For a warehouse to succeed its employees need to know what they have and where they have it. Good inventory management is essential.
There are five things that could adversely affect the condition of a warehouse’s inventory and could make it nearly impossible for employees to know what they have and where they have it.
(Courtesy: Consolidated Construction at flickr.com)
These include:
· Inaccuracies
· Capacity Problems
· Damaged Products
· Product Identification issues
· Training
Inaccuracies
It is not only one or two inaccuracies that warehouse managers need to confront. All inaccuracies that can adversely affect a warehouse operation include inaccurate understanding of quantities, inaccurate storage locations, and inaccurate pricing.
Regular inventory counts can help to identify what you have on hand and help you know the quantity of product you have on hand. However, it is difficult, if not impossible, to keep track of millions of product stock-keeping units (SKUs), which is the case for many warehouse facilities. Moreover, tracking the quantity of a product on hand can also be affected when items are stored in the wrong location causing an inaccurate count.
Capacity
A warehouse’s ability to store products can adversely affect inventory because as the number of products grow, the more cluttered the facility gets and tracking becomes that much more difficult. Moreover, if a warehouse has gone beyond its ability to store more products, then there is an increased possibility that items get lost or damaged and are not accounted for in an inventory management system. Obsolete inventory can get lost and that can add to the problem. For example, a warehouse manager trying to fill orders knows he has a box of the items wanted, but has no idea where it is due to storage issues. Since the product can’t be found, then it becomes obsolete over time and is simply forgotten from the balance sheet.
Damage
It is very common for items to be handled a multiple amount of times during a routine day in a warehouse. Every time it is touched or moved there is a possibility that it can be broken. The more touches and moving, the greater the possibility that the product will be damaged. In order to recover some of the original value of a broken product a warehouse may try to sell it for a substantial discount and that ultimately affects a warehouse’s bottom line.
Product Identification
In order for a warehouse to operate employees have to trust how shipments coming in have been identified. If the shipper slaps the wrong barcode on the carton, then the products in that carton will be misplaced. For example, let’s say that a warehouse gets shipments of blue plastic cups with an SKU number of XYZ123 and red plastic cups with an SKU number of DEF222. A storage location has been assigned to SKU XYZ123 that is different than the assigned location for SKU DEF222. Both cups are packaged 100 units per box. Each box has a barcode slapped on to it, which identifies the items in the box and all of that information is scanned into the warehouse’s inventory software. Now let’s imagine that a box of blue cups has been misidentified as a box of red cups. The inventory system is going to recognize that box as containing 100 red cups when it actually holds 100 blue cups. The box will be placed with the other boxes of red cups and without anyone knowing it the entire inventory system is screwed up.
Training
Bad or no training of personnel can lead to a host of problems that include inaccuracies, damaged merchandise, and improper product identification. It should be obvious that employees not properly trained or not trained at all don’t know how to properly identify what’s in a box and is more vulnerable to breaking in-coming products. It is essential that all personnel that handle inventory have to be well trained. Proper training increases a warehouse’s efficiency and productivity and decreases any kind of inventory issues.
(Next time: How to Set Up Inventory in a Warehouse)