Inventory Management Solutions for Your Warehouse
In most manufacturing environments, the emphasis gets placed on process design, workstation configuration and finding the right combination of speed, efficiency and quality. Inventory may not seem as important, but any company that hasn’t managed it properly, both on the factory floor and in their warehouse, might beg to differ.
Inventory management is vital in both settings, and selecting the right inventory management system is one of the most important decisions you’ll make in your manufacturing process. In this rundown, we’ll focus on warehouse inventory management systems to see what’s involved and how they differ from inventory management solution on the factory floor.
Why Inventory Management Matters in Your Warehouse
Whether you run a warehouse that operates as an exclusive business or one that supports a manufacturing operation, there are some very specific reasons why you should focus on inventory management:
- Stock levels. In just about every warehouse operations, avoiding shortfalls and overstocks is paramount. That means understanding demand patterns and nailing reordering points. It’s the best way to achieve cost control and prevent operational disruptions, and on a more holistic level it’s important when it comes to controlling your storage space needs.
- Efficiency and planning. Planning and forecasting your inventory effectively can reveal important trends in sales data, and it can help you pinpoint specific inventory items and products that aren’t moving well. This information can be used throughout an entire business to make improvements in every department, and it will improve your efficiency across the board as well.
- Dealing with suppliers. When it comes to working with your suppliers, the relationships can often be simplified—give them accurate information about what you need and when you need it, and the relationship will strengthen. If that information is lacking inaccurate, they may end up taking their business elsewhere, so your inventory management system needs to be an asset when it comes to these relationships.
The Four Different Types of Inventory Management Systems
Periodic Inventory for Business Management
In periodic inventory management, “periodic” refers to the intervals during which you do your inventory counts. These can be monthly, quarterly or annually, although there are industries with product scenarios that demand more frequent counts.
Typically, periodic inventory management relies on physical counts. As such, it’s based on manual record keeping, which means those records will usually give you insights about the movement of parts or items in between specific counts. This kind of inventory management system is generally used for low value or non-critical items, although there are exceptions to this rule in certain industries.
Perpetual Inventory Management and Order Management
Perpetual inventory management is about constantly tracking items in real time. Technology is usually involved—think barcode scanning, inventory software or radio frequency identification, depending on the nature, size and usage of the items being tracked.
Automation is an important part of perpetual inventory management as well. Product levels are automatically updated after each transaction, and the data generated by that tracking is vital to the existence of many businesses.
It can be used to generate reports using inventory management software and make predictions and financial decisions, so having precise control of this kind of inventory management system is critical.
Just in Time (JIT) Inventory Management
This kind of inventory management system relies on the ability to anticipate and match customer demand. Stockpiles are usually small, and stock is only replenished only when it reaches specified levels that trigger a restocking.
This minimizes storage costs and strengthens relationships with suppliers, but the demand forecasting has to be accurate and precise, and the logistics have to be manageable on an ongoing basis.
ABC Analysis for Inventory Management
As a categorization system, ABC inventory management is as simple as it sounds. Inventory items are categorized strictly according to their value—“A” items are high value and have a significant impact on revenue, “B” items have a medium level of value, and “C” items come with a low value.
For companies that can make these distinctions, ABC inventory management can provide an excellent level of inventory control, and it’s systematic enough to be very effective when it comes to meeting customer demand.
Matching Inventory Management Systems with Management Methods: An Industry Example
All four of these inventory management systems can be used in numerous industry scenarios situations, so let’s look at a couple of examples of how this works.
Electronics and Just-in-Time
Let’s start with a company that produces electronics devices. They sell a high volume of product, which means they can generate an equally high volume of data to predict customer demand.
Because of that combination, a JIT inventory management system is ideal. It allows the timely shipment of a small amount of parts exactly when they’re needed, which also helps the electronics company implement lean manufacturing.
The lower inventory levels minimize the required amount of warehouse space that’s necessary, which in turn reduces costs. In addition, continuous improvement goals can be met as customer demands and product trends change, and this lowers lead times and bolsters the relationships with parts suppliers.
Periodic Inventory Management for Retail
Many segments of the retail industry are ideally suited for periodic inventory management. Retail stores often sell a wide range of products at many different price points, which makes physical counts and manual record the best way to keep track of everything.
Stores can determine specific reorder points for different products, and discrepancies between the actual count and recorded sales can be monitored to counteract theft, damage and accounting errors.
Reporting is simpler as well. Reports can be generated periodically as data is tracked over time, and analysis and business decisions can be geared to specific products and product categories. Slow moving items can be eliminated from stock, and reordering procedures can be optimized and adjusted according to the data that’s gathered.
Going Beyond Good: Find Your Perfect Inventory Management System with Worksmart Systems and Quixxsmart
At Worksmart Systems, we offer a high level of expertise for companies seeking both specific and comprehensive manufacturing process solutions. That includes inventory management systems and the products needed to implement it effectively, and you can find these products showcased at our related website, www.quixxsmart.com.
You can find out more about our overall approach at www.worksmartsystems.com. Both websites are designed to help you find the ideal inventory management system, and you can also reach us by phone at (978) 356-5000 to get more information and have your questions answered, or you can call us with Quixxsmart questions at 978-536-9992. We’re also available via email us at sales@worksmartsystems.com.
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