Best Practices for Warehouse Inventory Management & Scanning 

February 1, 2023
5 min read
Warehouse and Order Management

Improving your third-party fulfillment inventory management process requires adopting industry best practices. To help set you off on the right path, here we share best practices for warehouse scanning and inventory management.    

Minimize Manual Input 

Even the strictest manual processes increase the risk of human error. By reducing manual input in the inventory management process, you can improve accuracy. Inventory scanning in hand with automated processes using a warehouse management system not only reduces human errors but also allows you to share accurate counts with customers in real time.   

Improved Picking Process 

Assessing your picking process to look for areas of improvement can have a positive impact on your warehouse inventory management. Because the picking process relies on accuracy to improve customer experience, as well as inventory counts, boosting accuracy with a more streamlined process helps see overall warehouse improvements. Mispicks can be eliminated using warehouse scanning technology and software that alerts pickers when an error is made. 

Use Warehouse Management Software 

Warehouse management software streamlines the process while allowing you to collect real-time counts as you receive and send out inventory. Third-party warehousing customers can plan shipment dates to align with events and seasonal volume changes.   

Ensure Popular Products Are Easy To Reach 

Dynamic slotting/staging allows you to apply ABC analysis findings to improve warehouse inventory management. By classifying products based on popularity and volume, you can ensure higher volume items are closer to your shipping and packing areas. This not only saves time for put aways, order picking, and returns, but also tracking inventory counts to avoid disruptions to customer delivery. 

Reduce Touchpoints 

3PL logistics efficiency is always improved when you minimize touchpoints. Every touchpoint costs money and increases the risk of errors or delays. Evaluate your process and look for opportunities to reduce touchpoints and limit the number of people involved in the inventory and scanning process. You can spot opportunities to streamline the process, limiting areas inventory might end up sitting during both the order and put away processes. 

One SKU Per Item 

Inventory management is always easier when you only use one SKU code per item. It reduces the risk of errors while making each stage of the scanning or inventory process easier. Single SKUs aid in accurate identification, especially when they include product properties such as color, size, and type. This keeps inventory clearly marked to ensure items are stocked in the appropriate bays for put aways and picked accurately for orders. 

Tracking Warehouse KPIs 

Warehouse KPIs allow you to set benchmarks to improve efficiency. 3PL KPIs you should track include: 

  • Receiving efficiency: To track how long it takes to receive and put away new and returned inventory. 
  • Picking accuracy: To track errors, including return rates due to mispicks. 
  • Inventory turnover: To understand how quickly items sell out. 
  • Rate of return: The reason for return tells you if it is related to mispicks or the product. 
  • Backorder rate: Consistently high backorder rates indicate poor planning and inventory tracking. 
  • Order lead time: Lower lead times indicate efficiency in order processing as well as inventory management. 

These KPIs provide a clear picture of how well your put-away and order-picking processes work, as well as the effectiveness of your (or your customer’s) inventory management. KPIs also facilitate inventory monitoring practices, so you and your customers can make smarter stock-level decisions to meet customer needs based on sales, returns, and product performance. 

Managing Safety Stock for Emergencies 

Safety stock ensures you can manage orders that exceed sales forecasts. This is important to avoid customer dissatisfaction. While it is easier to plan for seasonal volumes, your safety stock is designed to manage unexpected demand fluctuations. As a 3PL, safety stock levels are likely provided by your clients.  

However, the analytical data you track can help them determine safety stock levels. If you are responsible for predicting safety stock levels, a standard is to ensure the total cost of the inventory is no more than 20% to 40% of the cost to stock the merchandise. Costs to consider include storage space per foot, labor, and materials. Warehouse management software can help track inventory and provide data to determine emergency inventory levels without wasting space. 

Prioritizing Warehouse Safety 

Although warehouse safety should always be a priority, many distribution centers underestimate how it impacts performance. A safe and secure warehouse is clean and organized with designated areas for each task. This ensures the warehouse floor maintains aisles clear of inventory, making them easier to navigate. Clutter makes it difficult to follow the most logical paths, which can cause confusion in everyday operations as well as counts. Also, it is difficult to scan items stretching over palettes waiting for shipment or put aways. You free up space, create clear paths and improve access to bar codes. 

Information Sharing 

Information sharing has a direct relationship with inventory management. By adopting and defining sharing practices, all key stakeholders can communicate in real-time using one central location for information. Internalizing and building effective information technology across all channels of the supply chain streamlines inventory management practices allowing 3PLs to remain competitive. 

Adopting best practices allows your 3PL warehouse to become more effective in warehouse inventory and scanning. As a result, you help your customers become more predictive, ensure they always meet their sales targets, and maintain a level of customer service. 

VeraCore Smart 3PL Fulfillment 

For more than 40 years, 3PLs and fulfillment companies have placed VeraCore’s warehouse management software at the ‘core’ of their business to get the job done right. Ready to take your business to new heights? To learn how smart 3PL fulfillment software can help grow your business, schedule a demo.