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Inventory management tips for distribution centers and warehouses


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Fulfillment has never been more important for small to midsized businesses (SMBs). Today, consumers demand and expect fast shipping, and a survey from ShipStation showed that 92% of shoppers say that knowing their order will arrive on time is a major factor in deciding whether to make a purchase. In order to meet these demands, distribution centers and warehouses need a reliable way to accurately measure and manage inventory. Failure to do so could lead to under-stocking, which could negatively impact customer experiences, or overstocking, which could hinder efficiency and increase costs. But many SMBs still rely on manual processes to track inventory and reconcile with transaction-level data. The key to improving inventory accuracy is to take a holistic approach and develop systems and processes to prevent and resolve core problems. Here are six ways you can improve the accuracy of inventory management for your distributorship, warehouse or SMB.

1. Use data to identify optimal stock levels

An inventory management system provides lots of data on inventory held for distribution. You should be analyzing this data on a continual basis to identify the average stock levels of individual products in your warehouse. You can then adjust to account for the minimum, maximum, re-order and danger levels relevant to your business needs. This will help you avoid both overstocking and under-stocking, which can lead to wasted costs or delays in filling customer orders.

2. Improve inventory labeling and naming processes

Warehouse employees need to be able to quickly locate and identify inventory held for distribution. But they can’t do that accurately and efficiently if you don’t have proper labeling and inventory naming procedures in place. Make sure you have a systematic process for naming, tagging and labeling inventory as it comes into the warehouse. These processes should be uniform across all warehouses in your organization to improve the accuracy of your multi-location inventory management.

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3. Adopt cycle counting

Cycle counting is a system for counting inventory in which “small subsets of inventory are counted over a long period of time.” This creates less disruption in operations compared to traditional counting where all activity is stopped to count everything at once. This continual assessment of your inventory helps improve accuracy because you can catch problems sooner while making it easier to identify the cause of the inaccuracy. You don’t have to adopt cycle counting for all inventory but can selectively monitor products that are most important to your business because they are higher in value or volume.

4. Change your floor plan

As demand for various products fluctuates, consider changing the physical design of your warehouse space to optimize the flow of goods. Could you streamline picking for your highest selling items? Are you placing heavier, faster-moving items sooner in the pick path, and lighter, slower-moving items further down the line to improve speed and avoid damaging product? Reorganizing your space could allow you to not only improve the speed and efficiency of picking activities, but it could also improve inventory accuracy by creating a more systematic approach to your entire warehouse inventory management.

5. Limit access to inventory controls

The more people involved with managing and measuring inventory levels, the more room you create for inaccuracies. By limiting access to inventory controls and metrics to a select group of people who are properly trained in all inventory management processes, you reduce the likelihood of errors. Often, decisions about who has access are made when the system is put in place. If it’s been a while since you reviewed access permissions, conduct an assessment to see how you could restrict access without negatively impacting daily operations.

6. Leverage better technology

Upgrading your inventory management software can instantly improve the accuracy of your operation by giving you new tools to track stock and sync inventory data with your financial system. For a complete solution that was designed specifically to handle the challenges of SMBs, distributorships and warehouses, consider Gravity Software® (Gravity). This unique accounting solution also provides true multi-location inventory capabilities to track, control and manage your products from multiple warehouses, offices and/or stores. Each location is able to control its own pricing, reordering and stocking characteristics. With FIFO, LIFO, weighted average, standard and even specific item costing, you get an accurate profit analysis on every sale. Also, because your accounting software and inventory management system are part of the same solution, you can track inventory and sales data simultaneously without having to worry about expensive system integrations or manually migrating data between systems. Inventory and transaction data moves seamlessly through your operation to improve accuracy and efficiency.

If you’re not accurately tracking inventory in your warehouses, it's going to cost you. It’s as simple as that. But by taking these steps and upgrading your technology solutions to improve the accuracy of your inventory management processes, you can reduce costs, achieve greater efficiency and be better positioned to meet the demands of your customers.

Want to improve inventory accuracy at your warehouse or distribution center? Contact Gravity Software® to schedule a demo to see how our unique accounting software and inventory management module can help drive accuracy and efficiency for your business.

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