Optimizing Inventory Control – How to Significantly Reduce Business Costs
Why focus on Optimizing Inventory Control?
Investing in a new WMS needs to be worth the cost and effort required. It’s often not a small undertaking – and sometimes the individual benefits that a newer WMS brings to the table can be lost in the overall noise of such a large project. So, let’s talk about the inventory control side of things for a moment. Just optimising inventory control alone can bring with it huge savings that contribute to a faster Return on Investment for your new system.
The first thing we’ll look at is minimizing holding costs. There’s a cost attached to everything in business, and holding costs are the fees incurred through the act of storing physical products in physical warehouses.
Efficient, optimised inventory control helps keep the holding costs associated with carrying excess inventory to a minimum. By accurately forecasting demand (by using the data a well-setup WMS can give you), implementing just-in-time inventory practices, and regularly monitoring stock levels, businesses can reduce their exposure to the dangers of overstocking. Doing this kind of forecasting well helps businesses to reduce storage costs, minimise the risk of product obsolescence, and reduce the need for additional warehouse space.
Connected to this is the ability to minimise inventory holding time. A well-configured WMS facilitates efficient inventory control, which reduces the time that inventory spends in storage. Look out for systems that offer varied inventory management techniques like first-in, first-out (FIFO), or, if it works better for your business model last-in, first-out (LIFO). The more configurable the system, the better tailored it can be to your desired results. Using putaway and picking algorithms that are specific to your setup can help prevent inventory from becoming stagnant or obsolete. Doing this can help minimise holding costs, reduce the risk of perishable goods expiring, and help your business to maintain a lean and agile supply chain.
Effective inventory control gives you the power of efficient order fulfillment. By accurately tracking stock levels, businesses can optimize picking, packing, and shipping processes. They can reduce labour and transportation costs by consolidating work. And real-time visibility of inventory helps warehouse staff minimize order errors and improve accuracy, which has the knock on effect of enhancing customer satisfaction.
But it’s not just customers who gain from this – optimised inventory control allows for better collaboration and negotiation with suppliers. By accurately forecasting demand and sharing data on inventory levels, businesses can work closely with suppliers to coordinate production and delivery schedules. This can in turn lead to volume discounts, reduced lead times, and improved supply chain efficiencies that result in cost savings for everyone.
And savings to the bottom line can come from other areas too – inventory optimisation ensures that while you don’t have too much stock, you are carrying sufficient stock levels to meet customer demand. Something that has become exponentially more important in the last few years. By having the right products available at the right time, businesses can reduce lost sales and dissatisfied customers. And maintaining appropriate levels of inventory can also reduce the need for rush orders, emergency sourcing, or expedited shipping – saving on additional costs.
If you’re considering implementing a new WMS, contact us today to see how we can help you get a faster ROI on your investment – email email@example.com
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