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8 Easy Ways Any Company Can Improve Inventory Management

StrategyDriven Tactical Execution ArticleProper inventory management is one of the keys to keeping your business running smoothly and remaining profitable. Make mistakes here, and you may run out of best sellers, buy products you don’t need, and waste resources you can’t afford to lose. Here are eight essential inventory management tips every business should follow. We’ll focus on universal advice that almost any firm can implement.

Manage Inventory via Software

Don’t rely on spreadsheets to track software. Spreadsheets can be deleted. Cell values could be deleted or overwritten. Formulas may be altered, scrambling values elsewhere in the spreadsheet.

One of the best ways to manage inventory is by using software designed for this task instead. The ideal case is switching to inventory management software that integrates with your accounting system. Then the inventory is automatically updated as you sell items or buy more. That is why a QuickBooks Inventory management tool is invaluable – it is already tied to software you already use. QuickBooks lacks serial numbers, scanning barcodes and shipping. An inventory management tool can handle all of this. There are several tools that will allow you adjust stock levels in inventory checks and automatically remove inventory from stock when you receive orders so you don’t accidentally sell more than you actually have on hand. They will also help you track items reserved for sales orders and you can track inventory status, such as when you’re waiting for products to arrive so you can fill outstanding orders.

Have Clear Product Names

If you want to avoid problems with customer orders and internal inventory management, have a clear product naming system. You could use manufacturer part numbers, though this may be confusing if different manufacturers use similar part numbers for very different products. The ideal situation is creating internal part numbers that make it very obvious what someone is picking up. Instead of CRAY008 and CRAY016 for crayons in boxes of 8 and 18, label them “crayons, set of 8” and “crayons, set of 16”.

Set Minimum Stock Levels

Nearly every inventory management system allows you to set minimum stock levels, and most have reorder points. This ensures that you won’t run out of items. The best inventory management systems allow you to calculate reorder points based on historical data so you can order items based on how quickly you actually consume the product. You can still set low inventory alerts to ensure that you never run out.

Implement FIFO

FIFO is first in, first out inventory management. This is one of the oldest inventory management techniques, and it remains one of the most popular. A major reason of this is that it minimizes spoilage and the associated waste, since you’re selling the oldest items first. This isn’t limited to perishable goods that can spoil; it is applicable to other products, as well. Move your oldest products first so that they don’t become obsolete due to changes in packaging or industry standards. It simply requires setting up inventory so that the oldest items are on the front of the shelf and picked by employees, though you’ll want to train people to check expiration dates. You’ll also have to train staff to ensure that the FIFO system is properly maintained, instead of someone hurriedly stocking the front of each shelf with the newest products.

Keep the Warehouse Organized

If the warehouse itself is disorganized, how can you reasonably expect your staff to keep your inventory organized? Don’t let crates of packaged inventory pile up in aisles; have them immediately emptied and the shelves stocked. Keep work surfaces as clean as possible. Make certain that items are clearly labeled.

Also, make sure that you have formal processes for each task. Document how people perform tasks like placing purchase orders, receiving items, fulfilling orders and checking stock levels.

Do Regular Checks

Inventory management systems don’t eliminate the need to do inventory checks. People may make mistakes when checking in deliveries or in their data entry. Theft, spoilage and property damage may erode your inventory, too.

There are two main ways to check inventory. One way is with a complete physical inventory – checking all inventories – usually done at the end of the month. The other way is with cycle counting, counting small sections of the inventory on a particular day. You can mix and match with these tactics, such as doing surface area cycle counts for particular aisles in the warehouse each day but checking large physical item inventory every quarter or year.

Prioritize with an ABC System

An ABC system allows you to prioritize inventory checks and product maintenance. The “A” items are high value items that have low turnover. “B” items have some value and sell at a steady rate. “C” items have low value but sell in large numbers. “A” items should be checked for spoilage, maintenance and theft regularly, since you have so much money tied up in them. “B” items are a lower priority, since they don’t cost you as much but do move steadily. “C” items require little attention since they move quickly and cost very little, though you’ll want to make sure you have enough in stock.

Only Order with Purchase Orders

Only place orders via purchase orders. Don’t let employees place orders over the phone with your vendors. They may order items you don’t really need or can’t afford to buy at this point. By requiring people to order via a purchase order, it forces every purchase to be checked against inventory levels and the budget. No one orders an item that’s already on its way from the supplier. It creates a paper trail so that no one is surprised by a delivery of widgets. There’s no confusion regarding the payment terms or rush to figure out how to pay for something that just hit the dock. It ensures that inventory knows when to expect delivery and gives management a chance to negotiate purchase prices.

You cannot afford for the gap between accurate inventory numbers and bookkeeping to grow. This knowledge gap prevents your firm from being able to plan for the future or know the true state of operations.

A Must-Read Guide for Starting a Warehousing Business

StrategyDriven Entrepreneurship ArticleIt’s common for both small businesses and independent contractors to have limited storage space for their products. To accommodate the growth of their business, they might turn to large warehouse facilities to house their ranges.

A warehousing business could potentially be a lucrative venture, but you’ll need to identify the products you want to store and the right building size for your needs. Below are some top tips for starting a warehousing business.

Understand Your Startup Requirements

Never enter a new business without doing your homework. Not only will you need to establish your startup costs, which can range from $10,000 to $50,000, but you must review the competition in your area. Review local business listings to see how many industry rivals you need to compete with. You should also visit their website to determine the various services they provide, target demographic, and price ranges.

Call Other Warehousing Businesses

Your local competitors will more than likely not be willing to share the key to success, or the common pitfalls they face. However, companies far away from your destination might be more likely to offer advice and tips on how to make your first venture work, so give them a call.

The Correct Licenses & Equipment

If you are confident you have what it takes to make a warehousing business work, you’ll need to register for a DBA (doing business as), which you can obtain from either your local county or city administration office. The good news is, this will only cost between $25 and $50.

Most of your money will be spent on your warehousing equipment, such as shelving units, crates, forklifts, and storage units (such as freezers and refrigerators). It’s also vital to invest in highly efficient LED lighting. A truck might also be an essential investment for your company’s distribution services, as it will enable you to deliver products locally to clients.

Purchase Inventory Software

Effective organization is an important element for a successful warehousing business. If you want to accurately keep track of every item in your warehouse, you must buy inventory software. This will monitor the entrance, product location, and exit of each item, so you’ll never misplace an item or cause a delivery delay.

Hire Your First Employees

Of course, you cannot run a warehousing business without employees. Improve efficiency and professionalism by hiring candidates who have extensive experience in logistics, if you plan to provide distribution services to your clients. They will be responsible for organizing shipping and tracking the products to a final destination point.

You must also hire a person to check items in as they arrive, set-up the product locations in the warehouse, and label sections from A to Z. Not forgetting you’ll need to hire staff to both lift and operate forklifts for picking.

Find Customers

To generate leads for your business, you should sign up to the International Warehouse Logistics Association. The local listing could help you to secure nearby clients to start storing your first products. You should also call local companies to promote your services and explain the key benefits of working with your business.

Running a Smooth Operation: Tips for a More Organized Warehouse

StrategyDriven Tactical Execution Article
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Warehouses play a vital role in the supply chain and can, therefore, have a dramatic impact on your business’ bottom line. If your warehouse is an efficient, organized and well-oiled machine, your business will run more smoothly, and you’ll be able to make more money than it is a bit of a disorganized shambles. Unfortunately, it can be a lot harder to maintain a smooth running warehouse than you might think. If you’re struggling with this, check out these simple tips for a more organized warehouse:

Keep it Clean

Perhaps, the most important thing you can do to ensure that your warehouse is better organized and that it runs more smoothly, is to ensure that it is always clean. Ideally, you should do this by hiring a cleaner to come in for an hour or two each day to clear the clutter and mess and ensure that your employees have an easier time of locating items and moving around the space, unobstructed.

Install Warehouse Aisle Markers

Warehouse aisle marker signs are the first line in warehouse identification. Use them to mark where each of your products is located and it will speedup the process of your employees finding what they are looking for fast, and make the process of unloading simpler, faster and more efficient too.

Cut Down on Clutter

Reducing the amount of unnecessary clutter you have in your warehouse day to day will do more than almost anything else to help you maintain an organized space. Most warehouses have more bins, panels, inserts, and accessories than they actually need to get the job done, just lying around doing nothing, so remove them into a separate storage area for an instant organizational boost.

Adopt Slender inventory Practices

Maintaining a slender inventory means that you only ever stock exactly what you need to get the job done with no excess. Many businesses worry about doing this in case they get a sudden run on a certain product, but if you properly plan for demand and foster good relationships with your suppliers, this should not be a problem. Of course, having a small amount of safety stock is always sensible, but you should reduce this to the bare minimum if you want to run a really smooth operation.

Make Safety a Priority

A safe warehouse is a more organized warehouse, and of course, you don’t want to do anything that would put your warehouse workers at risk, so when you’re trying to make your space more streamlined, do so by placing containers, shelves, and products in the safest place possible. You should also aim to change the layout so that traffic patterns flow easily and that every inch of space is utilized effectively to make things easier on your staff and increase efficiency, which usually means that things are organized so that every member of staff has to walk the shortest amount of steps to complete their assigned task.

Monitor Inventory Error Rates

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It doesn’t matter how organized and efficient your warehouse is, you are always going to experience errors in picking and packing now and again, and if you want your operation to be as smooth as it can be, monitoring your error rates can give you the insights you need to implement better strategies for error reduction.

Invest in Stackable Shelf Bins

Stackable shelf bins are great for increasing efficiency and improving organization when you’re dealing with small parts because your pickers can use them to quickly store and access parts that are in demand so that they can get to them faster for greater efficiency allover and fewer stressful moments.

Place Like Items Together

This should be a no-brainer, but so many warehouse operatives have like items scattered all over the place. This makes little sense because, having, say, all of your office chairs close by, means that your employees know, at least, the area they should be looking at to find that product, and because customers often buy several like product, which means it’s easier to fulfill an order when like products are stored side by side.

Implement Regular Training

Last, but by no means least, if you want to be as organized and efficient in your warehouse operations as possible, you should implement regular staff training days to ensure not only that  new employees know what they’re doing, but so that regular staff are kept up-to-date with latest practices and refreshed on old ones. You’d be surprised how much this can help.

Maintaining a smooth operation takes time, but if you implement these practices and stay up-to-date on the latest developments, you should have no trouble keeping your warehouse expertly organized.