As much as the business world of today has gone digital, there is one common type of business problem that can’t simply be solved by an app or some new technological solution. That business problem is warehouse inventory management and the prevention and control of inventory errors.
Because there are so many physical assets, locations, and people typically involved in an entire logistics process, its not a matter of if there will be errors in the managing of warehouse inventory, but rather when. The best strategy involves anticipating and addressing as many warehouse issues as possible before they arise.
Since we work closely with so many businesses who are continuously striving to streamline their warehouse logistics processes, we wanted to learn more about what really works to prevent and control warehouse inventory errors. So, we reached out to 20 inventory management experts and asked them to answer this question:
“What’s the #1 thing companies can do to reduce warehouse inventory errors?”
We’ve collected and compiled their expert advice into this comprehensive guide to managing, preventing and reducing inventory errors. See what our experts said below:
Bruce Hollinger is the Founder and President at WiSys LLC and was the original founder of Macola Software in 1982. After Exact Software acquired Macola in 2001, Bruce joined Inspired Solutions where he was able to work directly with Macola customers and developed an understanding of the type of solutions they needed. In 2004, Bruce founded WiSys and developed the concept of Real-Time Warehouse Management and ERP for Exact Macola Software.
The #1 way companies can control warehouse inventory errors is by…
Using a Warehouse Management System that integrates with their ERP in real-time.
This ensures that inventory numbers are up to date and accurate across all systems and improves all aspects of the business operations, including reduced inventory, better customer service, fewer data entry errors and better compliance.
Scott Pridham is Business Unit Manager for Fortress Fencing, which operates several fencing supply warehouses in Australia.
The #1 thing companies should keep in mind in order to reduce warehouse inventory errors is…
Location, location, location.
Make sure there is a procedure in place for any time a product is moved from one location to another, and make sure all of your employees know the proper location for each item. By doing this, you’ll prevent inventory loss and reduce the time required for processing and fulfillment. A few ways you can do this – make sure everyone is trained on how to use the inventory system. Have knowledge sharing sessions where employees show each other where to find items in the warehouse, and the proper place to restock them.
Cindy Harder is the Principal of Visual Data Group, a firm that helps companies solve big problems with large data sets. Throughout her 20+ year career, Cindy has had extensive experience in Marketing, Wholesale & Retail Distribution, Supply Chain, and in developing Sales and Operations Planning processes. She is especially familiar with the Consumer Products industry where she has participated in all aspects of the supply chain, from Demand Planning to Warehouse Distribution.
My advice to companies who want to reduce inventory errors is…
Two words: human error.
It is common for individuals on the receiving dock, pickers and packers, and those who ship the products to misplace inventory. Companies should include training as part of the hiring processes to illustrate the importance of proper handling of inventory. Regardless of the job an individual is hired for, they should be trained on all the facets of the warehouse, the tools used to manage the inventory and that inventory errors are their responsibility.
Lee Schwartz is Principal and Founder of the Schwartz Profitability Group and for over 14 years he has been uncorking operational bottlenecks for manufacturing and distribution companies, saving them time and money, and boosting their bottom line. Prior to launching his consulting practice, Lee spent over 20 years in the corporate world, many spent in senior management positions of CEO and President. Lee is also a regular contributor and blogger to Industry Week, MDM (Modern Distribution Management), and The Aerospace and Defense Forum.
There are so many causes for incorrect inventory…input errors, theft, mishandling, lack of procedures, failure to follow processes…however I believe that if I had to choose one cause for inventory errors, it could be described by…
The acronym GIGO. Garbage in. Garbage out.
So many time I’ve worked with clients whose data is simply faulty. Correcting the data corrected the inaccuracies. Other times it’s the way the ERP or WMS or other inventory tracking software platforms are used . . . or not. Steps are missed. Orders aren’t inputted correctly.
Other times it’s the way inventory is handled in the warehouse. Product is moved from one location to another, yet the move wasn’t correctly entered into the system. Where’s the inventory? Where it used to be.
If there’s a close second it’s the lack of procedures or the lack of properly following existing processes. Failure in either case though will tend to lead to the erroneous inventory data.
Gary C. Smith is the President of NAEIR (National Association for the Exchange of Industrial Resources). Since NAEIR’s founding in 1977, it has collected and redistributed over $3 billion worth of new, donated supplies and equipment. Over 7,000 corporations across the United States have donated merchandise to NAEIR to support schools, nonprofits and charitable organizations while at the same time taking advantage of tax deductions and reducing storage costs.
The #1 thing companies should do to manage warehouse errors is…
Get rid of unwanted inventory.
Donate it to a non profit gifts in kind organization to get a tax benefit, clear the warehouse AND help others.
Berrin Sun Leads Product Marketing at Ragic, Inc, a flexible cloud database for businesses that helps customers to create their own databases across all with a quick and intuitive spreadsheet styled UI, and which doesn’t require any coding skills.
Our customers build inventory tracking applications in Ragic, and I can say that the #1 tip to control errors in warehouse inventory is…
Having a good database in the background.
A lot of warehousing and logistics companies confess that they have it all in Excel, which has gotten out of hand since they cannot control the inventory, purchases and sales in one spreadsheet.
Curtis Parnell is a Division Manager for North Shore Steel, a North Shore Supply Company. He manages and oversees all aspects of business operations for the Rack Express division for warehouse storage products. Curtis brings over 25 years of hands-on experience in the material handling and warehousing industry.
The #1 thing companies can do to manage warehouse inventory errors is…
Incorporating a tracking software if not already utilized.
Time spent counting, picking, packing and moving each shipment through the handling system should be tracked as well. A warehouse should be laid out in a manner that reduces time spent bending over, picking up, walking from one station to another, etc. Keep key items waist height and in easy reach.
Alejandro Velez is the Founder of Imagetoner.com, a retailer of toner cartridges for laser printers, green office supplies and eco friendly stationery.
The #1 thing companies can do to reduce warehouse inventory errors and can save your business tons of money is…
Training your warehouse employees to make sure they understand how your company works and what kind of products is the company selling.
Warehouse employees are not robots, given the right information they can make informed decisions and correct mistakes in advance. For example, we sell sets of toner cartridges, many times customers place orders with mixed references that are caught at the warehouse level before they are even shipped saving us hundreds of dollars.
Ross Peteresen is the CEO of Blitsy, a limited time limited quantity sale eCommerce website in the arts and crafts industry. After selling his first startup to Michaels and being brought in-house by the company, Ross became frustrated by the fact that the big dog in the industry sold exactly zero products online, relying on only brick and mortar stores to bring in $4.6 billion last year alone. As an astounding $30 billion market with over 60 million crafters in just the US, Ross knew there was huge untapped potential to capture online shoppers worldwide. In 2011, Ross, his twin brother Ryan, and sister Katy launched Blitsy, which makes it easy to find and receive deals that are delivered to your front door.
The #1 thing companies can do to control warehouse inventory errors is…
Build proprietary technology and arm your warehouse employees with an application that takes into account all of your company’s unique scenarios to reduce inventory errors.
Pauline Malone is VP of Procurement for Klein Steel Service Inc., a metals service center. She has been in procurement/supply chain management for 30+ years and serves as a chair person for the Institute of Supply Management (NY/NJ Forum) and on the board of the National Association of Purchasing Management (Rochester).
To maintain accurate inventory and reduce errors, you must start with…
A location strategy.
Establish a single location for each SKU and limit exceptions. In the steel business, this equates to minimal “drop racks” (i.e., locations that house the remnants from metal that’s been cut/shipped). To ensure accuracy, a focus on cycle counts and adherence to a rigorous cycle count process are critical – along with an inventory control team that does not report to operations.
Barney Cohen is the President of Business 360 Northwest, a business consulting company based in Seattle, Washington, and has more than 40 years of experience in starting and operating businesses. From a single record store, he built one of the largest wholesalers of prerecorded music in the world. Once Valley Media reached $900 million in sales, he decided to take the company public. He now helps small and medium sized businesses manage their growth and take their companies to the next level. He teaches a business tune-up class, facilitates retreats, workshops and advisory boards, and does business consulting.
As the owner and operator of one of the largest wholesale distributors of prerecorded music in the world, having enough of the right inventory was the backbone of my business. We carried hundreds of thousands of titles and sold to more than 10,000 customers. If you use a perpetual inventory system – one that counts inventory in and out and assigns bins for your products – my number one tip is to…
Visually verify each bin that has gone to zero in the computer. If you don’t do this, you run the risk of putting new inventory into an occupied bin.
If you don’t use a perpetual inventory system, you can eliminate errors through good organization and placement. First, make sure there is enough room to store each item. Second, label each bin clearly with both product name and bar code number. And third, store inventory at a height where pickers don’t have to climb or stoop.
William Bauer is the Managing Director of Royce Leather, a New York-based American retailer of fine leather products including wallets, passport cases, briefcases, padholders, and other accessories.
The #1 thing companies can do to reduce warehouse inventory errors, which may seem obvious but it is super effective in our warehouses, is to…
Make signs and labels to direct your personnel through your warehouse and help them find the inventory fast and easy, and, ideally, without having to continually bother supervisors by asking for directions.
Dave Goldstein is Warehouse Manager at eComfort.com, a premier online retailer for heating & cooling equipment and home improvement supplies. Utilizing over 20 years of warehouse experience, including 12 in management, Dave has brought eComfort.com’s warehouse to new heights. Whether it’s picking, receiving, processing returns, or keeping all our stock organized, the company has been able to count on Dave to ensure that their order get fulfilled quickly, accurately, and safely.
The most important thing companies can do to reduce inventory errors is to…
First, make sure what you receive is what you’re being told you received. Checking packing slips and items for errors eliminates a large amount of inventory problems. It is also important to make sure what you’re shipping out matches the orders placed, because missing inventory can creep up on you the next time someone places an order.
Orit Pennington is the Co-owner of TPGTEX Label Solutions, Inc., a labeling software company. Ms. Pennington has been working with companies large and small to help streamline processes in the warehouse for many years, finding simple solutions to big problems.
The number one companies can do to control inventory errors is to…
Tag their assets and their locations correctly.
Most mistakes happened when Items are received in a warehouse but are not placed in the correct bin or shelf location.
These items appear in inventory, but when orders are picked and these items are not in their locations, it creates a chain of problems for the warehouse and the accounting department.
1st the sales order may not ship – since it has a back order, 2nd inventory will be adjusted on the books to reflect the now “missing” inventory and 3rd when the order is finally sent it will be usually rushed (with expedited shipment – which is very costly.)
Most of these mistakes can be prevented if items are tagged with a barcode (of either the SKU or UPC) and a human readable name when they first arrive in the warehouse.
All locations within the warehouse should be clearly marked by aisle, shelf and area of the shelf. When using bins for small item, a bin label with the same information as well as a picture of the item can reduce mistakes.
Gavin Parnell is a Director at Go Supply Chain Consulting Limited, a results focused firm of logistics consultants based in the UK and working internationally. He has close to 20 years’ experience of improving complex supply chains across multiple industry sectors and countries.
The number one thing that companies can do to manage and control their warehouse inventory errors is to…
Book the goods in correctly on receipt.
Problems that present as pick errors, or are discovered during stock counts, are often the result of mistakes at goods in. To prevent these mistakes occurring, ensure that all products and warehouse locations are clearly identified. Barcode labelling on products and locations (if you don’t have racking you can stick laminated labels to the floor) is the best option in most cases. Scan both the product and the location on put-away to prevent errors. Only store one product code per location at any one time. These days a wide range of Warehouse Management Systems (WMS) are available to suit all budgets, so there is no excuse for poor process.
Forrest Burnson is a Market Research Associate at Software Advice, a firm that evaluates and recommends inventory management software, where he covers the construction, inventory management and supply chain markets. Prior to joining Software Advice, he was a writer and researcher for Global Water Intelligence. He has also written for a number of other outlets, including the Texas Tribune, the Austin Business Journal, Market News International and the Austin American-Statesman.
The best thing a company can do to eliminate errors in their warehouse is…
Invest in a piece of inventory management software, which integrates with barcoding hardware and point-of-sale software. It keeps track of what you have, how much of it you have, where it is in the warehouse or store, and when it is sold.
The primary benefit is that this saves business owners a considerable amount of time from not having to manually enter in this information every time an item enters or leaves the warehouse. Furthermore, inventory management software can also help maintain the right inventory levels by using data from historical sales to project future sales.
If a business owner is doing regular cycle counts of inventory with their software, and making note of discrepancies, patterns can start to emerge if there is a problem, which can lead to a more thorough investigation. Leveraging a system like this doesn’t just reduce errors, it also acts a deterrent to theft, too – if employees know that the owner or manager does regular cycle counts and audits, they might be less likely to steal. This, in turn, will help companies stay profitable, as employee theft accounts for 44% of all inventory shrinkage.
Using inventory management software alone will not prevent theft, but it will give a business owner better insight and intelligence into their business’s daily operations, and it can point them in the right direction if something is going wrong. You have to take a holistic approach to preventing employee theft: At the end of the day, it comes down to hiring the right people, keeping track of everything, being organized, using technological deterrents like magnetic sensors and security cameras when necessary, and leveraging the power of software and other technologies to make business processes easier and less time consuming.
Bryan Conklin is the Founder & CEO of Zylo, a design firm that specializes in app creation and consulting across desktop and mobile platforms.
My advice to companies who want to reduce warehouse inventory errors is to…
Sign up for FBA (Fulfillment by Amazon) and let Amazon deal with it.
Brandon Levey is the creator of Stitch Labs, a.k.a the ThinkerUpper, and writer of the original code that makes the product operate. He has a diverse background ranging from microsystems and nuclear security to iPhone accessories and sustainable apparel.
The key to reducing warehouse inventory errors is…
Process Documentation & Organization.
If you’re using some type of technology to manage and track inventory, as you should, it is likely to have ongoing updates. When these occur, be sure to spend some time educating your team on the updates and how it affects day-to-day routines.
Keep a record of current processes makes follow-up and training much easier to tackle. Optimizing your picking process is key to developing a more efficient system. Store best selling products near the shipping area to avoid a scavenger hunt that leads to a major slowdown in fulfillment, label clearly, and move out shipments as they’re received.
Brian Sutter is the Director of Marketing at Wasp Barcode Technologies, a manufacturer of barcode software and solutions. In his leadership role, Brian sets the strategic direction and oversees the tactical execution of the company’s marketing programs.
The number 1 way to reduce inventory errors is to…
Implement an inventory control system (not a manual tracking system).
After you have purchased items, an inventory control system can help you accurately count and manage them. Gaining visibility and control of your inventory levels helps to reduce write-offs, eliminate stock-outs, and diminishes time spent searching for inventory.
Chris Borkert is a Business Optimization Team Lead at Linium, a nationally-based business process and IT consulting firm dedicated to enhancing business performance through transformational services and software solutions. With 15 years’ experience, Chris has led implementations of IT Service Management and IT Asset Management solutions for large companies in various industries.
The best thing that companies large or small can do to reduce inventory errors is to…
Have in place a logical IT asset and inventory process and system.
Preferably using proven software that is powerful and flexible. In the last few years, some very good tools have come on the market, several of which have built-in workflows specific to inventory management. Some are even cloud-based and much more advanced than systems of the past.
For instance, items are scanned with smart phones and tablets instead of the old bar-code readers. A powerful system will support either, however, and should be adaptable. These tools are very effective at eliminating human error, and companies need not make their receiving and transfer processes difficult or complex to accommodate them. They are enabling exciting possibilities like just-in-time fulfillment, GPS location tracking, and complex multi-supplier environments.
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