If you are running a storage warehouse, then being able to effectively manage its inventory of stock is essential. It will be impossible to maintain an efficient operation if you are not able to keep track of what goods you have, who they are for and when they need to be dispatched.
Warehouse inventory management is more important than ever in 2023, as no business can take risks with its future in the current economic climate. But what exactly does it mean?
This piece will provide a guide to everything involved in modern warehouse inventory management.
What it is
Warehouse inventory management is a system that a company uses for grouping, tracking and handling the various items that it has stored in its warehouse facility. Among the types of business that will find such a process necessary for efficient day-to-day operations are e-commerce, retail, distribution and wholesale firms. Such companies typically invest a lot of money in their stock, and so failure to manage it properly can end up costing them a lot of cash.
A good inventory management process will make sure that orders are picked and packed for dispatch quickly and accurately. It will also enable your business to stay on top of exactly how much stock it holds, where each item is within the warehouse and how much needs to be acquired to fulfil future orders. The aim should be to make sure that you always have what is needed to meet existing orders, but do not end up with too much stock lying around the warehouse.
There are a number of stages involved in a standard warehouse inventory management system. These include:
- Taking receipt of stock
- Determining where within the warehouse each item should be stored
- Order management
- Maintaining accurate inventory records
- Devising efficient procedures for picking and packing items
- Order sheet and invoice production and processing
- Dealing with any returned items
- Working out what items need to be re-ordered and in what quantities
Failure to put an effective management system in place can be disastrous. If you are unable to meet demand for an item because there is not enough of it in your existing inventory, it will not only cost your company money, but also damage its reputation to clients. This can turn out to be the more serious issue over the long term.
What are the most widely used systems?
Although there are several options for the management of warehouse inventory, most companies that employ a system use one of three.
- Push system
- Pull system
- Just-in-time system
Let us look at each more closely.
This system sees the supply of inventory pushed through from manufacturer to retailer via the storage warehouse. It means large volumes of stock is stored in anticipation of high demand to come, so that you are able to meet those orders when they start to flood in.
By contrast, the pull system means that stock is manufactured and stored in warehouses based on existing demand rather than future forecasts. Under this system, your warehouse inventory will consist solely of stock that has already been ordered.
As the name suggests, this system involves inventory being ordered just in time to fulfil an order. It is a high-risk strategy and will only work if lines of communication are very strong.
The most effective systems combine the push and pull approach, ensuring the ability to meet demand without spending too much on stock that may not be sold.
Differences between inventory and warehouse management
There are points where an inventory management system and a warehouse one cross over, but the latter is much wider ranging. Warehouse management systems focus on making all of the operations of the warehouse as productive and efficient as possible, while inventory management systems concentrate on optimising the handling of the physical stock within it.
A warehouse management system deals to a large degree with outbound warehouse processes, such as the shipping of goods and the fulfilment of orders. By contrast, an inventory one is more focused on inbound processes like the receipt and storage of stock.
Steps to take
Putting in place an effective system is the first thing that your business should do. How that system works will depend on factors such as the type of stock you are holding and how busy your business is on a day-to-day basis.
Part of working it out will be making sure that you have the right warehouse equipment for your needs. Sturdy shelves for storage and trolleys for picking and transporting items will be essential, especially if you deal in heavy goods.
At Steely Products, we manufacture tough, tubular steel trolleys and shelves for warehouses. Use the contact form below to get in touch.Get a free quote