventory Management Software?
A balanced inventory management system can create opportunities to save on warehousing costs, eliminate product issues, and ensure customers get the products that they request. If you are planning to invest in inventory management software, make sure to evaluate several options, as each offers varying features.
A quality inventory management platform should cover all the basics of inventory tracking, product-level forecasting, barcoding, and scanning while also offering perks that will fit into your specific operations. It is also ideal to look for software that allows for easy integrations. This feature provides scalability to your operations so you can combine with other applications for a comprehensive system as the company grows.
For more information on balanced inventory management, check out our accompanying resource.
About the Author
Mariana Vieth is Director of Marketing at WSI, a leading third-party logistics provider that specializes in fulfillment, chemical warehousing, transloading, transportation, and more. Having the 17th-largest 3PL network in the United States, spanning more than 15 million square feet, WSI delivers tailored end-to-end supply chain solutions to customers who seek to increase efficiency, shorten lead times, deliver more reliable performance, and minimize costs.