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Reduce Inventory Management Mistakes with These Four Tips

Published on: Jun 14, 2017

inventory managementMistakes happen to everyone, but there are some business areas where mistakes can be costly. One of those areas is the warehouse. A single mistake can pile up and create more issues down the line giving your customers a poor impression of your business. Unhappy customers may take their business to a competitor. In fact, inventory management mistakes can cost your business thousands of dollars a year.

If you want to improve profitability by reducing inventory management mistakes, try these four tips.

Tip #1: Automate your warehouse.

Automated warehouses use barcode scanners, inventory management systems, and other tools to log goods into the warehouse and log them out again during fulfillment. Such systems reduce the amount of manual errors made by failing to count items, mistaken counts, and mistakes during data entry.

Tip #2: Add structure to the inventory fulfillment process.

If your warehouse doesn’t have a structured process for receiving orders, picking, packing and shipping, you are leaving the success rate on your order fulfillment to chance. You can reduce mistakes and close gaps in the system by creating a structure and process that details each step for your employees. Make sure that the process is in writing, and train your employees on each step in the process. Don’t leave it to your employees to create the steps in the process or you will end up with many, perhaps competing, processes in place.

Tip #3: Reduce the number of steps in order fulfillment.

Another area that can be problematic for many companies is that the number of steps it takes to fulfill orders is so lengthy and complicated that employees can’t remember them easily. Any process with more than a handful of steps is open to mistakes. Spend some time in the warehouse working alongside your team to actually see what’s working and what doesn’t. Then update the process, reducing redundant steps and making it simple and effective.

Tip #4: Set a baseline to measure improvement.

You may have heard from employees that there are “many” mistakes being made in the shipping process. Just how many mistakes qualify as “many?” Whenever you can, quantify the situation and set a baseline so that you will know for certain whether improvements you make are having the desired effect.

Let’s assume that you know that as of today, 5% of orders have a mistake in them. When you examine this data, you see that employees are mixing up packages, placing the wrong packages in the wrong shipper’s bins. This delays orders because the packages are returned from the incorrect shipper.

Given that 5% figure and an understanding of the nature of the problem, you can now take action steps to rectify it. You can reward employees for reducing the error rate. There are many things you can do to reinforce the positive nature of your improvements. Without the baseline, however, there’s no way to know whether changes made any impact at all.

IWI Consulting

IWI Consulting Group helps businesses gain insights into their operations, inventory, and profitability. Learn more about our software systems for distribution and inventory management. We provide software and support for a wide range of industries throughout the Toronto area. For more information, please visit IWI Consulting Group or contact us today.