Dusty Miller, Fishbowl

Top 5 Solutions to Common Inventory Management Mistakes

March 26, 2013
When trainers visit various warehouses they see trends of what manufacturers are doing well and some of the common mistakes they make. This article documents five of the more common mistakes (and how to fix them) that many warehouses are making.

As an inventory management software company, we send our trainers around the country to help implement our software into warehouses. Not only do our trainers help warehouse managers to understand the software, but they also help overhaul outdated inventory management systems to make them more efficient and save businesses money.

When our trainers visit various warehouses they see trends of what manufacturers are doing well and some of the common mistakes they make. We have noticed and documented five of the more common mistakes (and how to fix them) that many warehouses are making.

1. Use reorder points on inventory items to keep purchasing streamlined and inventory manageable.

Reorder points (otherwise known as min. and max. levels) are the best method for making sure you have the right amount of inventory in your warehouse at all times. If you have too little inventory you could lose out on sales, but if you have too much your cash is tied up in inventory that will not be sold.

One of the biggest problems many companies have is managing their cash. A quick way to solve that from an inventory standpoint is by making sure you have set the appropriate reorder points for your business.

2. Spend money on specialized training for mission-critical software.

Companies with a lot of inventory spend thousands of dollars on software they need in order to manage and track their items as they move all over the world. This software manages millions of dollars’ worth of assets. After spending so much money on software, some companies don’t want to spend a few thousand dollars extra to buy the specialized training they need to implement the software. This is a big mistake because this software won’t do you any good if you don’t spend a little bit more to learn how to use it.

If you try to learn your software on your own you may suffer for months before you learn the basics of how it works.

3. Rearrange the warehouse to set up for picking efficiencies.

Sometimes trainers see mistakes that are so obvious you would think they’d be corrected immediately, but warehouse managers may be too distracted to notice them. We often see 100,000-square-foot warehouses that are organized inefficiently. These companies could save themselves large sums of money by making a few changes to where they place their inventory. The items that you sell the most or send out the most should be right next to the shipping dock. This keeps your employees from having to walk all the way across the warehouse to pick them up every time you are going to send them out.

As companies grow, sometimes they just randomly put things where there is space. This works for a little while, but as you grow you need to think about efficiency because the minutes that your employees spend driving around the forklift cost you money.

4. Take time to get to know your technology so that you can use all the functionality.

Rarely will a company use all of the functionality their software provides. Most of the time there is more that the software can do for you that you haven’t explored. Software companies always hear from their customers about which features they want added to the software when a lot of the time the features are already there. The more features that you use in the software the more effective you can be in managing your inventory. You should either assign someone within the company to learn the software functionality or pay someone to come in and teach it to you.

5. Stop doing yearly physical inventories and move to a more regular, smaller cycle counting and reconciling routine.

Businesses used to shut down for a day to a week each year to go into their warehouse and physically count everything to make sure that it matched the information in their software. This practice is mostly outdated because of the amount of time and money it takes. Doing these checks in smaller, more regular cycles keeps a company from having to shut down. We recommend picking one section each day to check your product levels against the information from your inventory software.

Dusty Miller is the VP of training and support for Fishbowl, a software company that creates inventory management solutions to integrate with QuickBooks.

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