Inventory optimization software provides the tools for implementing best practices seamlessly through automation and heightened visibility. According to a report from McKinsey & Company, the worldwide cost of inventory distortions, i.e., overstocks, stockouts and shrinkage is $1.1 trillion. Reducing those distortions can lower inventory costs by 10%.
Inventory optimization software puts the “best” in these 5 inventory management practices with intuitive tools that do the work as businesses reap the benefits:
- Maximize warehouse space & maintain well-organized inventory
- Pick, pack, and ship orders strategically
- Barcode inventory
- Track inventory with lot and serial numbers
- Make informed decisions with key performance indicators (KPIs)
Inventory optimization software maximizes warehouse space & keeps inventory organized
A well-defined warehouse layout and logical placement of inventory helps maintain productive workflows from receiving to delivery.
Determining how and where to store inventory with inventory optimization software through:
- Utilizing the best location types based on capacity and preferences, i.e., on racks, pallets, bins, etc.
- Classifying inventory with ABC analysis to identify locations based on cost and demand.
- Dividing the warehouse into multiple zones based on product needs and attributes, i.e., temperature, size, expense, or rate of turnover.
- Dropshipping for direct shipment from vendor warehouses to the customer.
Inventory optimization software helps manage multiple physical and virtual warehouses and locations within warehouses along with support for dropshipping and instant reports to analyze product demand.
Inventory optimization software boosts picking, packing & shipping
As a result of a well-organized warehouse, workers can efficiently pick orders by following clear routes. For further fulfillment optimization, there are many strategies including:
- Just-in-Time (JIT) delivery, which improves cash flow and reduces holding costs and obsolete inventory by purchasing inventory right before it is needed rather than keeping it on hand. JIT delivery makes sense for products that have good vendor lead times.
- Bulk shipments, which reduce shipping costs for high customer demanded products by shipping inventory together, i.e., by palletizing.
Inventory optimization software boosts order fulfillment via capabilities such as:
- Warehouse Layout Editor that intelligently maps the best picking routes.
- Picklists for batch order picking via a single picklist sorted by location.
- Vendor performance analysis of published prices, last cost paid, lead times and last receipt.
- Packaging Manager to pack orders into shipments containing cartons with integration to carriers, i.e., UPS & FedEx.
Inventory optimization software delivers accuracy and speed with barcoding
Labeling product with barcodes enables operations, i.e., inventory counting, receiving, transfers, order entry and picking, to be performed via mobile devices. This eliminates human error and easily handles high volume to maximize capital.
Inventory optimization software generates barcodes to adhere to products, warehouse locations and print on documents; and delivers mobile warehouse management functionality that works with tethered scanners and portable devices.
Inventory optimization software tracks lot numbered & serialized inventory
With the ability to use barcodes, lot or serial number information can be included for enhanced tracking and tracing of product through the supply chain. This is often required for specific industries, i.e., food & beverage to manage recalls but it also ensures quality control, manages warranties and service, and prevents theft.
Regardless of the tracking purpose, inventory optimization software with full lot and serial number control and traceability delivers peace of mind knowing the whereabouts of products from origination to production to fulfillment.
Inventory optimization software enables informed decisions with KPIs
It is essential to have accurate data available to cut costs, improve cashflow and profitability, and fulfill orders on-time. Many KPIs can be used to measure operations overall and to forecast for long-term success. Examples of KPIs for inventory optimization are:
- Inventory turnover rate
- Average days to sell
- Holding costs
- Reorder point
- Service level
Inventory optimization software delivers KPIs in user-friendly formats, i.e., reports and dashboards based on real-time data to be proactive in cases like reordering on-time and ensuring accurate inventory quantities are maintained across all warehouses. Inventory optimization software automates KPI calculations for easy evaluation via reports and information, i.e., inventory overstock analysis, demand planning, minimum stock level analysis, inventory value summary, and more.
Acctivate for QuickBooks® is an inventory optimization software that simplifies best practice implementation initially and as a continued strive to drive improvements and success company-wide.