Understanding and properly managing inventory is essential to the growth and prosperity of any business. As the market continues to grow and consumers continue to spend record-breaking amounts of money online, there has never been a better time to be a seller. Business owners in today’s economy should be paying close attention to their internal operations and assuring that they are getting the highest level of efficiency and profitability from their warehouse. Never make the mistake of overlooking your inventory processes by implementing these 10 must-know inventory management techniques to optimize warehouse operations.
Top 10 Inventory Management Techniques
1. Implement a cloud-based management system with real-time syncs and analytics
As humans we are subject to one truth that overshadows all others, we make mistakes. In the world of business, mistakes are very costly. Proof of this fact can be observed in the disarray of businesses whose warehouses do not utilize any sort of warehouse management system. Day after day, micro mistakes caused by human error are made, and over time these mistakes begin to add up. By not adopting a warehouse management system, and instead managing inventory with outdated Excel spreadsheets or pen and pad methods businesses are costing themselves more than they realize.
By implementing a robust but, comprehensive warehouse management software like SkuVault, business owners can expect to virtually eliminate human error and the problems of miss-ships and out-of-stocks that come with it. Warehouse management systems are able to track online sales in real-time and reflect what available quantities are currently on hand. Coupled with advanced analytics to give you critical data about your products, these systems are a must have for improving inventory management techniques. Systems like this also automate different warehouse processes like shipping, receiving, picking, etc. which saves time and boosts efficiency.
2. Maintain up-to-date stock levels and inventory records
Make sure that inventory is stocked properly and in a timely manner, and restocked as necessary. Precise management of inventory guarantees accurate product locations and up-to-date data on those products. As a business owner, you should update inventory records promptly so that all key staff has access to the most recent information at all times.
Timely and accurate data benefits all areas of business. For example, accounting may need you to supply an updated list of the quantity and cost of each item within the warehouse. By maintaining updated information, the potential backlash from unpredicted issues dwindles considerably. Warehouse management systems also use this information to update listings on various online marketplaces. This ensures that all quantities are accurate and reflect your true inventory levels at all times, preventing the possibility of oversells.
3. Establish cost-efficient purchasing procedures
Ensure inventory is effectively under control by adopting purchasing procedures that align with actual sales history and past demand data. Operation managers establish purchasing procedures to accurately forecast how much product they need to have available during each quarter. All items that have not been sold during a 12 month period should be marked as obsolete and liquidated from inventory to eliminate unnecessary cost.
With procedures like this, business owners are able to make important decisions about the market performance of their products and act accordingly. Products that are dwindling in sales should be monitored, and safety stock for this item should be decreased until more data is available. Products that are selling above expectation should be ordered in accordance with increased demand and positioned appropriately to optimize sales.
4. Split inventory into different categories
One of the more basic steps an owner can take to improve inventory management techniques is to categorize their inventory. Inventory can be categorized into many different subsets depending on what kind of information you want to collect. For example, you can categorize inventory based on how fast the product turns, profitability, top sellers etc. Once categories are established and a significant amount of time has passed, analyze the data.
5. Maintain an active working relationship with suppliers
Business is based on relationships and one of the best relationships to have is with your suppliers. Maintaining an open line of communication with suppliers makes the purchasing and shipping of inventory a much more pleasant experience. For instance, once you have established rapport with a supplier they will be more inclined to go out of their way to assist you.
Say that your supplier is expecting to receive a new product line that is sure to sell, but has a very limited quantity to offer. Based on the relationship, he may be more inclined to give you a heads up about this new product and make sure that you are one of the first sellers to have access to it. If the relationship is strong enough, he might even give you some sort of discount because he is confident that you will purchase this product from him regularly.
6. Establish the ability to monitor all aspects of the inventory
Managing inventory is much more complex than many sellers initially anticipate. Once a business matures into a large scale operation, there is a whole list of supply chain logistics you will need to implement before your inventory becomes too much to handle. You should have the capability to have complete visibility of your products from the moment you place an order all the way to the time it arrives at the customer’s doorstep.
Knowing where your products are at all times is something that can quickly become a nightmare if handled inappropriately. However, adopting a warehouse management system give you the ability to take control of your warehouse. Through API integrations of other software within your company, a warehouse management system provides all the visibility and data necessary to operate and position a business for exponential growth.
7. Take advantage of technology whenever possible
Technology is rapidly expanding in the retail industry. So, to stay on top of trends, business owners should take advantage of this new wave of tech and adopt it into their warehouse operations. Training staff on mobile devices, like iPads and barcode scanners, creates an environment where employees can quickly be trained and move inventory quickly.
With the proper technology, inventory movements can be tracked precisely and financial records can be updated in real-time. This eliminates the need for daunting paperwork, minimizes mistakes and erases wasted admin time.
8. Structure your warehouse layout to optimize inventory
Restructuring your warehouse is the best way to improve the receiving, picking, and shipping process. Structure your warehouse so that fast-moving products are closest to the fulfillment area. You should be able to easily determine which items are best sellers based on collected historical data collected. Another way to optimize your warehouse is to use shelves whenever possible to take advantage of vertical space. However, different businesses have different layout needs. Use your best judgment to optimize space-based on sales and workflow.
9. Conduct regular inventory checks
Conducting regular inventory audits is a great way to catch issues before they become a problem. Traditionally warehouses may shut down for a couple days to run a physical inventory check. Clearly, it is not ideal to either halt sales or pays for overtime hours just to check inventory, so consider trying cycle counting instead.
Cycle counts give you the ability to check inventory in short bursts over a longer period of time. This method saves a tremendous amount of time and effort when compared to physical counts. No matter which method you prefer, you should check inventory at least once a year to ensure that inventory records are correct.
10. Plan for the future
Running a business requires a lot of forethought, that is if you plan on being in business for a while. If your current processes and management systems are not poised to accommodate continued growth, inventory management will quickly become overwhelming.
Many business owners either don’t think to consider a management system that can grow with the business or believe they are too busy to adopt new systems. You should never be too busy for improvement. If you discover that your business fits this description start preparing now and adopt these inventory management techniques and solutions to allow your business to growth.