It may seem that inventory management is a problem of modern days. Ever since its birth businesses have been dealing with inventories. Technological innovations and modernization in commerce have led to exponential growth in e-commerce. With the growth comes the need to manage multi-warehouse inventory.
Having to juggle inventory and multiple warehouses at once may seem daunting. This article will offer an insight into the world of multi-warehouse inventory management.
Defining multi-warehouse inventory management
It refers to the management of multiple warehouse operations that includes inventory, shipping, staff and goods storage. In the world of e-commerce, the term has a more specific meaning.
For the e-commerce industry, multiple warehouse management indicates shipping and product fulfillment and its underlying logistics. With the help of POSquote.com one can easily know which POS system to choose and businesses can increase sales, manage inventory and quickly ring up sales.
Cloud-based inventory management software allows inventory managers to keep track of inventory items across multiple warehouse locations. It offers convenient, quick and effortless business management with large inventory turnovers. For detailed recommendations on business software, head onto Cllax.
Businesses benefiting from multiple warehouses
E-commerce: Customer satisfaction is of utmost importance in the e-commerce industry. Most businesses falling into this category caters to online shoppers. It requires reliable and fast product delivery to the customer base across the country or globe.
Having multiple warehouses within the proximity of customer bases is important. Keeping a single management system to function multiple warehouses is therefore of utmost importance.
Businesses involving carrying heavy items: many businesses work with heavy products exceeding 10 pounds. Such items lead to a significant increase in shipping and packaging costs. Having multiple warehouses helps to reduce delivery time and distance for the products delivered. Shipping costs can thus be reduced in the process.
Businesses that carry perishable items: At times, businesses may require delivery of food, perishable toiletries, beverages and plants to customers throughout the state or across the country.
In such a scenario, having multiple warehouses would be a good idea. In addition, it reduces the time invested in holding facilities.
Business spreads across a wide geographical territory: in comparison to local customer bases, businesses with national or global customer bases tend to spend more time, effort and money on shipping and handling products. The multiple warehouses help to reduce shipping costs, fasten product delivery and offer higher customer satisfaction.
Benefits of multiple warehouse inventory management
With the Covid-19 outbreak, the warehouse management system in the e-commerce industry is expected to reach from USD 2.4 billion in 2020 to USD 5.1 billion by 2025. Despite the different warehouse locations or sales channels, the management tracks inventory items in real-time across a unified interface.
Accuracy of inventory information:
Effective multi-warehouse management offers constant, reliable and accurate information from all warehouse locations in one system. This eliminates the need to manage and receive information from each house separately.
It also prevents the chances of relating to different warehouses across mismatched inventory systems. Lastly, it prevents overstocking or understocking warehouses, missing deadlines or mismatching inventory levels at all times.
Managing multiple warehouses:
Multiple warehouses are necessary for businesses, large or small. With multi-warehouse management, managers can add or customize warehouse data.
A management solution requires several features and options. Amongst them, the ability to fulfill customer orders based on individual order detail is vital. With the help of effective communication with e-commerce platforms, the warehouse management system can reap most of the benefits.
A smart inventory management solution will offer seamless links between orders placed and inventory parts to fulfill the orders in demand.
Inventory data in real-time
The most valuable asset of multiple warehouse management is to be able to receive accurate data in real-time. If all the warehouses make use of the same system, the inventory management and distribution run evenly.
Managers must ensure the warehouse management system is set up in a way that it can accurately upload and sync all inventory data. It will help to monitor stock amounts and stock in transit, stay updated with every change taking place in any warehouse.
Besides, effective implementation of inventory management helps to access real-time data despite the warehouse locations.
Locating and tracking inventory
With the help of a user-friendly interface, managers can access multiple warehouse information at any time. Around the globe, multi-warehouse management offers better visibility and control over orders, every inventory piece, order status, current stock levels or fulfillment logic. It keeps track of all inventory mutations at different locations in real-time.
Coordinating inventory shipments
With the help of one unified management system, management and control all incoming and outgoing inventory shipments to and from any warehouse location. Streamline all business processes including picking, routing, packing and labeling among others.
Stock transfers from warehouses
Having effective warehouse management keeps inventory from running out of stock. For timely order fulfillment, inventory managers need complete control over stock transfers taking place. Now they can view order volumes and specific stock levels in real-time.
The transparent system helps to keep track and offer insight into the required stock transfers. Every order picked up is immediately updated in the system. This prevents unnecessary delays and discrepancies that may otherwise follow.
Challenges faced in absence of a warehouse management
Insufficient cross-warehouse communication: Different management systems operating different warehouses cause issues with inventory insights, quantity tracking and stock transfers. With warehouses being operated by different teams, a miscommunication or communication gap is bound to occur.
Within the fulfillment process, it is necessary to have points of contact and communication processes. A warehouse can operate efficiently as much as it is set up to do so.
More issues within the warehouse will cause higher chances of delayed product delivery and inaccurate product being sent to customers. This could be an e-commerce merchant’s worst nightmare.
Shortages in the planning process: Planning is an essential part of inventory management. With rush seasons at peak, a lack of planning ahead of time can lead to inventory shortages.
Other issues that can arise are a low rate of investment on inventory returns and selling products that are going out of stock. This leads to poor performance in sales and weak relationships with customers.
Lack of inventory level oversights at all sites: With every order placed, inaccurate and partial oversight of inventory levels leaves traders vulnerable to unexpected delays and fulfillment issues. Incorrect storage of stocks, whether they are identified improperly or misplaced complicates the warehouse management system.
Among others, occasional discrepancies in storage locations and purchase orders can quickly disrupt warehouse operations. Most prominently improper inventory counts tend to be a major issue for inventory managers.
Excessive stocks: Simply put, dead stocks are a business owner’s worst nightmare. It refers to the excess unsold stock of products that lies somewhere in the warehouse for a long time. No trader would want a major share of his/her income to be gone into the warehouses.
Dead stocks are common for seasonal or occasional products like winter shoes or Christmas ornaments. Selling off most of the stock is difficult, which would otherwise cause a huge risk of money loss. To top it off, dead stocks tend to fill up the inventory, reducing the inventory turnover ratio.
Overselling: The concept of overselling damages relationships with potential customers. Several businesses have online and offline stores. When a customer buys a product online that is the same as the last one bought by another customer, offline, it degrades the customer’s shopping experience and brand loyalty.
Ratings of multiple warehouses: In absence of the right tools, it is hard to understand the shipping rates that remain unchanged across most warehouses. An inefficient warehouse management system fails to locate the inventory location and whether it’s located in a single or multiple warehouses. This in turn will reduce the chances of receiving accurate information from the system.
With no multi-warehouse inventory management, customers will be left with inaccurate shipping rates. To boot, customers will experience delivery delays if shipment calculation occurs from one location but is shipped from another.
Inventory management across multiple warehouses
Stock management across multiple warehouses
A multi-warehouse inventory encompasses several warehouses operating at once. Synchronization among the warehouses and stores in real-time is necessary for a complete omnichannel experience.
The solution is to integrate multi-warehouse inventory management software into the online stores, warehouses and offline stores. It must be able to update real-time when a customer purchases through any channel or stock level deduction takes place through the channel in the integrated system.
The system may benefit in the following ways:
- Prohibit the sale of out-of-stock products and make orders on time, preventing inventory shortage.
- The updated stock levels help to prevent overstocking or low stocks in the inventory.
- Have just enough stock or products online or offline, enhancing customer experience.
- Keep supporting the finance and accounting teams. Make sure to inform at all times how much inventory is needed.
Optimizing and managing inventory levels
The game of inventory management is all about finding the right equilibrium. In the world of commerce, it is an important yet complex and time-consuming process. Excess stock of products indicates extra payout for storage while fearing the risk of expiring.
Inventory management allows traders and inventory managers to keep track of demand in sales channels and consequently set up inventory levels. It also reminds them when to re-order or make new inventory purchases.
Proper operations of orders
The order operation tool allows traders to completely digitize the process of purchase orders. It allows retailers to make order purchases, create and manage suppliers while keeping a track of the progress made.
The aim is to keep all information in one system. This will help different teams to be on the same page when tracking order statuses and making further plans.
With the help of POS software, business owners can save and redeem orders on hold, add necessary notes to particular orders. Other advantages include exchange, refund by store credit or gift card, duplicating orders and sending cart to customer’s wishlist.
Ensuring order fulfillment in multiple warehouses
Multiple warehouses create several fulfillment challenges. Several processes are involved to figure out the best fulfillment stores, split the order and figure out stocks with optimal safety. The multiple warehouse tools streamline all fulfillment processes.
- Creating picking and packing slips
- Splitting shipments
- Grouping warehouses
- Routing orders
- Replenishing orders
Reports and analytics for better warehouse management
To get complete knowledge regarding inventory upgrades, make sure to make the most use of the inventory management using the POS system. It is a cost-effective process that keeps the inventory organized and updated.
Coming to the generated sales reports, it offers a detailed report of the weekly, monthly and yearly sales. This helps to grasp the flow of sales and make stock-up decisions based on the inventory data.
Managing inventory management habits to avoid major stockouts
For maintaining multiple warehouse inventory, going by instinct instead of logic simply isn’t the right technique. It surely leads to more warehouse maintenance failure than less.
When the inventory management system is tied to the retail POS system and online sales channel, a digital record of the inventory will be available. This is beneficial to tally the numbers physically with inventory counts. However, a weekly inventory count by being physically present isn’t economical.
This is where cycle counting comes to play. It refers to the process of counting a portion of the inventory. Based on that, calculations regarding the rest of the inventory are made. To be more specific, for counting across multiple warehouses, the ABC analysis cycle is most effective.
With the help of this method, warehouse managers can assign their inventory into the following categories: A items that are most frequently counted, B items that are comparatively counted less and C items that are seldom counted.
The items being ranked are based on different warehouses and their managers in charge. Conducting physical inventory counts across all warehouses. Usually, either of the two approaches is used for cycle counting.
- Pareto Principle-Based ABC Analysis: It is based on the premise that of 80% sales come from 20% of the products sold. This indicates products that add the most to the profits. Despite being the most valued items, they might not be the fastest selling items.
- Usage-Based ABC Analysis: the focus here is on best-selling items that may cause inventory stock inaccuracies despite their decent price tags. Such inaccuracies cause frequent stockouts, leading to neglected revenue opportunities.
Transportation cost management
The addition of a new inventory also leads to added non-customer transportation costs. Such costs can’t easily be recovered through shipping charges. Hence, it’s essential to lower such costs.
Strategically allocating inventory helps in reducing costs related to inter-warehouse transportation. Make use of the usage-based ABC analysis for categorizing the items and determine the necessary storage of items.
At times, many customers tend to re-order items from previous purchases. Accordingly, warehouses can store some of those items together for a limited time to reduce costs and delays. Try selling out popular items in the form of kits. This generates cross-selling opportunities and introduces efficiency in warehouse operations.
Warehouse layout optimization
Having a new warehouse is an opportunity to reconfigure the current warehouse and create a better flow in the new warehouse. Make sure to look out for some of the problems to avoid when redesigning the new warehouse layout.
Check whether the equipment is placed inefficiently and unorderly around the warehouses. Poor placement of products can ruin the flow. Make sure to strategically stack items from best-selling to least selling in order of sale frequency.
A poor warehouse layout creates more people or equipment traffic. With a higher volume of orders in line, it’s time to reduce such inefficiencies.
With multiple warehouse management in hand, e-commerce traders have quite a load to consider. Good multi-warehouse inventory management is therefore necessary for most businesses. Remember the following tips to handle this complicated yet effective system.
- Try managing stocks in real-time across multiple warehouse locations.
- Keep the inventory levels optimized at all times.
- Keep the order operations running smoothly.
- Take care of order fulfillment across multiple warehouses.
- Stay updated with digitized sales and stock reports.
- Keep certain inventory management habits in check.
- Keep the warehouse transportation costs on the lower side.
- Finally, when adding new inventory, optimize the warehouse layout to efficiently run the business.
With these tactics in mind, business owners may be able to manage multiple warehouse inventory properly.