There’s a subtle difference between inventory management and inventory control. While opinions vary, most categorize inventory management as more of an external-facing process that involves forecasting, ordering, and making sure you have the right amount of inventory in the right locations.
Inventory control, on the other hand, is all about how you handle that inventory once it’s inside your warehouse. As such, it’s an important warehouse operation that has a huge affect on how quickly and accurately you can respond to customer requests, and the level of service your warehouse is able to provide.
Here are five steps to more effective inventory control:
Track Your Inventory: Barcoding (or RFID tracking) will ensure that you get an accurate count of your entire inventory. By implementing scanning procedures for each movement within the warehouse, you can create real-time visibility into location and inventory levels. Combining this with electronic data interchange, advance shipping notices, and other technology will eliminate mispicks and miscounts, shipping errors, out of stocks, and other negative consequences of inadequate tracking.
Categorize Your Inventory: With accurate data about what is moving in and out of your warehouse, and how often, you can begin ranking the items in the warehouse. In most scenarios, around 80 percent of demand comes from 10 to 20 percent of your SKUs. Dedicate more forecasting and inventory management resources to those fast moving items, while optimizing stocks of slower-moving B and C-level inventory.
Organize Your Inventory: Identifying and categorizing inventory also helps you develop shelving and layout plans for the warehouse so that faster moving items are easier to be found, co-located (if they tend to ship together), kitted, or staged closer to the shipping area. Inventory should be organized in such a way that you improve the efficiency of picking and packing, and reduce the overall cost of fulfillment for each customer order.
Automate Cycle Counting: Cycle counting provides ongoing inventory data so that you have access to accurate inventory more than just once a year. The process can even be automated by using barcode scans to conduct the counts as part of the normal course of business. If there are particular items or areas that tend to create inventory problems or generate errors, count those areas more often.
Reduce Inventory: This is where inventory control and inventory management cross paths. Having too much inventory on hand eats up cash and damage, depreciation, or obsolescence, depending on the type of inventory you are holding. It also makes it harder to keep your warehouse orderly and well organized. Ultimately, old inventory gets marked down and sold.
You’ll need the analytics capability to identify fast and slow moving inventory, and to use sales data to determine just how much inventory you actually need, and whether or not that particular SKU is subject to seasonal swings in demand. It’s tempting to keep extra inventory on hand just in case, but moving to a just-in-time model will free up working capital and reduce the cost of obsolescence.
Improving inventory control will improve inventory management, and your ability to manage the entire supply chain. Well-organized warehouse inventory that can be automatically tracked and easily counted is the foundation of optimized warehouse operations.