All you need to know about warehouse and inventory management

Knowing this, one would agree that warehouse and inventory management are critical to the success of any business.

A warehouse and inventory management system is not just a mere documentation process. It has vast financial implications and can help to reduce costs and improve efficiency. Having a neat record of your company's stock can help to reduce waste from overstocking or prevent customer dissatisfaction from shortages.

Since warehouse and inventory management provide insight into stock levels, they are often used interchangeably. However, there are some key differences between the two.

What is Inventory Management?

Inventory management is a process that allows a business to document and track stock levels. This process enables a business to achieve goals such as:

Forecasting sale trends: Supposing you own a clothing store, you would observe that the sale of red gowns or tops spikes in February during Valentine's season. Good inventory management will equip you with the information on merchandise currently in stock, enabling you to plan better for the spike in demand.

Maintaining optimal ordering and restocking levels: What good should you order, and in what quantity? Without a solid inventory management system, you could either end up overstocking or experiencing shortages. None of these is good for business.

What is Warehouse Management?

Warehouse management entails all the processes involved in handling inventory-related tasks in a warehouse, including:

Receiving inventory: This covers the processing of incoming orders and methodically placing them on shelves for easy access.

Picking and packing: This operation is linked to the first one. Proper inventory sorting will make it easier to source and use the goods for shipping when you receive an order.

Shipping and returns processing: Warehouse management also covers the processes involved in transporting goods to the customers and handling returns if the situation arises.

Warehouse and Inventory Management Techniques

Businesses employ some techniques to make inventory management easy. Here are some of them:

The ABC Method: Here, the stock is arranged based on the turnover rates. It follows the 20/80 rule. The top 20% of products that generate 80% of revenue are placed in Category A — near the shipping areas, while lower-performing products go to Categories B and C.

Fixed order quantity: As its name implies, the business restocks a product when the inventory has reached a set limit.

Fixed period ordering: This technique is most common among small businesses. In this case, goods are only ordered at a set period, like at the end of every quarter.

Why you need warehouse and inventory management for your business

Contrary to popular perception, warehouse and inventory management is not required for large-scale businesses only. Admittedly, small and medium-scale businesses may find limited use for a warehouse due to more simplified operations; however, an inventory management system is essential. Here's why you need them for your business:

1.   Eliminates overstocking and shortages

Proper inventory management would ensure that you do not overstock merchandise that would last too long on the shelves and eventually lead to wastage. You also need to take stock to prevent shortages which could lead to lost revenue.

2.  Increases order accuracy

Effective inventory management would ensure that customers get the exact orders. This has multiple benefits, like eliminating the need for returns and saving costs.

3.  Improves customer satisfaction

Customers get frustrated when they find a product they want, only to realise that it is out of stock while placing an order for it. Aside from helping to avoid this situation, proper warehouse and inventory management can also speed up the shipping processes, leading to happy, loyal customers.

Common warehouse and inventory management systems

Inventory management systems are categorised based on frequency and mode of documentation.

In terms of frequency, a business can employ an inventory or cycle-counting method. The inventory method involves the company selecting a day to close business and take stock of goods. For cycle counting, certain sections of the inventory are counted on a more regular basis.

In terms of the mode of operation, the process could either be manual or supported by technology. Manual counting might be better suited to a small business; however, a medium-scale business could benefit from a more tech-driven system like warehouse management software, barcode readers, Radio Frequency Identification (RFID) tags, and warehouse robots.

Conclusion

Size and complexity are key features that separate large and small-scale enterprises, but successful businesses set themselves apart because they deploy the best practices. Companies with proper inventory management can generate more revenue, cut overhead costs, boost productivity, and ensure customer satisfaction.

To fully optimise your inventory operations, the logistics unit of your business must also be efficient. The best way to achieve this is to partner with a reliable logistics service provider that aligns with your business needs and values.

A logistics partner like GIGL will serve your business well and cater to your logistics needs. Consequently, this contributes to the enhancement of your inventory management system, and you can enjoy all of the benefits listed above.

---

#FeaturedPost