Tips To Keep Your Company Free From Inventory Disasters

Inventory management is more critical than ever, but that doesn't always mean a major investment in software. Here are some non-software tips to eliminate problems.

Your company’s reputation and revenue rest at least partially on your inventory: If you constantly send the wrong items or have late orders, you will lose customers. It’s imperative to manage inventory properly, but that doesn’t always mean a major investment in software. Try a few of these tips to eliminate inventory problems.

Assign Responsibility for Ordering

When everybody is responsible for a process, nobody assumes the ultimate responsibility. Don’t assume you can handle it yourself. As soon as your volume warrants it, make inventory replenishment someone’s responsibility. You can split the task by product line, type of item, warehouse locations — whatever works for you — as long as there is a specific person assigned to monitor the on-hand balance of every item.

Use a “Two-Bin” System

This may also be called safety stock. When receiving inventory, split it into two quantities. Put one in the bin where you pick inventory for orders. Separate the other quantity by putting it in a different “overstock” location or sealing it into a separate package in your main storeroom. The goal is to never actually use this safety stock inventory. It’s only there to cover you in case of delays in replenishment or unexpected surges in demand.

There are many methods for calculating safety stock to help prevent investing too much in excess inventory. Learn about the various calculations and how to use them here.

Assess Warehouse Layout for Efficiency

Try to organize your warehouse for maximum efficiency. That means storing the most popular items near the front to eliminate wasted steps. Consider grouping complementary items that are often sold together next to each other to simplify picking.

Use Data Collection

You can start using bar codes with a simple attachment to an iPhone or other mobile device. This doesn’t require a huge investment in infrastructure. These add-on devices cost only a few dollars, and eliminate entry errors and improve accuracy. You will never achieve world-class customer service levels until your inventory accuracy is close to perfect — or at least in the 95th to 98th percent range. Invest in tools that help you achieve this easily.

Keep it Simple

You don’t need an elaborate system for re-ordering inventory. Use a simplified “Kanban” card, for example. Keep an order card in the bin. When the bin is empty, order the items and replenish the bin from overstock. Some companies like to keep a sealed packet in the bin. The sealed packet includes the Kanban card and enough inventory to cover demand during the replenishment lead time. Don’t confuse this replenishment inventory with safety stock. They are two different things and serve very different purposes in your quest for better inventory management.

Keep it Clean

Neatness counts in a warehouse. Use uniform bins in the right sizes for your items, and be sure they are clearly labeled. Use labels that can be printed using a laser printer for readability and include bar codes on the labels to improve accuracy. Remove old labels if you use the bin for a different part later.

While these aren’t difficult steps to take, each of them will help improve inventory accuracy. Effective inventory management requires diligence, but it doesn’t require a lot of money. Follow these steps and you will enjoy more accurate inventory records, higher fulfillment rates, better DIFOT rates (delivery in full and on time) and improved customer satisfaction — all without investing in more inventory. Now that’s a solution every business owner can get behind.


Don Amato is Vice-President, Sales of Chicago Tag & Label in Libertyville, IL. Chicago Tag & Label is a manufacturer of customizable form labels, labels and tags. They offer services to a broad range of industries that include retail, industrial, manufacturing, distribution and medical environments.

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