Walmart hopes to add $1 billion to sales by planned improvements to stock availability at stores. This is despite reducing inventories over the last few years. Their inventory management is key to their strategy to compete against Amazon.
As a business owner, warehouse inventory management can be your worst nightmare. There’s so much to keep track of, and the process can get complicated.
Learn how to manage inventory correctly and efficiently with these top 10 best practices.
1. Monitor Your Supplier Performance
Your performance is dependent on other people in your supply chain. If a supplier lets you down this can impact on your ability to service your customers. Improving your supplier performance is one way of enhancing your performance.
Peter Drucker is often attributed with saying, “If you can’t measure it, you can’t manage it.” This is true about supplier performance. If you are seeking to improve supplier performance you need to measure it.
Record your supplier performance by logging whether they deliver their orders fully and on time. Keep records of the accuracy of their delivery documentation, too. Do your orders, their delivery notes, and their invoices match?
Have meetings with suppliers to give them feedback on their performance. Use these meetings to negotiate improvements to their performance. Make sure your best suppliers get encouragement from you such as prompt invoice payment, the best delivery times and remember to say thank you.
If you are in the food business, it’s obvious that you need to sell your oldest products before your newest to avoid stocking unsaleable items. For example, fruit and vegetables only have a few days of shelf life. They have to be shipped through the warehouse without any delay.
This first-in-first-out principle applies just as much to other products even if they are not classed as perishable. Any product can deteriorate on a shelf in a warehouse after time. Worn packaging can make a product unsaleable just as much as rotten fruit.
Often packaging contains promotional information that is date related. Promotional support may be linked to special packaging. Have a firm, first-in-first-out procedure with new stock being placed behind old.
3. Regular Counting
To maintain inventory management disciplines, you need accurate data. Failure to maintain accurate stock information can lead to unexpected out of stocks, losing sales, and poor replenishment purchases.
A regular count of all your warehouse inventory helps keep your data accurate. This can be done on a periodic basis by counting a part of the stock every week. These cyclic counts become part of the routine of the warehouse organization.
4. Use Technology
A powerful tool for a warehouse manager or business owner is warehouse inventory management software. The large amounts of data and records involved mean that inventory management benefits from using systems. Consider inventory tracking systems such as those supplied by Idezi.
5. Work with Your Suppliers
Relationships with suppliers can sometimes seem like a zero-sum game. This is where a win for you is a loss for them and vice versa. This doesn’t always have to be the case.
Look for opportunities to collaborate with suppliers and find win-win projects. Sometimes you have the answer to a supplier problem that you can help them with at little cost to you. Help each other better serve your customers, reduce costs and achieve both your aims.
6. Support Winners
Use your knowledge of what is moving fastest and making the biggest contribution to your business. Support high sellers by storing them in great locations. This minimizes stock movement and costs.
Consider how you ship the highest volume products. Are they best shipped by the pallet load or in cases?
7. Reduce Receiving Errors
If you want to maintain inventory accuracy, it’s essential to get the data right from the start. Errors in the goods receiving area may mean that you miss identify product and then lose it in the warehouse. You may also think you have stock when you don’t.
Make sure you have plenty of space for the checking of deliveries. Have good people on this job. Do periodic checks to help maintain accuracy.
8. Identify Every Item
A key to controlling inventory is that everything is identifiable. Using labels on every case and location means picking and counting are much easier.
Thermal printing of product labels is a cost-effective way of doing this. Use barcodes on products for a more reliable means of identifying products.
9. Work Tidy
A clean and tidy warehouse is a more efficient and safer environment to work in. Establish routines for cleaning up at the end of every day. You may have to allocate time at the end of each day to do this.
Having waste materials removed and stock tidied will mean there will be fewer errors. It will be easier to get at the stock for picking, moving or re-stocking. A tidy working environment communicates to your people that caring for the product and workplace is part of the way you do things in your business.
10. Warehouse Organization
Help your people by logically organizing the warehouse. Have similar products together. Use signs to identify where things are.
Have a logical flow from receiving to storage and picking areas and on to dispatch. Minimize the distances product has to be moved. Make reducing the handling of product your objective.
Warehouse Inventory Management Action
Warehouse inventory management can make a difference to your business performance by supporting sales growth, reducing stock loss, reducing investment in dead stock and reducing business risk. It’s well worth turning these top tips into an action plan. Identify some priority actions and start making changes.
To make the change stick have a clear vision of what you plan to do. Share this with your team. This way you are all heading in the right direction.
Share with them the reasons why this is important for the business and them. This will help with their motivation and commitment to delivering the change. Make sure you and your people have the capacity in terms of time, resources and skills to do what needs doing.
Lastly, have a plan that sets out the first steps. Get things moving. Encourage and give people feedback along the way.
For more ideas, check our business resources to learn more about running and managing your business.