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There’s only one thing worse than going to a store to pick up your order, only to be told that it’s not actually in stock: that is, being the person running the store, who now can’t make money off the order and has to process a refund. Inaccurate inventory counts hurt your business, so let’s go over some best practices to help you out.
Key Takeaways:
I’ll go over the basics and provide you with 10 tips on how to keep track of inventory in a warehouse so it stays consistent and accurate.
Inventory tracking is the process used to keep an accurate record of all in- and out-going materials, and current stock counts.
The more channels you have going in and out of your warehouse, the more complicated that process becomes. However, that is the reality for many due to the rising popularity of various purchase and selling options.
Now, instead of just tracking what’s heading to a few stores for final sale, you have to track purchases made through ecommerce stores, social media platforms, and online marketplaces. It’s referred to as omnichannel fulfillment, and it can be an inventory manager’s worst nightmare.
Incoming products also factor in and must be counted, sorted, and stored in their designated areas.
An accurate inventory is the cornerstone of a successfully run business because it’s a direct connection to your clients.
No matter what purpose your warehouse is serving, whether as raw material storage or as a distribution center, the ability to track what items are or are not present is a necessity.
Inaccurate records make it difficult to complete the following:
All of these tasks are critical for managing your budget and keeping clients happy. In the next sections, I’ll go over best practices and some helpful tips to make inventory tracking easy and accurate.
The following tips are applicable in most warehouses. As a third party logistics (3PL) warehouse fulfillment system managing multiple warehouses and a wide variety of merchandise, we’ve found these to be the most helpful.
Implementing such strategies has helped us be better at helping you, our customers. Here we go.
The first, and likely the most costly tip, is to invest in proper warehouse management system (WMS) software and hardware.
As your business grows, paper logs and Excel spreadsheets are just not going to be able to give you the accuracy or flexibility to keep up. When a WMS is set up properly, it can track incoming items and update inventory counts in real time, keep count of items sold on multiple channels, and even track the status of returned merchandise.
Overtime, your inventory history becomes a tool itself. It gives you insight into high and low purchase seasons, fastest or slowest selling items, average shelf time, and more. All of it starts with the WMS.
Related: Types of Warehouse Management Systems
Before you ditch paper logs entirely, note they are good for this next tip: conducting regular inventory audits. How frequently you audit depends on the nature of your business. The point is that these should get done on a consistent schedule.
Inventory audits, manual or digital, serve a few purposes:
The goal with your audits should never focus on the hope of catching errors or mistakes, although that is useful, but to ensure that your current tracking methods are still effective. All of it will eventually impact your profitability calculations.
The hardware that helps a WMS system is just as important as the software, and this includes apps working alongside it. The tools vary somewhat, but it’s essential to utilize the ones best matching your system.
Tools include:
Any tool that helps warehouse workers track and organize inventory goes a long way towards ensuring accuracy throughout the entire warehouse and during the eventual fulfillment process.
Related: Inventory Tracking Technology
Organizing and properly labeling each area and section of the warehouse makes it easier to implement a WMS. It also helps when it’s time for manual audits to make sure the process is done as efficiently as possible.
An organized warehouse won’t just help with tracking, it will also keep your incoming and outgoing processes efficient, which is good for business.
Reorder points are preset limits that trigger an order request for fresh stock. Setting these up requires accurate tracking to begin with, but it also helps to maintain adequate levels of stock.
Part of inventory tracking is knowing when you have too few of an item in stock. Some warehouses set up automatic reorders, others simply have their WMS send out alerts.
Getting these reorder systems set up does take some trial and error, mostly in the form of analyzing your historical use. Once again, something that is much easier when there is a quality WMS in place.
Using a specific fulfillment method is another way to better track your outgoing inventory specifically. We recommend the FIFO method, which stands for First-In, First-Out.
This is especially useful if you’re managing a warehouse containing goods with expiration dates, whether it’s food, medicine, or even certain cosmetics. Realistically, it can be hard to never deal with expired products. Using FIFO, you should at least reduce the frequency and quantities involved.
There’s no rule that states you have to keep your warehouse organized one way forever. Not that you should change things too frequently, but it’s good to take current trends into account.
For instance, furniture retailers and suppliers may adjust their placement of outdoor patio sets and related items during peak seasons.
It’s a way to keep things efficient, but also a way to make sure that seasonal items don’t get forgotten. How much adjusting is necessary will depend on the products and which section of the supply chain the warehouse is focused on. Retail warehouses may have to adjust more often than those handling raw materials or base components.
Related: What is Demand Planning?
This may seem extreme, but when you need to run a full audit in a busy warehouse, it may be necessary to pause in and outgoing movement.
If you suspect that your WMS isn’t tracking accurately, or frequent stockouts are occurring despite having reorder points in place, a manual count becomes necessary. It’s an all hands situation to get the counts done quickly and accurately, requiring a trained staff. Hopefully, it gives you an accurate count and helps you figure out what went wrong.
While not an inventory tracking method, per se, having your inventory information backed up to a secondary system provides you with essential information should the regular system be compromised.
Between cyberattacks, natural disasters, unexpected power outages, and plain bad luck, losing inventory data can throw your business into chaos. A routine backup of the information that can be accessed outside the system makes it easier to keep businesses going or recover as needed.
Last, but not least, if you want accurate tracking of your warehouse to be the standard, warehouse employees need to be trained up correctly.
All the systems and methods and tips in the fulfillment industry won’t help you if you can’t rely on the people running day-to-day operations. Employees who receive good training are also more confident and more likely to stick with their job, hopefully reducing your turnover rate.
Between implementing the right systems to perfecting long-term ordering, keeping track of your warehouse inventory is actually a full-time job. You need someone you can trust to run a warehouse, and as a business owner, you’ve got too many other responsibilities to handle.
Working with Fulfillment and Distribution is the perfect solution. Our 3PL warehouses already have state-of-the-art WMSs in place and a dedicated group of warehouse employees. You benefit from the many services we offer, including
Call us today at (866) 989-3082 or complete an online service request form. Our team can work with you to set up the services you need so you can get back to running your business.
