Are you spending more than you should on your warehouse expenses? Then, you must have enough control over it and reduce your costs. Do you know that focusing on your inventory can help reduce your warehouse costs? If this makes you wonder, take a look at this article to give you a deeper understanding.
Are you overstocking?
First and foremost, you need to view your inventory not as merchandise alone, but as your money. The cost involved in your inventory is the cost of holding goods in stock thus, a blockage of money. Check if you are stocking too much inventory in your warehouse. Too much inventory means additional storage costs and tied-up cash.
Do you have accurate reports?
Another important task that you must perform is to keep a check on all your data perfectly. Just because your people tell you that the inventory data is accurate, you shouldn’t believe them. Keep taking a count of the inventory at regular intervals yourself. Count the number of products in the warehouse and cross-check it with the records in the computer. If they match, you can rest assured. But, what if they don’t? Instead of simply correcting the numbers, you need to immediately take steps to find out why there is a variation. What is the root cause where you are lacking to keep a perfect record? And, how do you do this? You must first take a physical wall-to-wall inventory. You must cycle count daily with your goal being to attain 98-99% accuracy every day. This is only how you will be able to have an accurate data output from the computer. Cycle counting and sustaining 98-99% accuracy strictly will help eliminate mismatches.
Do you have any hidden costs?
Even if you have a perfect inventory management, it won’t be covering your hidden costs. These hidden costs can also add up to a significant amount of warehouse costs. So, it is very important to manage them too. For example, fashion and retail products have always been seasonal. Instead of over stocking your warehouse with excess inventory because the particular products are in fashion is a waste. Fads are going to change every now and then. Understand the pace of every product and stock accordingly. Ever since eCommerce companies have come up, people are looking for fast deliveries and perfect shipments. This is what you need to practice in your organization too. Slow-moving inventory and damaged or incorrect shipments are going to hurt your relationships with customers and increase the inventory on your floor.
What measures can be taken for better inventory management?
If you are looking out for ways to handle and control all your inventory management, here are a few tips that can prove beneficial even to the largest warehousing company in India
- Overproduction of products means more storage costs and space consumption, resulting in increased warehouse costs. Produce only the amount that is required.
- Make sure your entire inventory has a proper place in the warehouse. Having products of the same category in different places creates unnecessary trouble and increases costs. Try having everything at one clearly marked location.
- Unnecessary movement of products from one place to another without planning programs to optimize transportation adds to warehouse costs. Leverage a partnership with a logistics company to stay strategic and competitive with better transportation management.
- Opt for Vendor Management Inventory, where the supplier provides you with certain parts to put in your warehouse, and you pay for the parts only when you use them, and not for the entire lot brought in.
- Place blanket orders with your suppliers and manage releases. Place the order and negotiate prices, and release the items based on the latest Materials Requirements Planning report.