Are you managing your inventory and warehouse as effectively as possible? It’s OK if you’re not. Before reviewing inventory management best practices, here are 5 questions you should ask yourself to learn about inventory management and begin the process of streamlining your operations – regardless of what kind of warehouse you run – in-house or outsourced to a 3PL company.
After answering them, you will have a clearer idea of what needs immediate attention in your warehouse.
How are we servicing our customers?
Perspective is key here. A customer could have an entirely different perspective than you do. While you may think you are serving your customers well, it is irrelevant because the only opinion that counts is the customer’s.
Customers are ‘fickler’ than ever; they expect things immediately and loyalty does not seem to play the same part it used to. Just one ‘stock out’ scenario can spell the end of a relationship with a customer as they go elsewhere to solve their ‘immediate’ need.
The digital age makes it easy to find alternatives more quickly, and the competition can easily win if they do a better job serving your customer’s needs.
Do we have too much of some items?
There are many reasons for stocking too much of a given item. There may have been a point in time where a particular item was extremely important and safety stock levels were set according to demand at that moment. Open purchase orders and blanket purchase orders with suppliers can have routine deliveries irrespective of demand for an item. ‘Set it and forget it’ demand for items can be a big driver to this problem as well.
Are you running useful reports or using a dashboard to reflect over stock scenarios?
What are the slow-moving items in inventory?
Changes in the velocity of item movement tends to ‘sneak up’ on you and what used to be a fast-moving item may now be a slower moving item. Build metrics around item velocity and measure this with the analytical abilities of your inventory control system.
Do we have too few of some items?
This can also ‘sneak up’ on you and the effects can be very dangerous. This issue is often latent, and the frightening consequence is that by the time you figure it out, the damage is done. Customers go elsewhere and getting them back can be difficult and more expensive than you think.
Is our warehouse optimized for maximum efficiency?
The way to avoid inefficient practices, and a high cost of inventory is optimization. Receiving and putting away activities should follow a streamlined process so that goods are validated and moved to their proper locations and inventory records reflect this in as close to ‘real time’ as possible.
Sequencing order picking so that footwork and movement is minimized. This can mean locating items that are commonly ordered together in closer proximity to each other to minimize picking time and effort.
Picking, packing and shipping need to flow seamlessly so that efforts are minimized, and orders are processed faster.
Customers expect immediate or same day shipping, this can be easily done with a well laid out warehouse and good picking discipline.
Keeping the warehouse organized and optimized is a continuous effort. Read 4 ways SAP Business One supports your warehouse operations processes.
Final Thoughts
Now that you have a clear idea of what needs immediate attention in your warehouse, we can talk about best practices that can be even better when you are using SAP Business One, a robust solution to upgrade and optimize your business processes.
At Consensus International we help small to midsized businesses optimize their warehouse operations with SAP Business One, software that focuses on the movement of inventories and their count so you can efficiently deliver on promise, keep customer satisfaction high and cost-effectively manage your supply chain, and more.
Consensus International is an SAP Gold Partner that sells, implements, trains, and supports its customers on SAP Business One from its offices in Florida, Texas and Massachusetts.
If you need help optimizing your warehouse operations, please contact us:
