The increased eCommerce revenue of businesses has led to rapid development in inventory management systems and warehouse control systems. Software solutions in the field of warehousing have drastically changed the landscape. Thanks to these solutions, businesses can automate various tasks like tracking par levels. Furthermore, modern software programs can be integrated with one another to increase their capabilities and efficiency further.
In this article, we’ll explain what warehouse inventory management is and why it’s important. If you’re interested in the subject, make sure to check other content prepared by BlueCart’s team like our article on warehouse management tips or this piece on the benefits of smart warehousing.
What Is Warehouse Inventory Management
Generally speaking, warehouse inventory management is the process of receiving, storing, and managing the inventory in a warehouse. With some businesses, the process is fairly simple. Other businesses, especially large ones, have a complicated type of warehouse inventory management that includes various additional components. Here are some of them.
- Optimizing storage space and costs. As prices of storage space have increased in past years, this task has become increasingly important. Furthermore, businesses that grow fast and need to scale their warehousing operations need to invest in storage optimization.
- Managing warehouse staff. That includes processes that boost the productivity of employees and decrease the labor costs and cost of goods sold.
- Optimizing fulfillment and shipping. Thanks to modern warehouse management software and inventory optimization techniques, businesses can improve customer experience by enhancing the shipping process.
Key takeaway: Warehouse inventory management can include various processes that aim to improve the efficiency in the warehouse. A common way to do this is by implementing a warehouse management system. There are various other techniques aimed at increasing staff productivity, improving warehouse layout, and boosting accuracy.
Importance of Warehouse Inventory Management
There are many reasons why businesses should invest in their warehousing. The increase in eCommerce orders will likely make proper management of warehouse inventory even more important in the future. Let’s shed some light on the benefits of optimizing these processes.
Improved Accuracy
Investing in a proper warehouse management system and other inventory management solutions will improve order fulfillment and accuracy. Furthermore, as accuracy improves, there’s less inventory loss and labor is used more efficiently.
Increased Productivity
Automating manual tasks is among the things that can increase productivity in a warehouse. Whether it’s via automated warehouse scanning equipment or by investing in modern barcode scanner apps for inventory, the staff will be able to concentrate on tasks with higher added value.
Cost Reductions
There are many ways to reduce warehousing costs. One of them is via proper warehouse inventory management. By having optimal stock levels, you make sure that there won’t be any understocking and overstocking issues.
Warehouse Inventory Management Processes to Implement
There are many ways to optimize inventory levels and warehouse staff performance. Let’s examine some processes that can be implemented to increase the productivity and efficiency of warehouse operations.
- Layout optimization. The layout of a warehouse should be done according to the fulfillment process. In order to optimize it, managers need to first assess the current layout and the needed changes. Warehouse slotting is the most common layout optimization practice. An optimized warehouse will be ready for the implementation of modern solutions such as autonomous warehouse robots.
- Inventory control tracking. By investing in warehouse inventory management software, businesses can track inventory in real-time, optimize stock levels, and generate various inventory-related reports. Furthermore, modern software solutions can also forecast inventory demand based on various factors such as seasonality or marketing campaigns.
- Reporting. Warehouse reports are crucial for managers. They help the decision-making staff plan for the future. Furthermore, warehouse reports are a crucial part of accounting as well. That’s why businesses can benefit greatly from investing in modern software that has extensive reporting capabilities.
- Optimized picking, packing, and shipping. A good example of a common warehouse practice is batch picking. It means collecting stock for identical shipments together instead of picking inventory for one order at a time. This reduces the number of trips to the same warehouse location. Another practice businesses can implement is having a very accessible “golden zone”. This refers to a location in the warehouse where all high-demand products are stored.
When it comes to optimizing the shipping process, you can consider hiring a third-party logistics (3PL) provider. It’s especially suitable for small businesses that don’t have the capacity to invest in storage facilities and warehouse inventory management software.
Frequently Asked Questions about Warehouse Inventory Management
New technologies have made warehousing significantly more complicated. However, thanks to these advancements, businesses have the opportunity to increase sales and ship orders even faster. If you’re interested in warehouse inventory management, make sure to read the answers to some commonly asked questions below.
What Software Types Are Used for Warehouse Inventory Management?
There are four major warehouse software types. Not all of them are necessary for the smooth operations of the business. In fact, smaller businesses should focus their efforts on scaling and growing instead of optimizing their warehousing processes. Only after a business has grown to a certain level does it need to incorporate these software systems into its processes. Here are the 4 main types of software used in warehouses.
- ERP software. It collects and manages data from different departments in the business. Read more about the benefits of ERP systems.
- Warehouse management system (WMS). This software helps manage the inventory flow in a warehouse. It manages virtually all activities from receipt of product to shipping and handling.
- Warehouse control system (WCS). It manages various automated technologies such as robots and drones which are typically not managed by the WMS.
- Warehouse execution system (WES). It’s similar to the WCS. The execution system builds up on the control system by adding things like work planning, optimization of resources, and labor management.
What Are the Trends in Warehousing?
Technological advancements have helped businesses from all sectors of the economy improve their products and services and maximize revenue. Here are some of the future trends in the field of warehousing.
- Automation. Through it, companies can reduce labor costs or free up employees for more value-adding activities. Autonomous mobile robots (AMRs) are expected to become even more frequently used.
- Sustainability. Both governments and business owners are investing a lot in sustainable and eco-friendly policies as a way to minimize their ecological footprint.
- Digitalization and data optimization. More businesses strive to adapt to the new challenges by implementing modern warehousing systems.
What Are the Main Types of Inventory?
Although some businesses use more varieties, there are three main types of inventory. Let’s briefly examine them.
- Raw materials. This category includes the various raw materials used by the business to produce goods or offer services.
- Work-in-process inventory. As the name suggests, these are products that do not fall under the raw materials category but they are not yet finished goods ready to be shipped.
- Finished goods. These items can either be sold in physical stores or shipped to customers ordering online.
Can You Outsource Inventory Management?
Yes. In fact, various professional companies offer third-party logistics services. These businesses specialize in warehousing and order fulfillment. Most big brands have their own storage facilities and fulfill orders on their own. However, small eCommerce businesses that sell products primarily via social media ads and content outsource not only warehousing but also shipments. Dropshipping is a good example of a business model with outsourced logistics.