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Five critical inventory management practices to apply in the warehouse

September 21, 2021
Andrii Rybakov

The emerging technology advancements force retailers to assess their current business approaches and systems, especially warehouse sophistication. As a key element of the entire supply chain, the main goal of the warehouse is to provide maximum effectiveness, along with productivity optimization, for satisfying the requirements of the omnichannel retailer.

But, according to Gartner, “60% of companies are dissatisfied with the fit between their supply chain planning objectives and supply planning capability.” Today, clients prefer accustomed full-cycle product offerings, which increases their loyalty to retailers that can offer the necessary products at any time. Therefore, companies must refine their warehouses to address the supply chain challenges.

To achieve organic expansion and growth, both retailers and warehouse managers need to assess the current state of the warehouse, uncover its potential challenges, and then build upon its major strengths. At the same time, managers should apply the right practices for providing accurate data, insights, or trends and diagnosing and resolving issues.

So what are the critical inventory management practices to invest in for making the warehouse more efficient? Read in our blog post.

Top-5 inventory management practices

In real life, most out-of-box warehouse management systems cannot manage the complexity and amount of workloads required in a modern retail environment. To reach cost-effectiveness, warehouse managers should constantly evaluate the state of their facilities and seek areas to improve and optimize.

Below we describe five inventory management practices for providing the entire supply chain with the immediate ROI:

1. Use demand prediction for setting default levels

The increasing popularity of digital retailing has led to multiple changes in the customer journey. That also creates a shift to implementing the omnichannel sales approach.  Now, financial transactions happen immediately using numerous channels and generating the data influx. If companies want to leverage this data effectively and stay competitive, they need to reject the typical forecasting methods and start investing in predictive analytics. That will help obtain valuable insights regarding future customer behaviors. 

With an appropriate demand prediction tool, warehouses gain an opportunity to satisfy the requirements of modern omnichannel retail centers better. This tool often involves sales and stock predictions for ensuring the availability of the right product at the right time. After all, it can also create visits and revenue predictions as well as customer visits or basket predictions. 

2. Always expect the unexpected

“Expect the unexpected” should become a must-have philosophy for warehouse managers to apply. Different issues, including unprotected passwords, lateness in shipments, damaged/lost goods, can result in negative consequences that affect the organization’s reputation and cut down profit margins. Thus, the warehouse staff should remember that the best method to plan for unexpected events requires expecting the unthinkable. 

Fortunately, the recent technological advancements have contributed to the improvements in the mentioned areas. For example, using blockchain technology for enhancing cybersecurity helps protect data and eliminate human security errors. Besides, companies can apply warehouse robotics and tracking software for delivering and handling delicate items properly.

3. Invest in automation

The inventory management future will depend on automation. That will minimize manual processes and reserve the human interaction required for performing high-skilled and nuanced tasks. For instance, automated storage and retrieval systems (AS/RS) are becoming widely used since warehouses continue to spend on automation for realizing greater cost efficiency. At the same time, warehouses can use robotics and automated guided vehicles (AGV) that will work together for picking and transporting bins and pallets within the facility. 

Such investments are mostly helpful in sectors where companies couple long-term products with different items that need extremely fast turnaround times, like food processing plants. When short shelf-life goods must be handled delicately and quickly, the longer-life ones require less sensitivity. Finally, warehouses can apply robotics for ensuring the appropriate first-in, first-out (FIFO) turnaround times related to various shelf-life stability products.

4. Enhance workplace safety with smart clothing

Warehouse staff may face multiple potential safety risks in their everyday operations. Apart from health issues, including injuries, stress, fatigue, or heart failure, environmental factors remain critical threats. Thanks to personal protection equipment (PPE), diligence, and staff training, warehouses can reduce the frequency and severity of workplace injury. But such precautions cannot fully address the risk of hazardous environments. 

Today, warehouse managers need real-time information for safeguarding their workplaces. That is why modern workwear may contain embedded technologies. Also, companies can implement them as standalone devices for providing continuous monitoring of dangerous environmental conditions. Such smart clothes or devices allow alerting employees and managers about the changes in environmental conditions, or when potentially harmful events may occur, in real-time.

5.Manage SKUs with AI & ML

Nowadays, depending on warehouse management systems (WMS) for managing items is not efficient enough for retailers and warehouse staff. They should incorporate smart systems that include advanced learning algorithms, like artificial intelligence (AI) and machine learning (ML), with Stock Keeping Units (SKUs). Applying these systems provides stockers with an opportunity to search and identify the necessary stock quickly from relevant lists, invoices, or order forms. 

In addition, using AI and ML allows counting stockroom more accurately, which ensures that the omnichannel sales cycle will not disappoint awaiting clients. And as clients desire to obtain more product variations, including additional colors or sizes, the AI and ML technologies will also adjust accordingly for making informed decisions regarding products. Thus, the particular smart systems not only bring a clearer picture of key profit streams but also promote business growth thanks to informed product decisions. 

The bottom line

Ultimately, both retailers and warehouse managers must stop using old, outdated systems that offer little or even no integration. With these systems, different manual processes, like tracking or counting inventory, cannot avoid human errors, which may cost significant money for a business. Even with the existing WMS in place, executives and IT staff need to cooperate with digital retail experts for integrating and optimizing systems within the connected warehouse. 

Over the next few years, warehouses should rely on efficient process-driven technologies for optimizing the software in place and planning for further upgrades. Thus, to uncover the warehouse’s actual state, managers need to start with a thorough analysis of current processes. That will help reveal opportunities for potential growth and various technological advancements. 

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