Blog - Answers to 5 Big Inventory Management Questions - Fishbowl Inventory (2023)

Let’s answer five complex questions related to inventorymanagement. Those questions are:

• How do I manage a warehouse?
• How do I track inventory in multiplelocations?
• How do I get the best value for my money with inventorycontrol software?
• What is the best way to manage inventory?
• What results can I expect from using inventorymanagement software?

HOW DO I MANAGE AWAREHOUSE?

This is a big question with several parts that need to beaddressed in order to answer it properly. You need to keep a close eye on leadtimes, optimize your warehouse layout to make picking more efficient, trainyour workforce on the correct procedures and software, and have the right toolsfor the job.

Order Management

Set automatic reorder points on your parts, products, andall other materials in your warehouse, with their lead times in mind. That way,you’ll constantly get new items coming in to replace outgoing ones and keepyour inventory levels in equilibrium.

Keep track of your vendors’ performance. Make sure they’regiving you competitive prices and consistently getting the right items to youat the right times.

Use wireless barcode scanners to quickly receive items intoyour warehouse and keep your inventory records accurate and up to date.

Warehouse Setup

Group products that are often purchased together next toeach other, like suntan lotion and beach towels. Put the most popular itemsclosest to the receiving entrance so they’re the quickest to move into and outof your warehouse.

Track inventory by row, shelf, and bin so you always knowwhere to find items when it comes time to pick them.

Workforce

You don’t need to hire dozens of warehouse workers to managea warehouse. If you use barcode scanners and warehouse management software, youcan keep your warehouse running smoothly with as few as a handful of workers.As long as they’re properly trained on the software and inventory procedures, asmall group can get just as much done as a large one, if not more.

The Right Tools

Having the right tools is the key to success in each of theabove areas of warehouse management. By automating as many processes aspossible, you can do more with less and keep costs down in terms of how muchyou spend on inventory and how much you spend on your workforce.

HOW DO I TRACKINVENTORY IN MULTIPLE LOCATIONS?

The answer to this question is actually quite simple: Use inventory tracking software. That might seem oversimplified, but the fact is that pretty much everything you need to handle the complexity of multiple locations is found in advanced inventory tracking system.

This software allows you to:

• Check inventory levels at each location.
• Integrate with UPS, FedEx, USPS, and other majorcouriers to get shipments out the door fast.
• Transfer items from one place to another if onewarehouse has a shortage and the other has an excess.
• Monitor long-term trends to see which locationssell more of a certain product and, thus, where more of that product should bestored.
• Ensure shipments arrive at their destinations ontime. If a supply chain gets disrupted, you’ll hear about it quickly so you canresolve the problem.
• Use wireless barcode scanners to order, receive,and cycle count inventory in each location.
• Quickly update your inventory data on aper-location basis so you always know where it stands at any given moment.
• Automatically update your accounting records inQuickBooks after transactions are made.

In summary, to track your inventory in multiple locations,all you need is a good inventory tracking solution, some training on how to useit, and some elbow grease to put it into practice.

HOW DO I GET THE BESTVALUE FOR MY MONEY WITH INVENTORY CONTROL SOFTWARE?

Focus not just on what the software costs right now, but howmuch it will cost to switch to something else in a few years if you outgrow acheap solution. Make sure it works with your accounting solution and it caneven extend the life of QuickBooks and other business software you’re alreadyusing.

There are four main ways to answer this question: cost,features, scaling, and integration.

Long-term Cost

It’s not just the initial price of the software you need totake into account when deciding if it’s the best deal. You also need to add inthe cost of software training, support, renewal fees, additional users, andhardware. In the long run, what will the cost-benefit ratio look like? It’simpossible to know the ultimate answer to that question, but try to look out asfar as you can.

Features

Inventory control software should give you a variety offeatures, including the ability to:

• Check inventory levels in real time.
• Cycle count your inventory.
• Track inventory in more than one location.
• Create multilevel bills of materials and workorders.
• Print and scan barcodes.
• Track inventory by serial number, revisionnumber, lot number, expiration date, and more.

Make sure it does everything you need it to do.

Scaling

You should purchase software that is scalable so it willmeet your needs for many years. It’s expensive and a waste of time to have toswitch software platforms every few years when you outgrow one’s functionality.All of that extra money and time spent on new software and training would bebetter put to use if you make the best possible choice the first time and staywith the same software for many years.

Good inventory control software should be able to addmultiple-location tracking, advanced manufacturing, and numerous other featuresto its core functionality. That way, you don’t have to pay for features youdon’t need at the start, but they’re easily accessible when you need to make thejump to something more complex.

AccountingIntegration

If you use QuickBooks for your accounting, it’s a good ideato get an inventory control solution that integrates well with it. This willkeep your inventory and accounting records accurate so you won’t have to go inat the end of every month and fix discrepancies, like most companies with amanual inventory system do.

You should also be sure the inventory software works withyour online shopping cart, if you run an ecommerce website. There’s plenty of othersoftware that companies use, and it works best when each one is connected.

The Best Value

If you keep these four points in mind when searching throughinventory control software options, you should be able to make a wise choiceand get the most bang for your buck.

WHAT IS THE BEST WAYTO MANAGE INVENTORY?

It all depends. What works for an electronics store wouldn’texactly work for a grocery store, for example. Decide what you value most, whatyour budget will allow, what your customers expect, how big or small yourbusiness is, and other factors, and that should give you a good idea of thebest way to manage your inventory.

There are a number of criteria you can use to answer thisquestion for your particular needs and situation. Let’s answer the followingquestions as stepping stones to answering the big question:

What Do You ValueMost?

In other words, what do you want to get out of yourinventory? Some companies want more than anything to keep their inventoryprocesses as simple as possible, others want to make them as fast as possible,and still others want to keep the costs low. Your overall goal has a big effecton how you manage inventory.

If you’re interested in simplicity, you may want to stickwith Excel or some system that is easy to learn. If you want speed, you shouldlook into an automated system. If you want inexpensive, you need to weigh thecosts and benefits of buying a software solution that could increase efficiencybut also cost a bit at the start.

What Is Your Budget?

Companies have to work within their budget. Make sure theinventory solution you come up with works with what you have right now. Thereare plenty of tools to make your inventory management goals come true, but youcan’t use them all, nor should you take a trial-and-error approach to findingwhat will work.

You’ve got to carefully analyze your needs and do an ROIanalysis on any potential solution, whether it’s purchasing inventorymanagement software, staying on Excel, or doing something else.

What Do YourCustomers Expect?

Inventory management is simply the means of getting productsto your customers. When you look at it that way, your customers’ expectationsare what determine your method of inventory management.

Do your customers place huge orders for highly technicalproducts and they don’t expect to get them for weeks? Then you can afford tohave long lead times on products, store very little in your warehouse, and savemoney on the space you don’t need. But if your customers expect products to beon the shelf when they’re looking for them, you need to be quicker and moreresponsive. Your supply chains need to be quick, you must have a safety stockto avoid shortages, and you need to be mindful of seasonal demand trends.

How Large Is YourCompany?

Big companies require more complex inventory managementtools than small ones. A small business can make do with an Excel inventorymanagement system or even a paper-based system for a number of years. But whenthey reach a point where they are unable to track all of their products on aspreadsheet and they need more detailed information on sales, orders, and otherparts of their inventory, it’s time to move up to a more sophisticated tool:inventory management software.

If your company is growing rapidly, it’s a good idea to getscalable inventory management software, so it can grow with your business andlet you purchase and add new tools when you need them, such as ecommerce,shopping carts, advanced manufacturing, barcode scanning, etc.

Which InventorySystem Should You Use?

There are four main ways to approach inventory management. We’veanalyzed them in depth before, so we’ll just mention them briefly againhere:

Mix-Max System –When an inventory level falls to a minimum level you reorder so it goes back upto the maximum level.

Two-Bin System –You have a main bin of products that you normally sell from and when it runsout you switch to a backup bin until the main bin is replenished.

ABC Analysis –Organize your products in three buckets: expensive, large ones, moderatelyexpensive medium-sized ones, and inexpensive, small ones.

Order-Cycling System– Periodically do an inventory check (such as once a week) and reorderproducts that are low.

It All Depends

The best way to manage your inventory depends on the abovefactors. It’s not a decision that should be made lightly, nor does the oneyou’ve made have to be permanent. If you’ve tried one system for years, butyou’ve either outgrown it or you’ve noticed that it hasn’t produced the resultsyou’ve been looking for, it may be time to try something else.

WHAT RESULTS CAN IEXPECT FROM USING INVENTORY MANAGEMENT SOFTWARE?

Empowered employees, lower costs, faster response times tocustomers’ orders, improved planning, and optimized warehouse layouts are justa few of the results you can expect to receive when you use inventorymanagement software in your business.

More EmpoweredWorkforce

With barcode scanners and an in-depth knowledge of inventorysoftware, your employees will be able to get a lot more done during theirworkdays. Instead of having to wait for a dedicated warehouse worker pick itemsoff a shelf or put new products away, they can do those things themselves.Processes that used to take hours can be done in fraction of that time.

Lower Expenses

With employees getting jobs done quicker and inventorylevels getting balanced, your business can expect to cut expensessignificantly. Inventory management software saves money by reducing yourstorage needs, carrying costs, overstocks, and other unnecessary expenses.

Quicker ResponseTimes

When multiple purchase orders come in, you can pick all ofthem at the same time, find the right containers to package them in, and thenalert UPS, FedEx, or another carrier that you have a package waiting for themto pick up. All of this leads to quicker response times. Your customers willget their orders delivered faster and you’ll have a more productive andefficient workplace.

Better Planning

Good inventory management software has the ability togenerate reports based on the data it records. For example, if you want to seewhich products are your top sellers at each of your locations, you can accessthat information in graphs, charts, and spreadsheets. These reports can helpyou figure out where you can make the best use of your resources. Seasonalplanning, location planning, and many other strategies can be formulatedthrough this data.

Optimized Warehouse

You won’t have to hunt through your warehouse to findproducts. You can access detailed maps showing where everything is by bin andshelf number. Not only that, but you’ll be able to move things around tooptimize their placement in the warehouse. If two or more products are usuallysold together in the same order, you can move them next to each other in thewarehouse to speed up the picking process. You can also put low-selling itemsfarther away from, and high-selling items closer to, the receiving door todecrease the amount of time it takes to put them away and get them ready forshipping.

Expect Big Results

These are some of the biggest results you can expect from using warehouse management system in your business. You don’t have to think about these purely in the abstract, either. Check out real-life examples of companies that have seen dramatic turnarounds in their operations by implementing Fishbowl Manufacturing or Fishbowl Warehouse: Fishbowl Case Studies.