Warehouse managers must handle multiple tasks simultaneously. One task they must continuously oversee is inventory management. When this job is handled properly, revenue increases, customers are happier, and prioritizing tasks takes less time and effort.
Understanding Inventory Management
Inventory management involves tracking existing warehouse inventory and determining where more is needed. The person responsible for this task monitors the purchase of all goods and tracks them until they are used or sold. This individual must determine how to manage the inventory effectively, as a one-size-fits-all approach won’t work. The following tips may help with this goal.
Lean Manufacturing
Every company should take the time to learn more about lean manufacturing. The goal is to eliminate processes or activities that consume resources without adding value to the organization. By optimizing the supply chain, companies can cut their inventory levels and use those funds for other purposes.
Reserve Space for Maintenance, Repair, and Operating Supplies
Maintenance, repair, and operating (MRO) supplies take up valuable space in a warehouse. However, they are necessary, as a machine breakdown can bring operations to a halt. Having the parts to make repairs will minimize downtime and boost productivity.
Communicate with Vendors
Business owners must communicate regularly with vendors to maintain good relationships. They should be informed in advance when order volume will change and asked for help when needed. Discuss key performance indicators and where the warehouse fails to meet established goals. The vendor may have suggestions to improve inventory management so these goals are met.
Prepare for Anything
Customer wants and needs change over time. Global supply chains may temporarily break down, causing product shortages. The global pandemic turned the world on its head. Nobody knows what will come next, but business owners must try to prepare for any eventuality.
Consider lead times and when to ramp up production to prevent stock shortages. Historic sales data may help predict when to ramp things up. When customer demand increases unexpectedly, set up a line of credit to purchase more products. Ensure there is ample room in the warehouse for new goods and find ways to dispose of stock that isn’t selling.
80/20 Inventory Rule
Inventory that moves quickly should be stored at the front of the stockroom, where it is easy to access. Twenty percent of a company’s stock accounts for 80 percent of its profits, so these items should be easy to move when needed. The other 80 percent should be kept on hand but it doesn’t need to be as easily accessible to workers as it doesn’t move as quickly out on the sales floor.
Conduct an Inventory Audit
Very few business owners today manually track inventory. They use software attached to the point-of-sale system to track this information. However, inventory audits are beneficial to ensure the information in the software program is accurate. This audit is more than a physical count of the merchandise. It also reviews performance metrics to find areas where improvements are needed for better warehouse management.
Automating inventory management offers numerous benefits. Companies can focus on other tasks to help grow their organizations. Using the software, a company can gather marketing data and target its advertising or expand its technological horizons. Lean manufacturing methods are an excellent place to start, as the focus is on cutting waste and improving productivity. Better warehouse management will help a company achieve both goals.