Managing your warehouse inventory can have significant effects on general inventory control and business performance. So it is necessary to apply an effective warehouse inventory management process to set up and manage a warehouse. Here below are some recommended steps and a warehouse setup checklist:
1. Warehouse layout
A good warehouse layout should ensure a clear and smooth flow of goods by dividing them into 5 separate areas:
- Receiving: Incoming goods should be downloaded immediately into the receiving area to avoid congestion. This receiving area has to be separated from fulfillment and shipping. With this setup, the path for incoming and outcoming trucks is clear and you won’t have to worry about new inventory getting in the way of loading, either. Moreover, goods should not stay in the receiving area for long.
- Storage: Items that are ordered frequently should have a specific amount set aside in a smaller storage location for easy access which is normally called forward picking area. To decrease travel time and maintain the flow of goods through the warehouse, this section should be located as close as feasible to your packing stations. Slower-moving items, on the other hand, can be stored in a bigger bulk storage area and later should be moved to the forward picking area frequently basing on needed stock level
- Picking: The situation where people getting in each other’s way normally happens in an unorganized warehouse which can cause cross-traffic and delay of the workflow. You have to create a specific path from the receiving dock to storage, down-forward picking area, packaging, and eventually shipping to accomplish this.
- Packing and shipping: The packing area should be arranged in such a way that goods enter one end and completed packages leave from the other end. From pick to pack to ship, and then out the door, there should be no gaps. Separate spaces should be set aside for “shipping” and “ship staging”. A package should be kept aside once it contains the correct labels and shipping information to have it ready for pickup at any moment as well as keep products flowing by unblocking the ship station.
- Free area: The warehouse should have a space without any specifically assigned functions where people or machines can move freely. As businesses grow, this free space can be converted to other workstations to remove congestion.
In addition, to maintain effective operation and inventory control, a warehouse’s inventory structure must be revised at least once a year. Over a year, your company will introduce new product lines and phase out others. When this happens, it’s natural to stack additional products wherever available space allows. During a review of the warehouse’s layout, you can rearrange merchandise so that everything is in a handy location.
2. Label boxes and create a map
Your inventory control numbers should be written on the boxes. You could also want to take digital photos of each thing and post them where the item is kept. Finally, make a map of the warehouse that shows where each category of merchandise is located.
3. Using employee tracking and personal identification
This is a method of monitoring employees to ensure that only those who are permitted on the floor are present. Having too many employees in one location causes congestion. They get in each other’s way, slowing down those who are attempting to work. As a result, both productivity and efficiency suffer.
4. Creating reorder points
Reorder points are considered a good warehouse inventory tracking tool. It helps business owners define the minimum amount of product that the warehouse can hold in its inventory at any one time. If the stock quantity falls below reorder points, the warehouse may not have adequate stock to fulfill orders so the owners need to work with suppliers to get more stock.
5. Applying FIFO technique
FIFO means first-in, first-out. The first stock that arrived at the warehouse will first go out of the warehouse. This method is growingly applied by almost all businesses since it is suitable for all product types.
6. Using warehouse inventory management system or software
Applying a suitable inventory management system is the best way that can help business owners manage warehouse stock efficiently. This system is normally a cloud-based software that provides you with real-time data updates on arriving and outgoing inventory. With this information, you can make informed decisions. Besides, warehouse inventory management systems can be a part of a bigger system called the Enterprise Resource Planning system which is very popular with businesses nowadays.
7. Perform physical count of warehouse inventory
Physical counts of inventory in the warehouse should be performed monthly, quarterly, or annually to reduce the discrepancies between real stock and stock data from the system. In addition, this is also a chance for the employees to go through all warehouse sections, label, and set aside all damaged and outdated stock.