Any warehouse operation that involves warehouse goods should have a finance department. They need to be aware of the escalating warehouse labour expenses and the excessive inventory. In its simplest form, an inventory control system creates efficiency around picking, receiving, putting away, picking, and shipping goods. With purpose-built logistic software, it ensures efficient work flows at the point where labour is involved. Wireless technology and rugged scanning devices are used to scan bar-codes on products and slot locations. This ensures a smooth warehouse operation. Modern warehouse management software offers a new level for product tracking and validation. This is vital in managing inventory.
Inventory control solutions are a great way to manage risk. They can provide labour efficiencies and an audit trail that will provide key information for the CFO during reporting periods. If financial departments want to show inventory assets as a dollar value in the balance sheet, a warehouse management system that uses bar codes can provide this level of detail.
Warehouse inventory must be controlled tightly. Otherwise excess cash could be spent on inventory that isn’t turned, shipped, or sold. These scenarios can help reduce business’ opportunity costs and allow them to spend their money wisely on other investments (not inventory).
Most systems allow you to track expiry dates, reorder points, and give analytics on which stock items are most profitable and move the fastest. It is generally believed that 20% of a warehouse’s inventory accounts for 80% of sales and profit. A warehouse management system can easily calculate this information. A warehouse management system can also provide a snapshot of your inventory that is 99.9% accurate. This means that you can calculate the value of your inventory assets in dollars. Bar-code validation is used continuously to verify the product information as the material handlers pack and pick up products. Warehouse management systems automate the labour-intensive process of counting products. It updates product information in the warehouse from the time it is picked up to the moment it is placed in a bin or slot. Full inventory cycle counts that can take several man-hours and take days to complete are no longer required. This confidence in inventory accuracy eliminates the need for large-scale annual inventory counts. With a softare interface, this data can be used to update the host ERP (SAP or Infor, Sage or Navision) and give visibility across the company. The host system can be updated to improve real-time transaction efficiency and improve business processes that depend on accurate and timely inventory data.
One can only begin to analyze inventory numbers and movements effectively with an inventory control system. Warehouse accuracy rates without automated tracking can drop to as low as 70%. Automation can increase product count accuracy up to 99.8%+
Businesses that are rapidly growing should pay attention to inventory control. They also need to be more careful about cash flow. Overstocking during production surges can cause cash to be drained. Any cash flow analysis should include careful examination of inventory positions. Even a low-cost warehouse management system, even an entry-level one, can help to reduce a company’s risk of excessive inventory and labour costs. It’s a fact that small business owners don’t want any cash left in storage.
An additional benefit could be a decrease in business insurance, if excess inventory is eliminated and events like dead inventory or expired inventories can be managed. The proper location and storage of items in warehouses can help to reduce the likelihood of theft. Staff may reduce theft by knowing that there is a strict process for tracking inventory, and that missing items can be quickly detected.
Summary: Inventory can be exposed to different risk types and carries a cash worth that should be monitored as any other corporate asset. A system for inventory control can help reduce this risk and provide greater certainty to the company.
