Inventory Management Tools
How businesses manage inventory impacts profit, regardless of how many units are sold. The reasons are twofold: the cost of your supply chain affects how much you profit on each unit, and the health of your supply chain determines how well you meet customer demand.
Distribution and supply chain processes of transporting, storing, and organizing inventory contribute to overhead, requiring additional resources as demand grows. And each inefficiency reduces what you profit from each sale. The importance of inventory management techniques comes down to reducing the cost that’s associated with moving products through your supply chain.
When you fail to meet demand where it exists—geographically or via ecommerce sales—you lose business. It’s the difference between a customer choosing to have a product the next day or the next week—the difference between leaving the retail location with a product-in-hand or with their name on a waitlist.
A functional internal supply chain requires implementing inventory management tools across every facet of logistics. Track product as it flows through each phase of distribution, manage inventory data in real time to forecast future orders, and identify and eliminate waste and inefficiencies that contribute to fulfillment delays and costly redundancies. Here, we’ll take a look at some of the tools to help manage inventory.
How do you Manage a Warehouse Inventory?
So what are the main components of managing the inventory of a warehouse, where you will be staging, moving, and shipping inventory from? Overall, inventory management is about creating transparency between all involved parties—and that includes the warehouse most of all.
Track all Products - Familiar to most, SKUs (stock keeping units) help identify types of products with a specific part number. These are especially important when dealing with similar products with slight variations. Barcodes, QR codes, and tracking numbers help navigate specific purchase orders through all processes including receiving, shipping, stocking, and selling.
Incorporate Tracking Software - All of your inventory data should be managed and monitored with a global software that can be used across distribution centers, retail, and manufacturing (when possible). This way you keep a birds-eye-view on each stage of the process and on each order.
Develop Movement History - Not only should you be able to follow a piece of inventory through the system through SKUs, tracking numbers, or barcodes, but you want to track all movement history—which means equipping employees with equipment like RF scanners that you can track every movement. This can help identify potential error spots that could be easily fixed rather than written-off.
What is the Easiest Way to Manage Inventory?
Inventory tracking, accuracy, and accountability reduce waste both in terms of lost goods and costly, unnecessary expenses. Plus, you improve how well you meet customer demand—which is the primary way you grow your business. The easiest way to manage inventory is to develop a comprehensive inventory management system that accounts for every step of the logistics process.
A good inventory management system creates transparency to inform those responsible for maintaining product flow.
Tracking – Know where your product is at any given point in the supply chain. At a moment’s notice, you should be able to provide real-time information to your distribution teams, sales teams, and customers indicating the status of available inventory. This informs purchasing decisions across the board, and it projects transparency to your customers and workforce, so they know what to expect.
Alerts – Inventory management systems should create automations that alert you to stock shortages, upcoming no-stocks, and surplus. Any software you include with your distribution system should include these automatic alerts, so you aren’t left in the lurch.
Accuracy – As product and inventory move through any distribution system, errors, damage, and waste create discrepancies in quantity and availability. Not only do these problems cost the business money, but they can damage your reputation with customers and lead to slow sales growth.
What’s the Best Way to Keep Track of Inventory?
Inventory accountability is extremely important within your supply chain. It is critical that businesses know exactly how much inventory they have on hand for any given product. That includes both retail locations, transport locations, and warehouse or storage locations.
Did you know you can be audited to ensure that these physical locations match what you have in your books in terms of type and quantity of product on hand? With how often you move inventory from location to location to fulfill orders, you increase the chances of inaccuracies, so you need a system in place to keep track of inventory.
This inventory management strategy updates system data with a scheduled, manual count of inventory. For example, a periodic inventory system for a small warehouse would include a quarterly internal audit of all products. This way, you can identify and correct where physical quantities don’t align with recorded quantities.
There is a downside to this technique: you run the risk of operating with incorrect inventory data until your next audit, leading to no stocks and frustrated customers.
Whereas periodic inventory consists of routine inventory checks, perpetual inventory is a check-as-you-go system that relies on inventory assessments at every “touch” during distribution. This means employees are prompted to conduct a systematic check-in each time they interact with a product or a location, verifying quantity, type, and other required information. This requires real-time technology capability often achieved with radiofrequency transmitters (RF scanners) that can update the system database as workers complete daily processes.
Perpetual inventory is more costly and can be more time-intensive than periodic inventory. Still, for larger companies dealing with large quantities of products, this is the only feasible way to maintain accuracy.
What are the Inventory Management Tools?
Manufacturing, receiving, replenishment, quality control, picking, processing, shipping—inventory is handled by a host of different departments and employees on the way out the door to retail and ecommerce destinations. Each stage of the process should be equipped with inventory tools and equipment to ensure accuracy and traceability.
FIFO – First-in-first-out, or FIFO, is an inventory tool that organizes order-or-operation based on a schedule: the first product received is the first product put into location. The first product put into location is the first product picked, etcetera. This maintains a consistent, timely process for every part of the distribution cycle.
Min-Max – This tool addresses both alert and accuracy. This tracks the inventory at a given location and alerts when a location should be restocked (at minimum capacity) or when the location is full (maximum capacity). This keeps your inventory accurate and alerts you when action is required.
RF Scanning – Employees should be equipped with real-time radiofrequency equipment that will allow them to update inventory data when on the floor of the warehouse or distribution center.
Cycle-counting – Whether operating as periodic inventory or perpetual inventory, cycle-counting gives employees and inventory systems the ability to rectify quantities at a given location to ensure accuracy.
Which Software is Recommended for Doing Inventory Management?
Thankfully, gone are the days when inventory had to be recorded by physical ledgers. Technology makes it possible to collect and manage inventory data in real-time or by conducting scheduled audits.
Depending on the size of your inventory and how many SKUs you keep in your system, you’ll need to implement inventory management software that helps manage and maintain correct inventory levels—including min/max, replenishment reports, aging reports, and other tools that keep your stock in check. Not only do these allow you to monitor your inventory from afar, but automated reports will show when to complete manual tasks like reordering, restocking, or physical inventory checks.
Various software is available on the market for inventory management. Fishbowl, DEAR Systems, Flowtrac, Katana—these are a few software companies providing businesses the inventory tools required to manage their stock accurately. While sometimes expensive, software tools like these will more than pay for themselves in the costs you save from dead or lost inventory and labor expenses to fix costly errors.
For small businesses operating with minimal inventory, free inventory management tools are available to track approximately 100-50 orders a month. Once you grow beyond these numbers, you’ll likely want to invest in existing software or work with developers to create an internal inventory management software.
What is the Best Tool for Inventory Management?
Implementing new ways to improve tracking and accuracy put businesses ahead of the pack regarding inventory management tools. And that’s how DuraMark Technologies helps businesses. With their unique labeling and printing technology, you gain further inventory management tools applicable to a number of different industries and processes.
DuraMark Technologies helps companies improve their inventory management by using labeling and printing technology to increase traceability for inventory. DuraMark offers a variety of labels such as SKUs, QR codes, barcodes, or VIN numbers that keep your inventory organized and accurate. Track products throughout the supply chain with durable labeling, and ensure you have eyes on every step of the process.
Avoid preventable inventory errors with simple strategies like effective labeling and tracking. Have questions about DuraMark’s solutions? Contact us today if this sounds like something that could benefit your business and distribution model. We’re glad to demonstrate how DuraMark solutions improve supply chain systems.