5 Critical Inventory Management Mistakes to Avoid

Unknowing of Fill Rate and Inventory Turn

Being over-inventoried is a common mistake. Sometimes it’s due to a lack of trust in suppliers and other times it’s because fill rate and inventory turn remain a mystery. In a warehouse environment, cash flow is dependent on selling product and if all your money is tied up in inventory;  you could have a problem. And while it may be a common mistake, it is one you should try to avoid at all costs. Not only is it a stressful situation; it could cause your whole operation to come tumbling down faster than it took to get it up and running. Your goal should be to learn these calculations and master the art (and an art it is) of purchasing the right amount of products at just the right time. Sounds a bit hairy but with some good inventory management software and a reliable supply chain; you’ll be able to manage this just fine. Here’s a calculation to get you started. Inventory turn (turnover) = Cost of Goods Sold / Average Inventory (on Hand).

Outdated Tools / Lack of Warehouse Efficiency

Having a reliable inventory management system in place automates many tasks associated with running a successful warehouse. Besides providing the reporting needed for making many decisions for your business, specifically, it will help you calculate cost of goods sold (COGS), inventory turns, and other important metrics you need to grow and sustain your business. If you’re still using a spreadsheet and hand calculating the inventory you have in the warehouse and how many you’ve sold; it’s time to upgrade. The minimal cost of Zenventory, a cloud-based inventory management system will pull the time-consuming tasks off your hands. Better yet, you will have more insight into what’s going on in your warehouse than you ever thought possible.

Performing Traditional Full Inventory Counts

Still shutting down operations for your inventory counts? Shutting down the warehouse is not only a costly endeavor, it’s also time-consuming and riddled with errors. Obtaining inventory management software will help manage cycle counts that are quicker by tackling small sections of the warehouse more frequently. More frequent counts will provide more accuracy, more insight, and take less time to complete. You won’t have to shut down your warehouse either. These go much quicker than counting everything at once. For more information, read up on cycle counting 

Excessive Warehouse Waste

Known as the silent killer, warehouse waste can come in many forms. More common types of waste are workflow related. The workflow of the warehouse should move at the pace designated by order flow. Any pace faster or slower and you have effectively created “waste”. And while this type of waste may not ruin a business over night, it can and often does over time. Overproduction is one type of waste that occurs when the workflow pace is faster than the rate of incoming orders. Finding small projects for employees during lulls or hiring individuals for shorter shifts helps to ensure efficiency. Maintaining efficiency and a balanced workflow in your warehouse operations will bring reward over time. Tip: If you’re finding it hard to keep employees busy try implementing a quality control program to manage.

No Quality Control Checkpoints

Quality control in the warehouse, commonly morphs into the on-again off again task. Typically, if time permits, then QC is more likely to happen. But in an environment of speed and urgency, quality control is a forgotten cause. The problem with this routine is that most production and fulfillment errors occur when the pace is fast. I am fairly certain your customer would be happier receiving the correct item a day later than the wrong item on time. Don’t sacrifice everything for speedy delivery. Mistakes are bound to happen, but making sure these occurrences are rare should be your focus. After that, speedy delivery.