7 Principles of Profitable Inventory Management

1.

Balance the supply demand equation carefully. Also known as “inventory turn” be sure you know yours at all times. Housing too much product that you can’t sell happens easier than you think. Most Inventory management software will automatically track that for you.

2.

Avoid silent killers like warehouse waste from overproduction, overstaffing, losses, or errors. Orders should pull the warehouse at the pace they are coming in. Run a lean crew that you are able to keep busy.

3.

Devise a solid labeling system for your products and make sure they are accurately tagged and logged into the system. Consider the cost of the item vs potential loss incurred from error or theft and then decide on a system. RFID’s tagging is expensive and typically only cost effective for valuable items.  

4.

Get the right tools for the job such as a good scanning device and scanning system to help make the process more efficient, and/or help prevent fulfillment errors. How are you currently using your scanning devices? Could you be using them more frequently to eliminate errors or save time. Do your pickers have scanners? Do they need them? Do you scan items coming in or items going out or both? What system do you use for picking and fulfillment? Revisit your pick process and the tools you use in your warehouse in case it needs some tightening up. Chances are your business has grown since you devised many of the processes and chose the tools.  Update outdated equipment where needed to ensure maximum efficiecy

5.

Devise a plan or workflow that is efficient, and makes sense for your warehouse. Set-up your warehouse for success with the picking process in mind. Have a good pick system in place that produces the least amount of waste. Be sure that the most popular items are closest to the fulfillment area to increase efficiency in the picking process. A successful pick process is only as good as the labeling of the products. Be sure pickers are able to see accurate labeling of products. Products that are similar should have distinct features or differentiation in plain view to avoid picking errors.

6.

Managing inventory is easier with inventory management software to help you stay on top of inventory levels. Customize and monitor levels with alerts. Setting par levels to keep on hand for your products will help you know when it’s time to order more. Be diligent about having in-stock inventory for incoming orders. Monitor fluxuations to ensure you aren’t losing business due to outages.

7.

Start up a quality control program to monitor outgoing fulfillment accuracy. Devise standards and make sure everyone in your warehouse knows the wrong way and the right way to let product out the door. Consistency in order fulfillment is the key to loyal customers.