Many warehouse managers cite transportation costs as the most difficult to control, but inventory can be a hidden budget buster. Why? Because it’s challenging to analyze and improve labor, operational, warehouse space, and waste costs. So how do you fix it? Three words; effective inventory management. Read on to learn where to start.
1.) Review Your Comprehensive Stock Order History
Order histories should play a vital role in your inventory management process. This data shows you how quickly or slowly you sell through product, how seasonality affects sales, how often a product is back-ordered, and what quantities your customers typically order.
You can use this data to influence future orders and to help ensure that you don’t over or under stock your shelves. It’s also beneficial to use an inventory management system that automatically analyzes order histories and provides predictive ordering insights.
2.) Re-Organize Your Warehouse for Easier Order Picking
Once you know the order history of your products, you have a better understanding of how often workers are pulling items from shelves. Now it’s time to use your product sales data to rearrange your warehouse into logical zones.
Adjust shelves so seasonal items are easier to get to and put frequent sellers close to where all boxes end up before shipping. This will streamline the picking process and will help order fulfillment workers make more efficient trips around the warehouse. As a bonus, both of these things can also help reduce labor costs.
3.) Use Digital Picking Tools to Improve Accuracy
Better inventory accuracy helps limit backorders and prevent theft. To increase inventory accuracy, move away from less efficient manual inventory checking and paper pick sheets. Instead, opt to use a range of digital tools such as wearable voice picking devices, pick to light systems, and RF scanning equipment.
These tools update your inventory in real-time and make it easy to generate reports you can use throughout your company. For example, your put-away and replenishment workers can use replenish frequency documents when performing cycle counts. These will help you reduce product waste.
4.) Implement Transparent Inbound Product Delivery
Inventory management improvements can start the moment when the supplier’s delivery truck arrives at your warehouse dock. By collaborating with your procurement department, you can help plan shipment delivery windows so that they don’t coincide with the busiest times of your order fulfillment. Making this change will help operations run efficiently and will help make sure workers aren’t overloaded, a situation that can increase labor costs.
It’s also wise to collaborate with your shipping and receiving departments. Set clear guidelines on what product is acceptable to be signed off on and what items need to be rejected. Doing so will lower the number of defective materials that enter your warehouse and will reduce freight claims that take a while to process and tie up cash.
5.) Establish Smart Return Management Policies
Creating a functional return management system can reduce errors and speed up the return process so that it doesn’t take time away from other order fulfillment operations. Not every product that’s returned should be placed back into the warehouse. In fact, damaged and obsolete products just take up vital shelf space and create inventory problems. Take the time to create procedures that address return processing times, return quality, and accurate reporting.
Optimizing your inventory processes and policies will allow you to have greater control over the flow of items moving in and out of your warehouse. Use the tips outlined above to reduce errors and cut costs.