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Warehousing and Distribution Practices: Understanding Order Cycles

in: Company News, Warehouse Management|Warehouse Management System (WMS)

Improving inventory control is a never-ending goal in warehousing and distribution operations. Typically 45 to 90 percent of a business’ capital is tied up in inventory. Even a small improvement in inventory practices can mean a big impact on the bottom line. The more you can improve inventory control, the more you can invest in other products or expand operations.

Understanding your customers’ order cycles (the time between orders) and taking steps to provide them with timely fulfillment can help improve inventory control. Each customer may be on a different order cycle, which can make it difficult to adequately manage inventory. Let’s take a look at the impact that order cycles have on inventory control, and how understanding this impact can help you with inventory levels.

Assessing Demand for Your Products

No two products sell exactly the same in a given period. Assessing the demand for your products can help you establish order cycles. When you know the times of highest demand for each product, you can ensure that you have enough on hand to meet orders. Conversely, you can also control stock levels during downtimes in the order cycle to prevent waste.

Understanding Your Order Cycle Helps Improve Profits

Another way in which understanding order cycles can benefit your business is by examining the relationship between order cycles, inventory management, shipping, and cost of goods. If you know your order cycles, you may be able to negotiate better terms with your vendors to reduce cost of goods ahead of time. Not only will you have less items in your warehouse during slow times, but during business times you may be able to order in bulk with a negotiated price.

Are Inventory Control Efforts Worth It?

Consider whether or not inventory control efforts are worthwhile for all products in your warehouse. Some high-cost products may justify the effort of tight management, while others cost so little or take up so little space that spending time on ordering cycles and inventory management isn’t worthwhile. You must balance the costs versus the benefits on every aspect of inventory control.

Out of Stock Messages Frustrate Customers

Sometimes, improved inventory control methods are helpful simply to reduce the number of “sorry, we’re out of stock” messages your customers see online or hear from their sales representatives. Nothing is so frustrating for your customers as learning that a part or product is out of stock just when they need it. “But you know that I always order that in January!” they may say, and they’re right. If you know your order cycles, you can have that item in stock and avoid too many frustrating “out of stock” messages.

Inventory Control: Improved Information, Higher Profits

Many inventory control products can help businesses control costs and maximize profits. Sage inventory software provides a solution for inventory control that can help you with order cycles, product stock status, and more. With the data display dashboard, you can see instantly what stock levels need replenishing. Order cycles can be calculated and new items ordered quickly to ensure that you’ll rarely give customers that frustrating “out of stock” message.

Acumatica Cloud ERP offers the Distribution Management Suite that can be fully integrated with CRM, Financials, Manufacturing, and Project Management. With this full-featured solution, you can gain real-time access to available inventory, inventory in transit, reorder quantities, and inventory costs. You can also manage multiple warehouses, lots, inventory sub-items, expiration dates, and bin locations.

Mindover Software Can Assist You

If you’re looking for expert insights into inventory control products, Mindover Software can help. With decades of experience helping many types of businesses resolve their inventory control issues, we can recommend the best software solutions for all of your inventory management needs. Contact us today.