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Efficient inventory management for warehousing is critically important to a business’s overall success. In fact, accurate inventory management helps avoid costly delays, optimizes stock levels to avoid overstocks or shortages, and improves customer satisfaction by ensuring consistent product availability.

More than a financial burden, excess inventory has a negative effect on productivity. Excess inventory hampers worker movement and reduces operational flexibility. For example, a warehouse at 90% capacity incurs longer search and travel times. Other negative effects of excess inventory in warehouses can include increased obsolescence and risks of damage. In extreme cases, difficulty in locating in-stock products leads to reduced service.

Take stock

Periodic inventory reorganization helps identify and eliminate obsolete products and unnecessary surpluses. By conducting a systematic inventory review, a business can free up valuable space and reduce storage costs. To reduce financial impacts, it may be possible to return some products to your suppliers, resell them at a discount or even donate them.

Strategically reduce inventory by product category

By segmenting inventory into distinct categories, you can analyze each product category’s characteristics and establish specific rotation objectives. Based on criteria such as demand, seasonality and product shelf life, suitable strategies can be developed to maximize turnover. By defining performance objectives specific to each category, you can take actions to achieve objectives.

Optimize logistics lead times to reduce safety stocks

Optimizing logistics lead times is an essential inventory management strategy for reducing safety stocks. Accelerating delivery times and implementing more efficient internal logistics processes can minimize the need to maintain high levels of safety stock. Fluctuations in demand can be anticipated more accurately by establishing close partnerships with reliable suppliers and using technologies such as real-time tracking. Reducing replenishment lead times also allows for quicker stock level readjustments based on changes in demand, which contributes to improving forecast quality and creating a more agile inventory management.

Improve forecasting quality

Improving forecast quality has a significant impact on reducing safety stocks. By refining the accuracy and increasing the frequency of demand forecasts, businesses can better anticipate market fluctuations and adjust their inventory levels accordingly. A more accurate forecast reduces the need to carry excessive safety stocks to cope with uncertainty. Minimizing forecasting errors can avoid costly overstocking while maintaining optimal customer service levels. What’s more, improved forecast quality enables more efficient planning of supplies and replenishments, reducing the risk of unplanned stock-outs.

Densify the inventory

Densifying inventory is a smart strategy for maximizing available warehouse space. By rethinking the layout and optimizing the use of overhead storage, capacity can be increased without requiring physical expansion. The use of technological solutions such as automated storage systems can also contribute to efficient densification, allowing items to be organized more compactly.

It’s also possible to adjust product positioning in the warehouse. Fast-moving products can be placed in easily accessible areas, while slower-moving products can be stored in denser, less accessible areas.

To learn more, contact Progima’s logistics optimization experts:
(514) 337-6662
[email protected]