Warehouse inventory management is much more than just spreadsheets and barcodes.
Done right, it’s intricately choreographed, with each product moving to the right place exactly on cue. And it’s the key to meeting customer demand without wasting time or money.
Inventory management versus warehouse management: The key differences
Some use inventory management and warehouse management interchangeably, but each plays a distinct role within a business’s logistics and supply chain operations. We might be called hypocrites for saying this when we combine these two terms into warehouse inventory management throughout this article, but we promise we have a good reason for doing that. Read on to find out.
Inventory management refers to the overall process of ordering and storing a company’s stock. Deciding what to order, how much to store, and when to replenish is all part of managing inventory. It’s the brains of the operation, employing analytics and strategy to manage raw materials and finished products.
If inventory management is the brains, warehouse management is the brawn. It focuses on the operations within a warehouse — the physical act of moving and organizing products so they reach their final destination in good condition.
Both inventory management and warehouse management ensure a smooth supply chain. And while they operate at different levels and have distinct focuses, warehouse management systems (WMS) and inventory management systems (IMS) are quite similar because they both ensure stock ends up in the right place.
5 benefits of warehouse inventory management
As the name suggests, warehouse inventory management combines elements of both inventory and warehouse management. It involves supervising stock within the warehouse to run an efficient system that fulfills orders faster.
This integrated approach helps businesses maintain accurate inventory records, reduce costs, and improve customer satisfaction. Here’s how.
1. Improved order fulfillment
When a customer places an order for a popular product, efficient warehouse inventory tracking guarantees that the system instantly knows if that item is in stock and where. This allows for quick picking and packing, ensuring the order is ready for prompt shipping. You won’t scramble to find misplaced items or disappoint customers with delayed deliveries because items are out of stock.
2. Reduced stockouts and overstock
WMSs use historical sales data and algorithms to predict future demand for each product. This lets you set optimal reorder points and safety stock levels so there’s enough inventory to meet demand — without tying up excess capital in overstock. For example, if you notice a sudden surge in demand for a particular product, the system would automatically alert you to reorder before you run out.
3. Increased efficiency
Many WMSs automate routine tasks like inventory counts, order picking, and data entry, freeing employees to focus on more complex activities that require human judgment and expertise. Instead of manually counting every item in the warehouse, for example, warehouse management tools like barcode scanners can quickly and accurately track inventory levels. This saves time and also reduces the risk of human error.
4. Cost savings
Every item in stock represents money tied up in inventory. By being intentional about how much you store and streamlining warehouse stock management processes, you can reduce storage costs, minimize waste, and free up capital for other investments. For example, by identifying slow-moving SKUs, you can restock fewer of them or discontinue them, opening up warehouse space for more valuable items.
5. Happier customers
A satisfied customer is a valuable asset. Happy shoppers are more likely to return or recommend your company to their friends, leading to increased sales and a stronger brand reputation. Fulfilling orders quickly and accurately is one of the best ways to achieve higher customer satisfaction — and with a solid warehouse inventory management system in place, you’ll have no trouble keeping up with new business.
Warehouse inventory management processes
Warehouse inventory management involves several core processes to ensure a smooth operation. Here’s a look at the basics.
Receiving
Receiving is the process of accepting incoming goods from suppliers, including verifying the quantity and quality and updating warehouse management software to reflect the new numbers. With efficient receiving processes, you check and move goods to storage quickly, minimizing delays and discrepancies.
Putaway and storage
The putaway process involves moving the items to their designated storage areas and updating the inventory tracking system. Once goods arrive at the loading dock, you store them in the appropriate locations within the warehouse to maximize space and ensure items are easy to find.
Picking
The process of retrieving items from their storage locations to fulfill customer orders is known as picking. Efficient picking leads to timely order fulfillment and reduced labor costs.
Speed up your picking process with technologies like pick-to-light (using lights and displays to guide warehouse pickers to the correct location) and voice picking (using headsets and microphones to give workers verbal instructions). Batch picking, where workers collect items for multiple orders at the same time, is another key strategy for faster fulfillment. These strategies reduce back-and-forth travel and help staff collect orders faster.
Packing
After picking comes packing items for shipment, which requires a system that ensures the correct products are in each carton and that they’re properly protected for transit. Effective packing processes reduce the risk of damage and errors, so they play a big role in customer satisfaction.
Shipping
The process of sending packed orders to customers is called shipping, which includes generating shipping labels and packing lists, arranging transportation, and updating the warehouse inventory tracking system to reflect new stock numbers. Timely and accurate shipping processes ensure customers receive orders promptly.
Returns
Returns happen. You need a reverse logistics process for inspecting returned items, updating inventory records, and restocking or disposing of the items people send back. Efficient returns management helps you maintain strong customer relations without losing too much value from returned items.
How to improve warehouse inventory management
Here are six tips to optimize your warehouse inventory management systems.
1. Implement a robust WMS
Not all WMSs are created equal. Some are cloud-based, offering flexibility and scalability, while others are on-premises, providing more control. When choosing a system, look for features that align with your needs, like barcode scanning, real-time inventory updates, and reporting capabilities.
2. Optimize the layout of your warehouse
Your warehouse layout should function like a thoughtfully designed city, with efficient traffic flow and designated zones. An effective layout minimizes travel time, reduces congestion, and prevents bottlenecks.
Consider adopting a U-shaped flow, where goods enter and exit from the same side, or using central picking aisles for high-demand items. The goal is to create a space where every movement is purposeful and efficient.
3. Use technology for inventory tracking
Gone are the days of manual counting and paper trails. Today’s technology offers a wealth of options for accurate and speedy inventory tracking.
Barcodes, for example, provide unique identifiers that track items during the receiving, picking, and shipping processes. Warehouse management software like Fishbowl pairs with barcode scanners so workers can note product movements for real-time inventory updates.
Don’t forget about automation tools like conveyor systems and automated storage and retrieval systems (AS/RS). These also significantly reduce labor costs and boost throughput.
4. Train your staff
Your warehouse staff are the heart and soul of the operation, and investing in their training is the key to success. Ensure they understand the WMS, inventory management processes, and safety protocols. Every few months or years, offer regular refresher courses to sharpen their skills and introduce them to new technologies.
Plus, employees on the floor know your warehouse processes better than anyone. Empower your team to speak up about improvements and foster a culture of continuous growth. They might make suggestions you wouldn’t otherwise consider.
5. Implement lean warehouse practices
Lean principles, originally developed for manufacturing, can apply to warehouse management with impressive results. These principles aim to shave down lead times and optimize every aspect of your WMS.
Here are three popular lean methodologies to consider:
- Kaizen: This Japanese continuous improvement philosophy focuses on making small, incremental changes to eliminate waste and increase efficiency.
- Just-in-time (JIT): The JIT strategy minimizes inventory levels by receiving goods only when they’re needed for production, reducing storage costs and waste.
- Six Sigma: This data-driven methodology eliminates defects and variations in processes to improve quality, reduce costs, and keep customers happy.
6. Monitor key performance indicators (KPIs)
KPIs are the numbers and statistics you track to gauge how close you are to meeting goals. These could include order accuracy, inventory turnover, or warehouse productivity — whatever matches your warehousing objectives. KPIs help you make data-driven decisions about areas for improvement.
Optimize your warehouse inventory management with Fishbowl
Improving warehouse inventory management goes a long way toward streamlining operations and improving inventory control. And you don’t have to do it alone.
Fishbowl is the all-in-one inventory management solution designed to help you control stock, warehouse operations, and more. Fishbowl’s integrated solution seamlessly connects every aspect of your inventory management, even integrating with QuickBooks to promote financial visibility.
Whether you’re a business owner or a solutions-focused warehouse manager, start optimizing your warehouse today with a free demo of Fishbowl.