Warehouse inventory management- this process may seem like a simple one on the surface. But the reality is different. It’s more than just inventory in and inventory out, in reality, it’s all about analysing the best ways to manage the inventory in the warehouse.
It considers various processes to decide on the best approach that applies to any given particular warehouse. As the e-commerce industry grows in leaps and bounds, businesses are relying on warehouses to store their products.
However, managing a warehouse can become a challenge. That’s where the best practices come into the picture. In this blog, we’ll see the best ways you can manage your inventory and streamline your operations.
Warehouse Inventory Best Practices
Here are some of the best practices that supply chain players use in warehousing. A well-equipped warehouse inventory management carries out the following practices:
1. Prioritising Inventory
The first step for managing inventory is to establish which items of stock are important to ensure the success of your business. You can mark the ones that are profitable to your business and separate them from the ones causing losses.
Having specific categories for your inventory makes a huge difference in your overall process. For some businesses, this is an elementary process. However, if you’re just getting started in the world, then you need to understand and implement this practice.
The method of analysing and categorically labelling inventory as per their “demand” and “sell-out” capacity is the ABC method. Let’s see what that is:
- A refers to high-value, low-sales inventory. This is expensive but has the highest profit margin.
- B refers to a mid-value, mid-sales warehouse inventory management system. These are items that move regularly but do not have the highest profit margin.
- C refers to lower value inventory that is high sale. These items are always moving and businesses rarely need to store them for longer periods. Even though you have a lower profit margin, you can sell enough to make up for that.
Learn more about the ABC inventory here.
2. Track Product Information
Without accurate records, it is impossible to oversee a complete inventory process. Every item in your inventory at any one time needs to be monitored. You would be aware of things like:
- SKUs or Stock keeping units
- Barcode information
- Origin Country
- Suppliers
- Lot number
Having KPIs in your inventory process is going to let you know what is working and what is not. Set goals depending on how much you want your inventory to move.
Having good KPIs (key performance indicators) throughout your inventory processes points out what’s working vs. what’s not. This will be easy to see, while in others, it becomes difficult to find the indicators. Fixed set goals know the inventory quantity that you want to move and how fast you want to move it.
Inventory turnover should be an integral part of your company’s performance.
3. Regular Audits of Your Inventory
You can choose your desired intervals to audit businesses. For some, it’s an in-depth annual audit, while others use a week-to-week auditing model. Still, other businesses audit by the month, and others use a combination for their warehouse inventory.
Managing your inventory with efficiency, it’s not about how regularly you are auditing your inventory. What matters is that you audit it and do it at intervals that work for your business.
There’s another way to see how your inventory is moving. It’s batch tracking. In this process, a group of inventory items are assigned a lot of numbers that were purchased at the same time. Then you can track that batch number or RFID tag throughout the supply chain.
4. Implement the 80/20 Inventory Rule
When aiming to optimise inventory levels, a common guideline is that 80% of your profits typically come from just 20% of your stock. For effective inventory management, you need to have a good idea of that 20%. It requires high priority when assessing stock value. You can monitor it closely to see how it performs when you audit your inventory.
Let’s see the next warehouse inventory best practice.
5. Consistent in Receiving and Handling Stock
Another way you can manage your inventory is by having a uniform process for handling stock. Individualised approaches can lead to discrepancies. It mainly creates breaks in the supply chain, becoming an inconvenience to multiple parties associated with it.
That is why it’s vital to have a process, where everyone is receiving stock the same way. How you receive stocks is up to you but here is a checklist you must follow:
- Incoming stock is verified
- Stock is received and unpacked simultaneously
- The number of incoming goods tallied with order numbers
- Everything is accurately counted and stored
- Receiving warehouse inventory
Even with all of this, there’s one more practice you need to keep in mind. That is your sales.
6. Track Sales
This is another trick that helps to manage inventory. As you track sales, look for things like:
- Seasonal boosts and drop-offs in popularity
- Days when the stock sells more than other items
- Items are usually sold together
Remembering good inventory management is not only about totals that help to optimise inventory levels. They also reflect trends and patterns of your business experience.
7. Cultivate an Active Relationship with Your Suppliers
Suppliers are an integral part of supply chains. So, keeping an open line of communication going on between your business and your supplier is important.
A regular supplier might proactively inform you when a popular item is restocked or alert you when something will be unavailable for a while. Additionally, as more customers seek to buy locally, suppliers can be a valuable resource for sourcing local produce in their inventory management process.
While these warehouse and inventory management tips are crucial, sometimes you can make mistakes. The supply chain is not excluded from mistakes and problems. But worry not you can also solve them. Here are a few that you need to keep an eye out for.
Common Warehouse Inventory Problems (with Solutions)
Here’s how warehouses can tackle some of the challenges they face:
Out-of-Stock or Stockouts
One of the most frustrating for customers is to not be able to find the products they want. So, always keep your stocks full if you want your customers to be happy and make sure to order enough inventory to meet customers’ demands.
Excess Inventory
Alternatively, having too much inventory can be just as problematic as having enough. If you have excess inventory every time you are doing counts, it’s time to reevaluate your sales data. See which items aren’t selling and make adjustments.
Inaccurate Inventory Records
Keep accurate records of your inventory. Inaccurate records can create a lot of problems like out-of-stock and excess inventory and even shipping delays. Regularly update your records.
Shipping Delays
To overcome shipping delays, ensure sufficient staff and proper training in your warehouse inventory operations. Addressing these issues can mitigate common inventory management problems.
FAQs: Guide to Warehouse Inventory Management
How to monitor inventory levels in a warehouse?
Personnel can use inventory management software, and implement barcode or RFID tags. They can also conduct regular physical counts and set up automated alerts. These methods ensure accurate tracking and timely replenishment of stock.
What are 3PL warehouses?
3PL warehouses, or third-party logistics provider warehouses, offer a full range of e-commerce fulfilment services, including storage, shipping, and receiving.
What are the four steps of inventory management?
Assess the existing merchandise, analysing sales, and identifying items you want to restock or stop buying.
Conclusion
Effective warehouse inventory management is crucial for optimising operations and ensuring customer satisfaction. By prioritising it, businesses can maintain efficiency. However, managing these complexities can be challenging. For expert guidance and comprehensive solutions in supply chain traceability, turn to Qodenext.
