Inventory management goes beyond simply counting products in a warehouse. An effective management system will allow companies to maximise their profitability by focusing on improving various aspects of their inventory control.
Inventory best practices are based on establishing clear policies, monitoring metrics and tracking all materials in the warehouse. By implementing reliable processes, accurate inventory management is optimised and production flow is invigorated.
The importance of warehouse management
Warehouse management essentially strengthens every aspect of a warehouse along with its inventory. Monitoring inventory is not only beneficial to businesses, but it is also a requirement under US Securities and Exchange Commission (SEC) regulations.
The federal agency protects investors from fraud by requiring companies to publicly disclose reports, such as inventory data, on the SEC website. Similarly, the Sarbanes Oxley Act was created in 2002 to promote the accuracy and transparency of corporate disclosures by requiring rigorous audit reports and records of inventory movements.
However, it can be difficult for companies to control inventory due to their extensive operations and products. Inventory management systems require effort and thorough organisation to ensure that cycle counting, packing, shipping and order fulfilment tasks are completed. Management may also find it difficult to accurately understand their inventory levels or trends in customer requirements.
These forms of inaccuracies in an inventory management system can result in overstocking or understocking items, which can lead to financial burdens as companies either lose profits due to sold-out products or fill their warehouse space with unwanted goods. Determining an Economic Order Quantity (EOQ) can remedy this by identifying the ideal quantity that organisations should carry in order to reduce costs while maximising the production of high demand products.The
Establishing inventory management processes can further assist companies with inventory demands. Proper management is critical to running a business, large or small, as it enables organisations to visualise, control and improve warehouse operations.
Software-based management solutions make warehouse monitoring more accessible by providing companies with tools to track inventory and logistics with real-time information. These management systems can be integrated with existing point-of-sales systems and forecasting software to suggest and automate orders. With a user-friendly interface, including barcode scanner integration, mobile apps and voice search capabilities, it can also simplify waste tracking and shelf-to-sheet counting.
8 Tips for managing inventory
Organisations can proactively manage their inventory by following these approaches-.
- keep operations up to date
Warehouses should be reviewed frequently to ensure that they meet current safety and organisational standards. For example, warehouse managers should consider whether their products are easily accessible to employees and can be retrieved safely.
Warehouses should be organised and damaged items must be kept in separate areas so that operations can move smoothly. It is recommended that a daily checklist be prepared so that all necessary tasks are tracked.
- identify best-selling items
The best-selling items should be placed near the shipping area for accessibility. This will help minimise the time and physical labour required to retrieve high volume inventory. Companies can determine which of their products are best sellers by using inventory tracking software. These cloud-based tools provide real-time reports that show key insights into which items are most popular with customers.
- using perpetual inventoryThe
perpetual inventory is a form of the cyclical inventory recording process that occurs regularly and quantifies only one set of inventory each time. Cycle counts should be scheduled frequently to ensure greater accuracy and to prevent stock shrinkage. This procedure can be carried out quarterly to minimise the need for physical counts, which usually results in stock operations being stopped. This form of inventory tracking allows organisations to adjust their financial budgets as needed and optimise their business strategies for a better return on investment (ROI).
- Ensure only authorised access
Reduce unauthorised foot traffic within warehouse areas by ensuring that only appropriate personnel have access via unique identifiers such as uniforms or IDs. This will prevent all warehouse staff and their workstations from getting in the way and minimise theft and accidents.
- allocate space for goods receiving areas.
When organising the warehouse layout, goods receiving areas should have extra space so that stock supervisors can assess the new products and check that they have the correct stock items. This allows them to do so without being overloaded, which can help avoid mistakes and misdirection.
- label everything
All stock items must be accurately labelled so that they can be retrieved more easily at a later date. Companies can customise their labelling systems to suit their needs and preferences. Labelling reduces the time needed to find products in the warehouse and prevents errors caused by selecting the wrong item. Areas around storage facilities should also be labelled to facilitate navigation.
- implement quality control procedures
Quality control methods assist in effective inventory control by ensuring that all products received and shipped meet high quality standards. These procedures require personnel to verify the accuracy of the SKU and detect defects or damage to products.
Quality control procedures allow companies to identify the types of shipments or suppliers that deliver the highest quality products. Not only will this help companies save money, but customers will be more satisfied with their purchases.
8 Incorporate Inventory Management Software
Companies can increase their productivity by using inventory management software. An efficient system offers a variety of up-to-date applications, such as barcode scanners, inventory reports and accessible KPIs to track work management. Managers can use inventory software to actively manage stock levels, track waste and review reports to maximise their profits. Managing inventory with these systems saves time, money and labour.