7 Principles of Profitable Inventory Management

Eliminate Waste, Promote Processes, and Turn a Higher Profit with These 7 Warehouse Tips

1.  Managing a successful warehouse means balancing the supply/demand equation carefully.

• Be sure you know what your inventory turn is at all times. Housing too much product that you can’t sell, happens easier than you think. Most Inventory management software has built in functionality to automatically track that for you. 
• Spend the extra dollars on an inventory management system. The money spent will be regained in the efficiency and time saved by using it.

2.  Avoid silent killers like warehouse waste from overproduction, over staffing, product losses, or errors 

• Incoming Orders should pull the warehouse at a matching pace.
• Make an effort to run a lean crew that you are able to keep busy
• Trim any wasted labor costs when the warehouse is slow or orders are trickling in.

3.  Implement a solid labeling system for your products and make sure they are accurately tagged and logged into the system

Often the cost of the item will determine the proper tagging.  RFID tagging is expensive and typically only cost effective for valuable items. Barcode and SKU codes are generally fine for most other items.

4.  Scanning equipment and processes can put a dent in your efficiency

• Prevent the majority of fulfillment errors by scanning items as they are picked. How are you currently using your scanning tools? Could you be using them more frequently?
• Revisit your pick process to see where you can eliminate waste, or better yet, errors. 
• Update old equipment where needed to ensure maximum efficiency.

5.  Devise a plan or workflow that is efficient, and makes sense for your warehouse

• Set-up your item locations with the pick process in mind. Narrow it down to one that produces the least amount of waste.
• Be sure that the most popular items are closest to the fulfillment area to save on the most frequently traveled steps.
• A successful pick process depends on the visibility of the labeling. Can pickers see the labeling clearly without the need for a magnifying glass.
• Products that are similar should have distinct features or differentiation in plain view to avoid picking errors.

6.  Managing inventory is easier with the right software in place to help you stay on top of inventory levels

Customize and monitor levels with alerts. Setting par stock 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.