Managing inventory and warehouses are synonymous, yet each has its responsibilities. Noting the difference between the two makes sense when we want to improve our internal processes.
Inventory management deals with items, managing the movement of items, forecasting trends, and managing pricing and stock quantities, to name a few.
Warehouse management is the physical aspect of your operations. Warehouse management involves transparency into multiple locations, warehouse mapping, where your items are and empowering staff with the tools they need.
While both have some process and management differences, they tend to face tightly linked challenges.
Loss of inventory control is often the cause of many operating issues. These can stem from more than just one area. Ultimately, the consequences of such lead to audit problems, loss in revenue and efficiencies, angry customers, poor employee morale, high inventory holding costs and others. We’ve identified five common challenges around the loss of inventory control and offer tips on improving your inventory and warehouse management.
When an item has been misplaced or miscounted, it can affect all levels of operations. Relying on your staff to manually count or randomly decide where things should go can have a huge ripple effect throughout the life of an order, or the entire organization for that matter.
Tip: Reducing paper such as pick tickets, scratch pads, and count sheets by implementing scanning abilities. Implementing barcode scanning results in less uniqueness and helps to have consistency in how your team captures information. You also help eliminate work for the warehouse manager, who typically would gather count sheets and other papers.
Imbalance of inventory
Too much stock can sometimes be caused by placing a purchase order for more than needed. Or the reverse, not having enough quantity on hand can also happen. Both instances are due to a lack of transparency in the warehouse.
Tip: Don’t let inventory pile up. Products we typically order on request should be sold as soon as we receive them. Ideally, you will have zero non-stocked items in your warehouse. Any quantity of non-stocked items should be regarded as excess. Consider adopting SKU rationalization. SKU rationalization is when a business decides whether to keep or eject certain SKUs due to a lack of profitability. SKU rationalization involves weighing up several factors, including fulfillment costs, demand consistency, and return rates.
Your system says that inventory items are in one location when they aren’t. Incorrect location details mean delays in order processing, mistakes in inventory counts, unnecessary POs and more.
Tip: Proper warehouse mapping, preferred primary location, and proper labelling of shelves are critical. While some items may be significant and easy to see and identify, others can be an ocean of little parts crucial to an order. When your warehouse process has mapping and structure, shelving locations or bin locations are correctly labelled and used. A sensible solution will use label printers with scanning features built right into your software. This tip may take time to put together, but it will help significantly improve the tracking of your inventory items within the warehouse.
Garbage in and garbage out:
Data entry isn’t necessarily the most challenging task; however, it is one of the areas where mistakes most commonly occur. Aside from typos, data entry errors happen because of inventory and warehouse management inconsistencies. Another area that causes inaccurate data entry exists within the software’s user privileges granted to team members. Team members can unknowingly and unintentionally contribute to inaccurate data without user permissions properly defined. For example, a warehouse clerk may have the ability to search for an item but shouldn’t necessarily have the ability to change an item’s location or inventory number.
Tip: Eliminating manual data entry is the first step in avoiding inaccurate data, and barcode scanning is the place to start. Using barcodes and scanners avoids incorrect inventory numbers, wrong warehouse locations, inaccurate counts and more. It also means less staff time spent keying in information from a piece of paper or Excel spreadsheet. Ensuring your team member’s roles are clearly defined and matching the software’s user permissions to reflect such is key. Good software will allow many different functions to be turned on or off globally throughout the application. Ensuring you have controlled parameters and user privileges will make a significant difference.
Antiquated thinking & systems
“We’ve always done it this way” is a sentence we’ve all heard or even said too often. It is true that while a business may have seen success for over 30 + years by operating with the same processes, it stands to reason that in the modern world, those old ways don’t always serve your business best.
Tip: Keep your processes contemporary by streamlining and automating otherwise manual tasks. In addition to the tips mentioned above on avoiding human error and location accuracy, other ways of automating your inventory and warehouse management include wave picking, dashboard reports, and cloud-based solutions that give you anytime and anywhere access; contemporary solutions you should consider for your business.
Spire is a fully integrated accounting and business management software system with the wholesale distribution business in mind. Our robust inventory module includes lot and serialized tracking, multi-warehouse, multi-company, multi-user, and multi-currency.