Are You Over-Stocking The Warehouse? Why You May Want To Investigate

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One important factor in developing long-term business relationships is reliability.  It’s natural to want to be able to pick, pack, and ship the inventory that your customers order in the right quantities and on time.  However, unnecessarily overstocking the warehouse in order to ensure customer deliveries can present a new set of problems.  Consider these three ways to avoid inventory overload.

  1. Invest in your business intelligence instead of inventory: Instead of overstocking the warehouse, invest in your business technology. A robust enterprise resource planning (ERP) solution with a powerful inventory management solution can provide greater control and insight over inventory. You can use this control to get closer to ideal inventory levels and build-in the lead time needed to replenish your inventory without risking stock-outs.
  2. Know what’s trending and what’s not: Blindly filling up a warehouse with inventory is a risk. Customers can be fickle and you could just as easily run out of a hot item as you can get stuck with obsolete inventory.  A requirements planning or forecasting demand manager solution can help you identify trends in inventory and make strategic stocking decisions. Create forecasting scenarios and determine what to stock up on and in defined quantities that are to your and your customer’s financial advantage.
  3. Don’t be so focused on inventory that you forget about the customer: Your customers have a need for your inventory and they choose to work with you for a reason – pricing, shipping options, quality of products, or other value-added services. Strengthen your customer relationships by using your technology to predict when they may need replenishment orders, and stock your warehouse in accordance with those trends. You might also use this data to identify potential cross-sale or up-sale opportunities. Further investigation into your supply chain may identify additional opportunities to save money and improve customer service. For example, you may have a supplier drop-ship directly to a customer instead of deliver to your warehouse for you to repack and ship to the customer.

Maintaining the right inventory, in the right quantities, at the right time can be challenging, especially if you are using manual processes or inadequate technology.  Contact RockySoft for more information about using better business solutions to strategically stock your warehouse instead of needlessly overstocking it.

By Jeffrey Porter with RockySoft, Microsoft Dynamics software provider for demand planning

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