If you are a warehouse manager, you know that efficiency is key to running a smooth supply-chain operation. Of course, money is always an issue. If you are expected to keep costs down, how can you achieve top-notch efficiency?
Key to the efficiency formula is inventory management. According to Inbound Logistics, “inventory levels…drive supply chain savings.”
That should make sense to you. For instance, if you have inventory that is not moving out fast, it could mean it’s not selling well, which means it’s taking up space in your warehouse, rocketing up holding costs for being there. In fact, those costs related to storage, capital, taxes, damage and theft could add up to be 15 to 40 percent higher than the cost of that inventory.
This is not a healthy inventory management situation for your business. So what can you do to better understand inventory levels so that you can reduce costs?
Technology through a robust inventory management system provides the best solution for decreasing supply chain costs. With the tools a system provides, you can build a history, of sorts, about your inventory that can help you create a more cost-effective inventory management strategy for merchandise. For example, you can better track what time of year to stock up on a particular item to avoid costly over-stocking issues.
There are many facets to managing inventory. “Without a clear plan in place for each aspect of inventory handling, you can’t spot inefficiencies or uncover potential cost savings.”
Your warehouse is, of course, a necessary link to the supply-chain efficiency of your business. But, without an inventory management system in place, you’re missing out on technologies that can provide the most basic of opportunities for reducing costs and increasing profitability.