One of the biggest challenges retail businesses face is managing their inventory. Ensuring the right amount of products and materials are on hand and where you need them, when you need them can be the difference between success and failure.
This problem becomes even more challenging when you’re operating multiple locations and warehouses.
The good news is: there are ways to overcome these challenges. Let’s explore how inventory management software and best practices can make multisite inventory management much more manageable.
Why Use Multiple Warehouses?
Before we get started, let’s take a minute to talk about the pros and cons of using multiple distribution centers and warehouses.
As far as cons go, the elephant in the room is the focus of this article. Managing inventory is hard enough with one location – and the challenge multiplies exponentially as you add more warehouses.
Managing inventory across multiple locations is a bit like directing the air traffic at a major airport – there are a lot of moving parts and it requires a great deal of precision to keep everything operating at max efficiency.
However, there are benefits to housing your inventory in multiple locations too.
One of the key benefits of having multiple warehouses is that it means your business has grown to a point where housing all of the products and materials you need in one place is no longer feasible. Growth is good – and outgrowing your single location or warehouse means your business is getting bigger.
But beyond that, another benefit of having multiple warehouse locations is that it helps you better serve your customers.
With one centralized location, there can be delays in shipping products to customers who are further away from your shipping center. No one likes to wait for their packages to arrive.
With multiple strategically placed warehouses, you can get your products shipped and into your customer’s hands more quickly.
Taking that a step further, this can also save you money on shipping costs. Placing your warehouses in geographically-advantageous locations means you can ship product from the closest location – potentially saving you huge amounts of money.
And finally, having multiple warehouses or distribution centers makes it easier to consolidate your inventory.
For example, if you have a product that does well in New York City, but your business headquarters and main warehouse are in San Francisco, it makes sense to consider obtaining a second warehouse closer to New York so you can better meet demand.
These are some of the biggest reasons why you might want to have multiple warehouses. And since there are financial benefits to having more locations, it seems silly to let the logistical challenges of managing your inventory stand in the way of better serving your customers and improving the bottom line.
Why You Need Multisite Inventory Management
As we pointed out in the last section, there are a lot of financial advantages to having a multiple warehouse set up for your business – but that’s hardly the only reason to utilize one.
Here are several reasons why you will eventually need a multi-location set up for your business.
Easier to Sync with Manufacturing
If you’re assembling your products, odds are you started out with your materials, manufacturing, and inventory all in one location.
However, as you grow, you’ll often discover that it’s beneficial to have multiple manufacturing locations for your company. The reasons for this are numerous, but can include better deals on rent/land and building costs, location in relation to customers, or even access to labor.
Now, imagine you have that – and you need to keep each manufacturing location stocked with the right amount of materials…that could quickly become a logistics nightmare.
However, with inventory management software you can keep each location stocked at the appropriate levels and not have to spend extra time and money making sure each manufacturing center has what it needs to keep cranking out products.
Easier to Outsource Manufacturing
Taking the previous point a step further, many companies are increasing the amount of outsourced manufacturing they use. There are multiple reasons for this, including decreased labor costs.
But those benefits can come with headaches in the form of increased challenges when it comes to managing your inventory.
Once again, a multi site inventory management system can alleviate the issues by allowing you to track how much product and materials are at each location so you’re never caught short or scrambling to get things from one place to the next.
Easier Implementation of Lean Manufacturing Principles
Lean manufacturing has become a big deal in the past decade or so. If you’re not familiar with lean manufacturing practices, it’s basically a system designed to improve efficiency, reduce waste, and increase productivity by streamlining the steps you use to manufacture products.
As part of a lean manufacturing initiative, manufacturing may take place at a variety of different facilities. Because of this, you’ll want to be able to easily track where your product is in each stage of the manufacturing process. And, once again, a multi facility inventory management system can make this much more manageable.
Let’s be honest – having your entire inventory and manufacturing in one place sounds like a dream come true. There’s a lot to be said for ease of access and having to manage only one location.
But what happens if you have a warehouse fire? Or a flood? Or your warehouse is robbed?
Having your entire operation in one location can be disastrous in those situations. Having a secondary (or even more) locations helps you mitigate risk.
And if the reason you’re not using multiple warehouses is because you’re concerned the inventory management duties will be harder, that doesn’t have to be the case. There are software solutions on the market that can make managing multiple locations a breeze.
You may be thinking “How would taking on additional warehouse space actually lower my costs?” And we’re glad you asked.
As we mentioned earlier, adding additional warehouse space can save you money on shipping, on labor, and on rent or the mortgage on your warehouse property.
If you’re outsourcing to another country, those savings can go up even more.
Beyond that, you can even save money on transportation costs.
The key here isn’t to just randomly add locations – it’s to strategically add locations.
Retail Outlet Management
Are you selling your goods direct in a retail or outlet location? You’re going to need multi inventory management tools.
Not only will you need to be able to track your products in your warehouses, you’ll need to be able to track them at the retail level as well.
Retail or Reseller Management
The next logical step forward from outlet management is traditional retail and reseller management.
Generally speaking, if you’re selling your goods to a retailer or reseller, once that transaction is completed there’s no longer a need to track that inventory – at that stage it becomes their inventory.
However, if you’re dealing with things on consignment, where a retailer or reseller only pays after your product is sold, you’ll want to keep track of that inventory to make sure everything’s on the up and up.
So, as you can see, there are a lot of reasons for why you need multi location inventory management. It’s not just about adding space – it’s about improving operations in a way that helps you achieve greater success.
Multiple Warehouse Challenges
Now that we know what benefits having multiple warehouse locations can provide, let’s talk about the challenges of managing your inventory when it’s spread across a number of locations.
It shouldn’t come as a surprise that spacing out your inventory makes things more challenging when compared to tracking your products and supplies when they’re all housed in one location, but that should not put you off exploring how a multi warehouse approach can benefit you. We think the rewards greatly outweigh the challenges.
Here are some of the most commonly cited issues companies face when utilizing a multi-warehouse system.
Maintaining Stock Counts
The more inventory you have, the more challenging it can be to track – and this challenge can grow exponentially when the inventory is placed at multiple locations.
The good news here is inventory management software with multi warehouse functionality used in conjunction with an inventory control system utilizing barcode scanners can greatly reduce the challenge.
When products are stored in numerous locations, the potential for bottlenecks increases. This is often due to miscommunication between locations, but it’s a costly problem that can have a dramatic affect on overall productivity and your bottom line.
Mismatched Inventory Levels
With your production materials, manufacturing, and multiple products located at different job sites, it’s easy to wind up with mismatched inventory levels – which can create another type of bottleneck.
The logistics of having your materials primarily stored at one location and your production at another means you’ll need to be on top of you inventory management in order to guarantee that the right amount of materials required for manufacturing arrive at the right time.
Too early and you’re stuck storing excess inventory. Too late and you’re manufacturing can grind to a halt.
With poor inventory management systems in place, you will quickly find that orders are often filled more than once or not at all. When you have multiple locations, the potential for this sort of error only increases.
Luckily, inventory management software can alleviate this issue. When orders and inventory are tracked accurately, successful order completion rates tend to go up dramatically because employees know exactly what they’re filling and shipping and where the order is being filled.
Tips for Managing Inventory Across Multiple Warehouses
You may find yourself looking at that list of potential issues and freaking out – but don’t. Following these guidelines can make managing inventory across a number of locations a breeze.
Get a Multi Location Inventory Management System
The first step on the road to taking control of your inventory involves getting a multi warehouse inventory management system in place.
Fortunately, there are no shortage of inventory management software and apps on the market. From simple apps to modular tools that can be customized for your specific needs, from free products, to software solutions that only large companies can afford, there’s a solution out there for every business.
Explore the market, schedule a demo, and take advantage of free trials. These products are a game changer when it comes to managing your inventory.
Place Warehouses Strategically
We touched on this one earlier, but it bears repeating: be strategic with your warehouse placement.
There are a lot of different factors involved in choosing a new location for your business, but if you select solely on the price of the space, you’re doing your company a disservice.
When choosing a warehouse location consider the pool of skilled workers nearby, the location in relation to your customers, shipping options, and the like.
Picking locations with forethought can save you headaches down the road.
Another way to manage your multi location inventory is to make sure you’re forecasting so you’re aware of what you might need in the future.
If you know you have a product that does well seasonally or tends to sell well in a certain area, it makes sense to prepare for that by ensuring you have proper inventory levels on hand before you actually need them.
Set Safety Stock
Running out of stock or materials can bring your business to its knees – which is why it’s vitally important to keep safety stock on-hand so you never actually find yourself with a zero in the inventory column.
Safety stock helps prevent a number of inventory errors to a certain degree, such as stockouts and demand uncertainty. You can read more on safety stock and how to use it here.
What to Look for in Multi Site Inventory Management Software
Naturally, we’re firm believers in the power of inventory management software. These programs and apps can make your life infinitely easier, particularly if you’re tracking your inventory across multiple locations.
Choosing the right software for you is a very personal process, but here are features you should definitely look for in your software solution.
Does It Use the Cloud?
There are numerous advantages to using cloud-based software, but this is particularly true when you’re managing inventory across multiple locations.
The biggest benefit in this scenario is that it allows your employees to access the software from anywhere, at any time, and through a wide variety of devices (tablets, phones, and more).
Even better? Most cloud-based solutions will easily sync up with your other software, including your point of sale system and a wide variety of ecommerce platforms you may be using.
Automation and Routing
If you have multiple locations, you’ll want to find a software solution that can send orders and inventory to the best location without require manual input from you.
For example, if you have 10 warehouses and an order comes in, you’ll want your software to be able to look at the shipping information, the levels at the product at each location, and determine the best location for fulfilling the order.
This allows you to fulfill orders more efficiently, eliminates double fulfillments or orders getting lost completely, and can guarantee the customer gets their order in the shortest time possible.
Running out of inventory or materials can be costly – both in lost productivity and dissatisfied customers – so make sure you’re always aware when levels aren’t matching by selecting software that features automated inventory syncing.
The ability to automatically sync inventory across channels greatly reduces the amount of unnecessary out of stocks or oversells. Product listings are automatically updated across channels to reflect the actual inventory count available in your warehouse after a purchase.
We all make too many decisions in a day as it is – and part of the allure of inventory management software is that allows us to let the machines figure things out so we can focus on what matters.
The best inventory management software will tell your team how to ship items – from choosing the right box and amount of packing materials to how to position it all for maximum efficiency.
This frees your employees to actually fulfill the orders – and not waste time trying to decide which packaging is best.
Managing inventory can be challenging even with a single location, so being wary of the challenges presented by expanding to multiple warehouses is wise.
That being said, while moving inventory between multiple locations can often feel like a juggling act, it’s really about finding balance – and thanks to advances in technology, there are now software tools on the market that can make tracking inventory easier than ever regardless of how many locations you have.
Explore the options on the market – there really are solutions for every size and type of business and budget. Schedule demos and ask questions, look for the features we’ve highlighted here, and try some free demos.
With a little research and taking the time to determine what exactly you need, you’ll find inventory management software that will help you wrestle back control of your supply chain while also saving you money, making your company more efficient, and most importantly, keeping your customers happy.