April 04, 2023
Poor warehouse inventory management characterized by incorrect order fulfillment, stockouts, and operational inefficiencies can damage a business's reputation, impacting its bottom line negatively.
Amidst all the operational challenges that businesses face, business owners can leverage efficient warehouse management best practices for success. Process automation, cycle counting, real-time tracking, barcodes, and proper data analysis are vital strategies for success.
While realizing all this can be daunting, efficient warehouse inventory management can alleviate some of the burden. We cover in this comprehensive guide the art of efficient warehouse inventory management.
What is Warehouse Inventory Management?
Did you know 60% of inventory records are likely to be wrong at any time, according to an ECR report? This alarming statistic posits the challenges stemming from poor warehouse inventory management in the supply chain due to human error or technology inefficiencies.
The good news is that businesses can implement warehouse inventory management best practices to avoid these challenges. According to the ECR report, businesses with an efficient warehouse inventory management system experience 4-8% sales growth when inventory records are accurate.
So, what is warehouse inventory management? Warehouse inventory management is the logical control of goods inside storage facilities for the optimal use of storage resources and timely order fulfillment. The process involves receiving, organizing, tracking, auditing, and replenishing inventory levels.
Why is it Important?
In order to survive in modern market conditions, proper warehouse management is vital. Here we explain in detail why warehouse inventory management is so important:
Several factors cause inefficiencies in warehouse and inventory management. For example, overreliance on manual processes like manual tracking and data entry increases the likelihood of human error. Disorganized warehouse layouts also facilitate time wastage, delaying timely order fulfillment.
Efficient warehouse inventory management leverages appropriate technologies like Radio Frequency Identification (RFID) to increase operational efficiency. This way, you can track inventory, reduce the time you’d spend looking for items, and minimize picking and packing errors. Other ways optimal warehouse inventory management increases efficiency are process automation, layout optimization, and correct demand forecasting.
Warehouse inventory management best practices demand optimal inventory stocking, correct demand forecasting, efficient use of space, timely order fulfillment, and reduced manual processes. Doing these correctly can reduce warehouse inventory control costs like storage, holding, stockout, labor, and obsolescence.
Key Strategies for Success
Below are the key strategies for efficient warehouse and inventory process management success.
Process automation in warehouse and inventory management is leveraging technology like warehouse management software or inventory management software to streamline manual operations. Order processing, data entry, and tracking can benefit from warehouse and inventory management automation.
The benefits of automation include the following.
- Streamlining processes: Manual tasks like data entry can be repetitive, tedious, and time-consuming. You can significantly reduce the time you take to complete such tasks enhancing your efficiency.
- Minimal human error: Manual processes are susceptible to human errors. Removing the human factor through automation facilitates accurate data capture, reducing the possibility of making mistakes.
- Scalability: Automation enhances productivity through speed since automated systems like inventory management software can process many tasks simultaneously.
Here’s how to implement automation in warehouse inventory management.
Step 1: Identify a Process or Processes
First, determine which manual processes you can automate. This may include data entry, order processing, or inventory tracking.
Step 2: Pick the Appropriate Inventory Management Software
Next, choose appropriate inventory management software according to your business needs and goals.
Step 3: Integrate the Software with an Enterprise Resource Planning (ERP) system
Next, integrate your preferred inventory or warehouse management software with an enterprise resource planning (ERP) if you have one.
Step 4: Train Yourself and Your Staff
Next, consider training your staff on how to use the software effectively. You can hire a trainer or request the warehouse inventory management software provider to conduct it. Test the software to ensure it works well and suits your business needs and goals.
Implement Accurate and Real-Time Tracking
Implementing accurate and real-time tracking involves using technology to track inventory movement from one place to another, including location and status. Implementing accurate and real-time tracking provides better inventory visibility. This way, you can pinpoint your inventory’s location hassle-free. This aids in quick decision-making, minimizing stockouts, and reducing picking and packing errors.
Here’s how to implement accurate and real-time tracking.
Step 1: Pick a Tracking Technology
Depending on your business needs and goals, pick a tracking technology for ultimate real-time inventory tracking. Radio-Frequency Identification (RFID), Global Positioning System (GPS), and the Internet of Things (IoT) are excellent real-time tracking technologies you can implement.
Step 2: Integrate Your Preferred Tracking Technology with Your Management Software
Next, Integrate the tracking technology with your inventory management or warehouse management software for seamless tracking.
Step 3: Label Inventory Items for Easy Tracking
Use your preferred tracking technology, such as Radio-Frequency Identification (RFID), to label items for easy tracking. Next, install inventory tracking sensors strategically in your storage facility to record tracking information in real-time.
Step 4: Train Your Staff
Lastly, train your staff to use the real-time tracking technology and sensors you have implemented.
Utilize Barcode Scanning
Barcode scanning uses barcodes to identify and monitor inventory items. The strategy involves using scanners to read barcodes on inventory for fast and correct data management. In addition to accuracy and speed, barcode scanning provides real-time inventory tracking. And the best part? You can integrate it with your inventory management software.
Here’s how to implement barcode scanning.
Step 1: Define the Warehouse Inventory Management process Requiring Scanning
Define warehouse and inventory management processes that can use barcode scanning. This may include phases like receiving, picking, and packing.
Step 2: Label Inventory Items
Next, print or stick barcodes to various inventory items.
Step 3: Pick the Scanning Device and Integrate it with Your Management System
The two options you can consider when shopping for a scanning device are handheld barcode scanners and mobile devices with barcode scanning features. Next, integrate your preferred scanning device option with your warehouse inventory management software.
Step 4: Train Your Staff
Train your staff on how to use the scanning devices.
Analyze Your Data
Analyzing warehouse inventory management data examines inventory data for quick and informed decision-making. In addition to enhancing decision-making, analyzing inventory and warehouse data aids in forecasting demand, optimizing storage space, identifying trends, and promoting cost efficiency.
Here’s how to analyze your warehouse and inventory data for effective management.
Step 1: Gather Relevant Data
Collect appropriate inventory and warehouse data from your warehouse or inventory management software, scanning devices, and tracking software.
Step 2: Employ Analytics Tools
Next, use a warehouse inventory analytics tool to analyze the data. You can use warehouse inventory management software with this capability or a data analytics platform like Microsoft Power BI to analyze metrics like order fulfillment and inventory turnover rates. Lastly, use the information from your analysis to make informed warehouse inventory management decisions.
Implement Regular Cycle Counts
The cycle counting strategy involves counting portions of warehouse inventory regularly. It’s the best alternative to one-time annual physical inventory counts characterized by operation disruptions. In addition to reducing disruptions, other benefits of regular cycle counts include enhanced inventory accuracy, early detection of problems, and providing invaluable information for continuous improvement.
Here’s how to implement regular cycle counts.
Step 1: Segment Your Inventory
First, divide your inventory into segments using criteria like product category and storage location.
Step 2: Decide the Frequency and Schedule Counts
Depending on the nature of your inventory, decide the frequency and when to conduct counting. You can also employ various counting methods like barcode scanning.
Streamline Your Warehouse Operations with Tech-Forward Solutions
Efficient warehouse inventory management is critical for supply chain management. Employing the best strategies like barcode scanning, cycle counting, automation, and data analysis is critical for successful warehouse inventory management. Ready to make your warehouse as efficient as possible? Book a call with EnterBridge today to get started.