Inventory errors can increase your costs of doing business in various ways.
Understanding how expensive these errors can be could reveal how investing in a modern inventory control system is a wise use of resources.
Taking an annual inventory is a burdensome process that could require shutting down normal operations or paying overtime to have workers conduct inventory when the warehouse would typically be closed. Either way, an annual inventory is not cost-effective, and the information it produces has limited utility.
An inventory management system uses a cycle counting system. It could be customized to suit the customer’s requirements, but the general principle is that items are counted on a regular basis as part of the workers’ daily tasks. There is no disruption to normal operations or need to have workers put in extra hours. Some items are counted frequently, others less so, but discrepancies become apparent more quickly than they might if the company only took inventory once a year.
An inventory management system allows you to see what is in your warehouse, where, and how long it has been there. Access to this information can benefit your processes and your workforce in countless ways. For example:
The transparency allows the company to see which products move most quickly and observe whether customers tend to purchase certain products together. Armed with this information, the company could adjust the way it prices or advertises specific products to take advantage of consumer preferences.
Inventory management systems reduce a picker or packer’s physical labor by eliminating wasted effort. In turn, workers who suffer less fatigue and frustration are more likely to observe good safety practices.
Similarly, inventory management systems generally assign workers the most efficient route to deliver or pick up inventory. Strategic use of heavy equipment and automated systems can result in a safer workplace.
Labor shortages frequently plague warehousing, and a perception that the work is dangerous is one aspect that makes recruitment difficult. Investing in systems that make the job less hazardous improves morale and employee retention and reduces workers’ compensation costs and outlays for recruitment and training.
The visibility a modern inventory management system offers can alert management quickly when discrepancies appear in the inventory. Managers can follow the data to determine when the item disappeared and even who was in the physical location when it went missing. The data granularity allows managers to take disciplinary action with a high degree of confidence. In addition, the swiftness and simplicity of theft detection act as a deterrent.
Any company seeking greater accuracy and agility in its inventory management processes should consider working with a 3PL provider. A logistics expert could streamline all warehousing, fulfillment, and delivery processes to ensure maximum efficiency and enhanced customer satisfaction.