There certainly are other operational best practices and system capabilities that play into improved inventory management, too numerous to list here. One foundational step, however, is the importance of proper training- -Rahul Mehra, CEO, AWL India Pvt. Ltd.
A growing economy over the last few years and the continued rise of e-commerce have warehouse managers under pressure to get goods out on time to multiple channels.
In the rush to meet the needs of multi-channel commerce, the need hasn’t been so much about reducing inventory, but rather controlling it in such a way that a common stock of inventory can be used to fill orders for multiple channels.
Today’s challenge with inventory is about how to manage it with enough precision to meet the needs of omni-channel fulfillment. Cost efficiency still matters, but it’s really a dual challenge: capture e-commerce opportunities, but fulfill at lowest cost.
Under One Roof
For some companies looking for omni-channel fulfillment efficiencies, the trend has been to move away from distribution centers dedicated to a single channel and instead have distribution centers that fulfill orders for multiple channels.
Ten years ago when e-commerce was still fairly new, one had a lot of channel separation in the way companies set up and run distribution centers, and e-commerce fulfillment, in many cases, was outsourced to a 3PL.
One of the trends we’re seeing now among retailers is to have multi-channel fulfillment centers in which inventory and fulfillment for all channels is under the same roof. The ultimate goal of inventory management is to optimize supply chain practices to minimize costs without jeopardizing service to customers.
Attaining these goals centers around increasing the availability of useful information, as well as other important elements such as obtaining commitment from top management, training, and developing effective cross-functional teams.
Demand planning attention
Better, leaner inventories aren’t purely the result of better use of execution systems. The process starts with the technology to forecast demand, and to properly time that demand.
Typically, companies have modules in Enterprise resource planning (ERP) systems or best-of-breed demand planning applications that assist planners in coming up with accurate forecasts, but the trick is in
disseminating that information to the entire supply chain team.
Leverage common bin locations
For multi-channel fulfillment centers, leveraging common, forward-pick bins for most inventories can bring labor efficiencies and a greater ability to share inventor. There are some stipulations to this approach, starting with enough similarity in order profiles across channels.
For example, if a wholesale order for a SKU typically is going to be so big it would deplete the pick bin, and then it may make sense to pick wholesale orders from an overstock location.
It really depends on the order profiles, but generally, picking from a common bin maximizes the use of labor and minimizes travel within the warehouse.
Another limitation is that even if common pick-bin locations make sense, the picking methods and downstream sortation and packing flow might be different by channel. It may be that retail orders are picked from a common bin to a conveyor and move to a cross belt sortation system, whereas e-commerce picks might be done to a cart that moves directly to a pack/ship station.
“Not all systems are created equal. You want to have the ability to co- mingle inventory in the same bin for multiple channels, but be able to systemically segregate it if you choose.”
Achieving and maintaining accuracy
Most picking should be “system directed and scan confirmed,” and in many cases, so should replenishment of bins or put away processes. Real-time data capture and scan validation have been best practices for inventory accuracy for many years, well before the shift toward omni-
channel took hold; and they are only increasing in importance as new regulations and mandates come into force such as serialized tracking of pharmaceutical and medical devices.
Serialization is going to be another level of detail that is going to have to be controlled through the entire system for more companies and supply chains.
A very simple tip on whether better data capture and validation procedures are called for, is whether staff are still wandering around at times looking for items. For all the technology advances, it’s still common in some companies that workers can’t find inventory on a timely basis.
Visibility into inbound flow
Another well established, but still highly useful technology for inventory management is electronic data interchange functionality that integrates with WMS or ERP systems.
Another best practice on the receiving side is ensuring that goods are properly identified through human readable information on labels as well as bar codes or other automatic identification technologies.
A DC’s receiving and put away procedures should also be based on having an updated inventory flow master plan. These may seem like basic details in the grand scheme of an omni-channel strategy, but they remain essential to inventory accuracy. Much of your success with inventory management is about establishing and then maintaining
Once you get a process started, having the discipline to do it right every time is critical.
Training as foundational
There certainly are other operational best practices and system capabilities that play into improved inventory management, too numerous to list here. One foundational step, however, is the importance of proper training. For example, in the rush to fill orders in a busy DC, management might not build in proper training for floor associates. So, an “extra” inventory management tip might be the most fundamental—remember the importance of training.