Best Practices for Inventory and Warehouse Management
It’s getting near that time of year for many businesses when solid best practices for inventory and warehouse management can save the day. As businesses enter the holiday season, they may find that their warehouses are the busiest places in the company. Even wholesale sellers find that their orders pick up as customers scramble to order more goods to fulfill their orders.
While inventory and warehouse management may be something you rarely give thought to, it can be an extremely important point in your business processes. Sound inventory management processes ensure that you have adequate stock to fulfill orders while also protecting against overstock that can drain capital from your business and tie it up into your inventory. Good management also ensures that you never have to turn customers away with that dreaded “out of stock” message that may push customers to your competitors.
Improving Inventory Management Systems
Improving your inventory management system isn’t hard. It just takes knowledge of some common best practices. These include:
- Projected inventory levels. Reports from your ERP system can be used to improve inventory forecasting levels. Forecasting reports can help you adjust your inventory levels to match predicted sales volumes. This helps you avoid the “feast or famine” syndrome of over- or under- ordering inventory.
- Accurate tracking. Use systems such as barcode scanners to track current inventory. Make sure that items on the receiving dock are entered into the inventory system and aren’t just stuffed into bins or packed out onto shelves. Teach your staff to scan all items as they move into and out of inventory to ensure that items are tracked accurately.
- Prioritizing orders: Prioritize orders of new stock around what is selling briskly or seasonal items for upcoming seasons. Focus your time and money on items that are in highest demand.
- Phase out spreadsheets: With so many affordable software options, it’s hard to imagine why you might keep using spreadsheets. Spreadsheets require manual data entry, do not synchronize easily with other systems, and require a lot of time to manipulate and use. Newer, automated systems can make inventory tracking so much easier and efficient.
- Avoid spoilage: If you manage items that can spoil such as ingredients, food products, chemicals, pharmaceutical inventory, or other items with a dated shelf life, be sure to use FIFO (first in, first out) inventory methods. Keep careful track of the expiration dates on your items to avoid spoilage.
- Contingency planning: While your goal is to keep inventory levels at the right levels, there are going to be times when demand outstrips supply. Plan for emergencies. Line up extra suppliers now and budget for rush shipping charges, if necessary, to accommodate customer
- Audit your inventory regularly: Reconcile records to actual inventory, quarterly. The more frequently you audit your inventory, the better you will get at managing it for maximum efficiency.
Manage Your Receiving Area
Another aspect of inventory and warehouse management that requires attention is the receiving area. In many companies, the receiving area becomes a bottleneck to fulfilling orders. Personnel is often directed to fill orders while inbound shipments languish on the loading dock.
Be careful about letting new shipments pile up while you manage outbound shipments. While it is, of course, important to ship customer orders promptly, checking in merchandise is also important. Without inventory coming in, inventory can’t go out—and you’ll find yourself apologizing for late orders even when the goods have arrived. Balancing time spent fulfilling orders with time spent replenishing the warehouse is the key to managing the receiving area properly.
With these tips and the use of solid data from your ERP system, you can improve inventory and warehouse management. Whether it’s for the holidays or it’s simply time to get up to speed, now is the right time to improve your inventory management procedures.
Mindover Software provides business software and solutions to companies big and small. Acumatica and Sage provide companies of all sizes with powerful data management and business insights and can be tied into inventory management systems to improve warehouse management. Contact us today for more information.