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What Is Warehouse Inventory Management?

Businesses can be bifurcated into two in two ways; firstly, some businesses sell products, and then there are those businesses that sell services. The latter doesn’t have to deal with warehouse inventory management. However, for product-based businesses, warehouse inventory management is essential for business operations.

So what is warehouse inventory management? Product-based businesses have to stock their goods before they can be shipped. These goods are kept in warehouses; the operations and activities of inventory management in the warehouse are called warehouse inventory management.

Warehouse inventory management is an umbrella term for all the day-to-day operations that are carried out in the warehouse. These operations focus on safe and secure inventory storage and ensuring that the stock items are promptly delivered to the final consumer.

We will educate you about the A-Z of warehouse inventory management, its core operations, benefits, and the right tools for this operation. 

Core Operations of Warehouse Inventory Management

As we have informed you earlier, warehouse inventory management involves several operations. All of these operations range in complexity and time consumption. Let us look at some of the core operations of Warehouse Inventory Management.

1.  Space Management

The most critical operation in warehouse inventory management is the space management of the warehouse. The main reason why space management is essential is that if the warehouse’s space is optimized, then more inventory can be kept in it. Therefore, businesses should primarily focus on maximizing the available space.

The warehouse should be designed in such a way that it enables smooth operation and movement of the stock items. As several stock items are kept in the warehouse, you should be able to bifurcate the warehouse into separate zonal sections. Each zonal section should stock different stock items.

If your business has to keep stock of small items, creating ailes and bins would be very helpful for you. This would enable you to keep more of such items. In contrast, if your business has to keep stock of large items, then there won’t be a need for ailes and bins.

Good warehouse space management also means less wastage of money, as the flooring of the warehouses is improved and your business is stocking more items in your warehouse, then there won’t be a need for extra warehouses; this means there won’t be a need for capital spending and hefty investments.

2. Inventory Tracking

Inventory tracking has high significance in warehouse inventory management. This is because inventory tracking brings feasibility to the operations of inventory control. However, inventory tracking can become intimidating as piles of stocks are kept in warehouses. Don’t worry; their management will become easy as you become more aware of these operations.

Historically, inventory was tracked manually, leading to several problems and errors. However, as technological advancement took place, the mentors of inventory tracking enhanced too. In recent times, inventory has been tracked through RFID tags, QR codes, and barcodes.

Inventory tracking is necessary for various other reasons too. As there is a proper inventory tracking system, incidents like inventory theft and misplacement can be easily avoided. 

A big thing on which some businesses miss out is cycle counts. Cycle counting is a process in which businesses check whether their physical inventory matches the number in records. 

Unfortunately, businesses often undermine the significance of cycle counting and perform it relatively less, like once a year. Businesses that want to avoid shrinkage should carry cycle counting regularly.

There is a bifurcation in the inventory tracking methods too. There are two ways in which inventory can be tracked; serial tracking and lot tracking. Your chosen tracking method depends on what kind of stock items your business deals with.

Serial tracking is a sort of inventory tracking in which items are tracked from when it is in raw form until it is shipped out. Adding to this, each item has a unique code, making it traceable to its customer. This tracking is primarily used for items with high worth, but their sales are very low. Serial tracking can be used for ammunition, sophisticated machinery, and others.

Lot tracking is another inventory tracking method. In this method, batches of finished goods are tracked. This inventory tracking method is for goods that are low-worth but are sold off in high quantities.

These items are tracked and traced using lot tracking because these are sold to retailers in bulk. The types of goods for which lot tracking is suitable mainly include food items like serials and clothing items like fabric.

3.  Inventory Costing

Inventory costing is a procedure in which cost is assigned to stock items kept in the warehouse. Inventory costing is necessary for various reasons. Firstly it is a financial requirement that a business has to abide by to add transparency to its financial recordkeeping. Secondly, inventory costing helps you know the cost incurred on each storage item.

There are a few inventory costing methods; choosing one depends on your business model and what product you sell. The most prevalent inventory costing methods are First In, First Out (FIFO), Last-In, Last-Out (LIFO), and Weighted Average Cost (WAC).

The First In First Out (FIFO) is the most prevalent inventory costing method. In this method, the stocks that have their earliest arrival in the warehouse are sold off first. Generally Accepted Accounting Principles (GAAP) and International Financial Reporting Standards (IFRS) recognize this inventory costing method.

Last In First Out (LIFO) is an inventory costing method in which the newest arrivals to the warehouse are shipped earlier. LIFO has a few advantages, but one thing that makes it less commonly used is that it is not aligned with GAAP and is subsequently not recognized by it.

Lastly, we have WAC. In this inventory costing method, the total cost of the stock items is averaged with the stock units. GAAP and IFRS recognize this inventory costing method.

4.  Inventory Reporting

Inventory reporting is an operation where data collection of stock items is done. This operation is too complex and time-consuming to be done manually, and that is why there is a need for warehouse management software. 

Nevertheless, inventory reporting is an essential operation mainly because it helps generate several data-driven insights that lead to data-driven decision-making.

In this operation, businesses collect various information about the product or batches. This information mainly includes the arrival dates and shipped date of each item. 

Inventory reporting is very helpful for businesses as it enables them to calculate inventory turnover days. Calculating inventory turnover days lets a business know how quickly inventory is sold.

Sales history and quantitative data about the product are also recorded in inventory reports. Recording the sales history of any product is vital for several reasons, mainly because a sales record helps a business to know what product has red-hot demand in the market and what product is at the end of its product cycle.

The recordkeeping of the sales history of any stock items helps a business in its future projections for how much growth in sales the product would experience in the upcoming time. These projections enable businesses to make numerous warehouse spacing, layout, and other decisions.

The data would be available on how favorite the product is in the market. The spacing and layout of the warehouse could be created to allow more storage for star products so that the increasing demand could be catered to. 

Along with this, the data would also show the product with declining sales, and for such products, their space storage in the warehouse could be curtailed to compensate for other products.

In warehouse inventory management, inventory reporting plays a significant role. Inventory reporting is assistive in streamlining the warehouse inventory management operations.

5.  Warehouse Labor Management

Warehouse inventory management is a highly automated operation. Still, there is also a need for people who can manage machines like hand trucks, side rollers, order pickers, platform trucks, etc. We can’t also forget about the specialized software that is also used in warehouse inventory management.

Your business needs to have an effective team of warehouse employees and a warehouse manager who could take up the leadership of warehouse employees. The warehouse staff should be hired with focus, and only the right people should be hired for warehouse inventory management.

You should hire a warehouse manager to ensure efficient warehouse operations as a business owner. The warehouse manager you are hiring should have experience in warehouse management operations.

The warehouse manager should be comfortable working with warehouse inventory management software. He also should have a great understanding of inventory records and in-depth knowledge of supply chain management.

Software for Warehouse Inventory Management

Warehouse inventory management can’t be done manually, and if warehouse inventory management is done without automation, human error is inevitable. That’s why we have software solutions for warehouse inventory management that ensure ease in managing every warehouse operation. Let’s have an overview of these software.

1.  Warehouse Management Software

Warehouse management software are applications tailored to be assistive in several warehouse operations. As we told you earlier about all warehouse inventory management operations, all these operations become seamless with warehouse management software. So let’s have a look over its functionalities and how it could be helpful for your business.

Great emphasis is put on optimizing the floor space and space of the warehouse. However, there are two key things your business should be cautious about. The first is that the flooring and space management enhance the storage of inventory so that more stock levels can be kept. The second is that there shouldn’t be extra space which could lead to the problem of excess inventory storage.

The warehouse management systems should have features that help you design the warehouse, allowing you to perfect the organization of inventory items, optimize storage, and reduce space wastage. These software allows you inch-perfect warehouse mapping. Whether you want an L-shaped, I-shaped, or U-shaped layout, these software can help you with everything.

The warehouse management software also helps your business in warehouse inventory control operations. These operations are necessary to ensure inventory visibility and inventory accuracy. As mentioned earlier, the stock items can be easily tracked and traced by using RFIDs, Bar codes, and other electronic tagging.

This software provides you with the finest performance evaluations of the warehouse employees. This software provides you with valuable KPIs (Key Performance Indicators) of how effectively and efficiently they perform.

2. Inventory Management Software

Inventory management software is a subset of warehouse management software. There are various operations in which both could be used, but IMS doesn’t do everything that WMS can do. Let’s have a look at the functionalities of inventory management software.

The inventory management software is used for the adequate placement of the inventory items. This ensures that the items can be tracked quickly once needed. This software helps you to find the most suitable locations in which items can be placed.

The inventory management software also ensures effective order management, called order fulfillment. This process ensures that from the initial steps of raw materials receiving to the delivery of finished products, the workflow remains smooth.

As we have told you earlier that operations like inventory counting are hard to do manually, that’s why we have inventory management software that can enable ease in cycle counting.

The TakeAway

We have provided you with detailed information about warehouse inventory management. We have gone through various operations in warehouse inventory management, and we hope that you get the gist of the topic.

ZarMoney is one of the best software for warehouse inventory management. Our software is the right platform for inventory and warehouse management. The best part about our software is that it is affordable and has numerous functionalities that optimize your business’s warehouse inventory management. Explore ZarMoney today and streamline your warehouse inventory management operations!


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