10 Inventory Control Strategies for Better Warehouse Management
Warehouse inventory control is all about maintaining the right levels of stock so you can meet consumer demand and minimize waste in the warehouse.
In this blog, we’re sharing 10 warehouse inventory control best practices that will help you track and manage stock levels while efficiently controlling the flow of inventory through your warehouse.
What is Warehouse Inventory Control?
Warehouse inventory control is the ongoing process of tracking, managing, and optimizing the flow of products through your warehouse. The goals of warehouse inventory control are to:
- Ensure that your warehouse has enough merchandise on-hand to fulfill incoming orders
- Ensure that inventory in your warehouse is optimally stored and organized to accelerate the order picking process
- Optimize how cash is allocated to order inventory
- Maintain inventory levels in the warehouse
Warehouse inventory control encompasses many activities and processes in the warehouse, including inventory and demand forecasting, establishing safety stock, setting reorder inventory levels, tracking inventory counts with spot-checking and manual counts, warehouse storage optimization, and inventory location tracking.
Warehouse Inventory Control vs. Warehouse Management – What’s the Difference?
The terms “Warehouse Management” and “Warehouse Inventory Control” sound similar and are sometimes used interchangeably, but they aren’t quite the same thing.
We think of warehouse management as encompassing six core operational processes in the warehouse: receiving, putaway, storage, order picking, packing, and shipping. These processes span the entire warehouse operational workflow—from receiving new inventory, to assembling orders and shipping them to customers.
But when it comes to warehouse inventory control, we shift our focus to a more narrow set of processes that deal specifically with managing the supply chain and tracking/controlling inventory levels in the warehouse. Effective warehouse inventory control helps warehouse managers know:
- How much inventory of each SKU is present in the warehouse at a given time
- Where each individual SKU is located in the warehouse
- How much safety stock should be kept on hand for each SKU
- How much demand is likely to exist for each SKU in the next 30, 60, or 90 days
- Which SKUs move the fastest
- How to improve the warehouse storage layout for optimized access to fast-moving SKUs and faster order picking
- When each SKU should be reordered based on current inventory levels and projected demand
Now let’s take a closer look at 10 warehouse inventory control best practices you should know.
10 Warehouse Inventory Control Best Practices You Should Know
1. Adopt Inventory Tracking Software
Thousands of warehouses in the United States are still dependent on paper-based methods of tracking and controlling inventory, but the most efficient warehouses are going paperless by adopting inventory tracking software solutions.
Inventory tracking software provides greater visibility of inventory throughout the supply chain, including products on-hand in your warehouse, products in-transit from suppliers, and products currently on order.
In addition to providing real-time information on stock levels, inventory tracking software helps warehouse managers set the right safety stock levels, reorder inventory at the right times, and automate data entry to save time on manual counts. Inventory tracking software often includes or integrates with accounting and payroll software, giving warehouse managers increased visibility of financial data and better overall control of the business.
2. Automate Inventory Data Entry
An immediate benefit of adopting inventory tracking software is the ability to eliminate paper-based inventory counting and replace it with automated data entry using technologies like barcodes and RFID.
Instead of manually counting inventory as it enters the warehouse, employees can use battery-powered mobile workstations at the receiving dock with barcode scanners or RFID readers to process shipments and automatically update stock counts. Automatic data collection results in more accurate inventory counts and increases productivity while driving down labor costs.
3. Count Physical Inventory with Manual Spot Checks
Even with digital inventory tracking enabled in your warehouse, it’s still important to occasionally run manual inventory counts. Manual counts provide the feedback that warehouse managers need to:
- Measure and assess the accuracy of digital inventory counts vs. floor counts
- Identify any process gaps that might be causing inaccuracies in inventory counts
- Uncover and quantify shrinkage
- Modify digital inventory counts, safety stock requirements, and reorder timing to accurately reflect business needs
Battery-powered mobile workstations equipped with barcode scanners empower warehouse employees to complete manual inventory counts faster and more accurately than with traditional paper-based counting methods.
4. Implement Inventory Location Tracking
Warehouse inventory control isn’t just about knowing what stock you have in the warehouse – it’s also about knowing where to find it. Inventory location tracking lets you build a virtual model of your warehouse storage layout, showing employees exactly where to find every SKU in the storage plan.
Inventory can be tracked using serial numbers or lot /batch numbers, but the best option usually depends on the characteristics of the product. Serial tracking works well for high-value items that sell in low quantities, while lot tracking is well-suited for high-volume SKUs that sell in greater quantities.
Inventory location tracking plays a huge role in optimizing order picking, the mostly cost-intensive part of warehouse operations management. When order pickers can easily find the SKUs they need to fulfill every order, we see big gains in efficiency and productivity as well as reduced labor costs.
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5. Measure SKU Velocity
SKU velocity is a warehouse management metric that describes how frequently a given SKU is picked in the warehouse during a set period of time. Software-based warehouse inventory control makes it easy for warehouse managers to accurately measure the velocity of every SKU in the warehouse – even when sales are happening through multiple different channels.
Measuring SKU velocity gives warehouse managers the information they need to make smart decisions about everything from storage layout optimization to safety stock requirements and reorder timing.
6. Reassess Your Warehouse Storage Layout
The storage layout of a warehouse has a massive impact on its overall operational efficiency, especially when it comes to labor-intensive processes like putaway and order picking.
Inventory tracking software provides the data-driven feedback that warehouse managers need to truly optimize the warehouse storage layout by:
- Designing the warehouse storage area to minimize order picking trip times
- Identifying fast-moving SKUs and storing them near the order picking or packing areas to maximize order-picking efficiency
- Choosing right-sized storage bins that maximize storage space utilization and SKU accessibility
- Optimizing the use of vertical space in the warehouse
- Storing items that are frequently ordered together in close proximity in the warehouse
7. Leverage Sales Data to Forecast Demand
When the customer demand for a given SKU exceeds the supply available in your warehouse, the end result is disappointed customers and lost revenue. This is the most important problem that warehouse inventory control tries to address: ensuring that you have adequate stock levels on-hand to meet demand.
Maintaining the right stock levels means ordering the right SKUs in the right quantities at the right times, and achieving that requires a data-driven approach to forecasting future demand for every SKU.
Software-based inventory tracking can leverage your sales data to measure trends in demand over time and predict future demand for SKUs based on past performance. As a result, warehouse managers can maintain the stock they need to maximize revenue and keep customers happy. Forecasting future demand is one of the most valuable applications of warehouse inventory management.
8. Keep Adequate Safety Stock
Maintaining safety stock is a critical aspect of warehouse inventory management, especially when you’re operating in the post-pandemic era of supply chain disruptions and product shortages.
Every SKU has a Velocity (how fast it sells) and a Manufacturing Lead Time (how long it takes between ordering new stock and receiving it from the supplier). When the remaining stock of a given SKU is expected to sell faster than the manufacturing lead time, more stock must be ordered to avoid running out.
But what happens when manufacturing lead times are unpredictable or subject to influence from external factors?
Safety stock is the extra stock you keep on-hand in case of manufacturing delays, late shipments, or unexpected increases in demand. Safety stock allows you to capitalize on demand and keep your customers happy when your supply chain is moving unexpectedly slowly.
Software-based warehouse inventory control helps warehouse managers determine the right levels of safety stock for each SKU.
9. Choose Just-in-Time (JIT) Inventory Management – Not Just-in-Case (JIC)
JIT and JIC are two different inventory replenishment philosophies with direct implications for how inventory is ordered and how efficiently the warehouse operates.
Just-in-Time inventory management means that your warehouse is running lean. You’re ordering just enough of every SKU to meet demand, keeping just-right stock levels (plus some safety stock), and you’re not wasting any space or tying up cash with excess inventory.
Just-in-Case inventory management is when you order more stock than you immediately need and keep a large amount of extra stock on-hand “just in case”. However, keeping the warehouse full of excess product can create congestion issues and limit your flexibility to adjust the storage layout. JIT is the best option in most cases, especially when you consider the cash flow implications of storing thousands or millions of dollars in excess inventory.
Some warehouse managers gravitate to JIC inventory replenishment, especially when they feel that making larger and less frequent orders is more cost-effective. We also saw warehouses switching to a JIC approach during the COVID-19 pandemic, when supply chain issues were causing delays in product shipments. But now that supply chains are returning to normal, most warehouses are re-embracing JIT inventory management.
10. Optimize Your Returns Process
Returns management, also called reverse logistics, is an often-overlooked area where an effective approach to warehouse inventory control can drive great business results. Some returned products can be restocked into the warehouse, while defective products may need to be sent on to the manufacturer.
The most efficient warehouses today use software-based return management systems to gain insights into why returns are happening, measure the cost of processing returns, and issue refunds to customers.
Optimize Warehouse Inventory Control with the DTG Problem Solver Warehouse Cart
The Problem Solver is a battery-powered mobile workstation, manufactured by DTG to support inventory control and other operational processes in the warehouse environment.
Deploy mobile warehouse carts at your receiving dock to scan new inventory, in your storage areas to support manual spot counts and order-picking, and in your shipping area to track inventory as it leaves your warehouse. DTG’s Problem Solver cart unites people and technology at the point of task, enabling speed and efficiency in every aspect of warehouse inventory control.
Ready to learn more?
Check out this warehouse cart case study to learn how one of the world’s leading 3PL providers used our Problem Solver warehouse carts to accelerate order-picking and eliminate wasted steps in the process.
Or contact us for a free virtual demo and we’ll show you why some of the biggest and busiest warehouses rely on DTG Problem Solver warehouse carts to support their inventory control activities.