I used to be afraid of 2 words “inventory”. When working part-time cashier in high school, “inventory” has only one meaning: to count a lot.
Businesses often have to inventory every year by going to inventory every product in the warehouse and make sure it matches the data on the books. And for large companies, it needs everyone’s involvement.
I understand the importance of warehouse management. The main warehouse is where the capital is buried. You pay to buy goods back into inventory, and you receive money when you sell it.
Keeping goods in stock equivalent to a lot of cash is in one place. That is why good warehouse management is important for growing the company. Like cash flow, it can make your business stand out or bloom.
So What is Warehouse Management?
Warehouse management is the activity of regularly monitoring the goods stored in the warehouse and tracking their weight, size, quantity, and location.
The goal of warehouse management is to minimize inventory costs by helping business owners know when they need to import goods or buy raw materials.
Why Is Warehouse Management Important?
Effective warehouse management is important to ensure businesses have enough goods to meet customer needs.
If inventory management is not handled properly, it can result in business loss or loss of potential transactions, or a waste of money due to excessive inventory.
The Warehouse Management System Also Helps To Limit Mistakes
If you sell products with expiration dates like food or makeup, chances are they will spoil if not sold out. Good warehouse management will help you avoid these unnecessary failures.
Avoid Hard Stock (Deadstock)
Inventory that is hard to sell is unsold, but may not be due to expiration – it only sells seasonally, in style, or becomes unsuitable. With better inventory management, you can limit inventory that is difficult to sell.
Save on Storage Costs
Inventory is a variable of cost, meaning it varies based on the number of products you stock. When you stock a lot of products at a time or encounter a product that’s difficult to sell, your inventory costs will rise. Avoiding this will save you money.
Warehouse Management Helps Improve Cash Flow
Good warehouse management is not only cost-effective, but it also helps improve good flow in many ways.
Remember, inventory is a product that you have to pay in cash (checks and cryptocurrencies) and you will sell it for money, but when it is still in storage it is not money.
Try paying the warehouse and ground for the landlord with a phone case or pet food.
That is why inventory is so important to cash flow management. Inventory directly affects sales (by specifying how much you sell) and costs (by specifying what you have to buy), and how these factors impact your cash flow. have in hand.
In short, good warehouse management helps manage cash flow better.
When you have an efficient warehouse system, you will know exactly how many products you have left and based on your sales you can know when you are out of stock and make sure to enter the goods in time.
This not only helps you not lose sales (important for cash flow) but also helps you plan to buy more to ensure you have enough extra cash.
Money spent on inventories is money not spent on growth. Manage it wisely.
- 1 Basic Warehouse Management Techniques
- 1.1 1. Set The Minimum Inventory Level
- 1.2 2. First-In-First-Out (FIFO)
- 1.3 3. Relationship Manager
- 1.4 4. Coping Plan
- 1.5 5. Regular Inventory
- 1.6 6. Tangible Warehouse Inventory
- 1.7 7. Partial Inventory (Spot Check)
- 1.8 8. Earn Cycle Counts
- 1.9 9. Make Priority Order ABC
- 1.10 10. Accurate Forecasts
- 1.11 11. Consider Dropshipping
- 1.12 12. Take Control of Inventory
Basic Warehouse Management Techniques
Warehouse management is a highly flexible part of doing business. The optimal system will vary by company.
Every business should try to minimize human error from warehouse management as much as possible, thinking that it should take advantage of the strengths of warehouse management software.
Whichever system you use, the following eight techniques will help you improve your inventory management – and your cash flow.
1. Set The Minimum Inventory Level
Make inventory management easier by setting minimum stock levels for each product. Minimum inventory is the lowest metric of a product you must have at all times.
When your inventory is below this level, you know it’s time to place an order.
Usually, you will have to set a sufficient number to be slightly higher than the minimum. Minimum stock will vary by product and is usually based on how well the product is selling and how long it takes to import.
Although the minimum inventory requires some research and prior decision making, availability will help to streamline the ordering process.
Not only helps you make decisions faster, but it also helps employees make decisions (with your prior permission).
Remember that conditions change over time. Check inventory at least several times a year to make sure they are still reasonable. If something changes in the meantime, don’t worry, just adjust the minimum inventory level up or down normally.
2. First-In-First-Out (FIFO)
First in first out is an important principle in warehouse management. This means that the oldest inventory (first in) will be sold first (first out), not new in stock. This is especially important for products that are easily perishable because they have been sold out.
Applies to non-damaged products as well. If the packages are always behind, they should be sold first
In addition, packaging design or functionality often changes gradually. So there is no need for too many mounds of beef and eventually cannot sell.
To manage the FIFO system, you need a well-organized warehouse. That means adding new products from the back or leaving old ones out.
If you work with a warehouse or forwarding company, they will always do this, but it’s best to call in to confirm with them.
3. Relationship Manager
Part of successful warehouse management is adapting quickly.
Whether you need to return slow-selling items to import new products, or import additional best-selling products, handle production problems or temporarily expand storage space, it is important to have a relationship. Closely with the supplier.
This way they will be happy to work with you.
Specifically, there is a long-term relationship with a supplier of products. Minimum order quantity is also cute draft. Don’t be afraid to set a minimum level so that you don’t have to stock up too much.
A good relationship is not just about being friendly. But also the clear, proactive communication between the two sides.
Let suppliers know when you expect to increase sales so they can adjust production. They will also tell you when the product is behind schedule so you can stop advertising or find a temporary replacement.
4. Coping Plan
Many incidents can arise regarding warehouse management. These types of problems can undermine unprepared businesses. Such as:
- Sales rise too quickly and you sell out quickly
- You have a serious cash shortage and cannot afford to pay for the products you need to import
- The warehouse does not have enough room to meet the peak sales season
- Wrong inventory calculation means you have fewer products than you think
- Slow-selling products take up a lot of space in the warehouse
- Manufacturers out of stock while you have orders to deliver
- Manufacturers stop production without notice
It is not a question of whether or not it arises, but when. Determine where the risk lies and prepare a coping plan. How would you react?
What steps did you solve the problem with? How does this impact other parts of the business? Remember, close relationships will be helpful here.
5. Regular Inventory
Regular inventory is important. In many cases, people depend on software or inventory reports, just to know how many products you are stocking.
However, it is important that the data match the reality. There are several methods to help with this.
6. Tangible Warehouse Inventory
Is to the inventory of goods in stock for a while. Many businesses do this at the end because it involves accounting and tax preparation.
Although physical inventory usually only works once a year, it can cause a delay in the business.
If you spot a discrepancy, it is difficult to point out where the problem is when you have to look back at the whole year’s book.
7. Partial Inventory (Spot Check)
If you have a physical inventory at the end of each year and often have a problem, or you have a lot of products, you might want to do a partial inventory several times a year. That means you choose a product, tally it, and compare it to paper figures.
This is not a scheduled implementation and is a complement to the physical inventory. Often used when you want to check if there is a problem or not for products where the speed is high.
8. Earn Cycle Counts
Instead of a physical inventory only once in a year, many businesses use cyclic counting. Tally the cycle spread evenly throughout the year. Every day, every week, or month, a product is tested on a rotating schedule.
There are several ways to determine which products will be tallied, but generally, those value-added products will be tallied more often.
9. Make Priority Order ABC
Some products need more attention than others. Using ABC technology helps you to prioritize warehouse management by manipulating products that require a lot of attention from the remaining products.
See your entire list of goods and add each product into one of 3 categories:
- Product value fox with low sales frequency
- Average value product with average selling frequency
- Low-value products with high sales frequency
The items in Section A need a lot of attention because of the significant financial impact but the sales are difficult to predict.
Item C does not need to be taken care of too much because of its smaller financial impact and frequent rotation. The target item falls somewhere between A and C
10. Accurate Forecasts
A big part of good warehouse management comes from accurate demand forecasting. Not making mistakes is very difficult.
There are many variables in it and you don’t know exactly what will happen – but you can get close to that.
Here are a few things to look at when predicting future sales:
- Market trend
- Last year’s sales in the same week
- This year’s growth rate
- Guaranteed sales from the contract and annual fee
- Seasonality and the general economy
- Upcoming advertising program
- Budget spent on advertising
If anything else helps you make a more accurate forecast, bring it in.
11. Consider Dropshipping
Dropshipping is an ideal perspective from a warehouse management perspective.
Instead of stocking it yourself and shipping it – either internally or 3rd party – the manufacturer or wholesaler takes it for you.
Basically, you completely free from warehouse management. You can even use drop shipping to test it before investing in a large order, which can be a great addition to your business.
Many wholesalers and manufacturers offer drop shipping services, but even if the supplier does not, this is still an option.
Do not be afraid to ask. Although the product is usually more expensive to do this way than for large orders, you do not have to worry about the costs associated with keeping, inventory, and delivery.
12. Take Control of Inventory
With an efficient warehouse management system, you can reduce costs, help your business generate profits, analyze and predict future sales, and prepare your business for unexpected problems (like translating). Corona now).
With an appropriate warehouse management system, businesses will have a better chance of profitability and survival.
Read:- Life Without Future
It will take time to control inventory management and avoid wasting money. Choose the warehouse management technique that is right for your business and start deploying today.