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Inventory Position & Why It’s Important

Your warehouse may be big with lots of locations in it. On a daily basis you may receive and handle a significant amount of inventory. The question is, where should it all go? It might seem obvious to say, ‘where I have space to put it.’ The logic being that as long as I know where the inventory is in the warehouse I know where to find it. Simple, right?

In reality though where inventory is placed, or positioned, should be a part of your larger inventory and warehouse management planning and strategy. Accounting for inventory position can have significant benefits for your business, warehouse, and processes. Let’s take a look at what inventory position is and why it’s important.

Inventory position is both the physical location where it is stored but also as it relates to your overall supply chain. This would refer to the actual warehouse storage position, as well as other storage locations within your organization, including other storage facilities, retail locations, production facilities and so on.

By having a well-planned inventory position strategy as part of a comprehensive inventory management plan businesses and warehouse operators will know where to store inventory and in what quantities, so that they can fulfill orders on time. In doing so businesses improve their warehouse management operations, reduce fulfillment times which boosts productivity, and lowers costs associated to their inventory management.

Inventory position is important to warehouses and fulfillment centers because it directly affects efficiencies. This would include your putaway process, since workers upon receiving product into the warehouse will have predictability for where to store inventory.

Fulfillment centers often don’t store inventory immediately for picking either. Rather they’ll hold inventory strategically in reserve storage locations and have dedicated picking locations which they’ll restock. Having a good inventory position strategy will ensure good turnover of inventory and ensure that none of it sits idle or gets forgotten about. This also reduces costs since the longer inventory sits in storage the cost associated to it increases, not to mention it reduces waste.

By position inventory correctly in the warehouse you make workers jobs, especially with regards picking, more efficient. One of the biggest inefficiencies in fulfillment processes is the amount of time and distance workers need to travel to pick items. By strategically positioning items that are popular, purchased together, or for the same customer, picking times are reduced which boosts productivity and lowers labor costs per order.

If you're a manufacturer, operate multiple warehouses, or retail stores, positioning inventory closer to their eventual destination or point of purchase will also reduce fulfillment times which will help support your greater supply chain. Ensuring that each location and channel has adequate inventory and that it is accurately tracked will enable this, help to meet demand, and keep customers happy.

Now this might seem all well and good, but how to do it you may ask? Here are a few practical suggestions that can be implemented.

One tip that could be implemented almost immediately is to make sure that popular items are stored in easy to reach areas. You probably already have a good idea which customer’s inventory you fulfill for most, or which of the products you sell turns over the quickest. Help your pickers out by making this type of inventory easily accessible. This will help optimize your fulfillment process.

As well make sure that high demand products are always well stocked, especially at locations where the most orders are coming from. This will help match customer demand and reduce the logistics costs and delivery times. This will not only benefit your bottom line but your customer's as well.

Demand planning and forecasting will also go along way in your inventory position strategy. Understanding what products customers want will help you to have adequate stock once demand spikes. You will then be able to place purchase orders with sufficient lead times and quantities so that you will be able to meet the increase in demand. As well you will be able to strategically stock your various channels in advance.

Demand planning in relation to your inventory positioning should also be viewed as ongoing. Variables like seasonality, market factors, regionality, supply chain variables, and so forth are always fluid. So, make it a part of your ongoing planning, rather than viewing it as a one time deal.

Of course, having the right technology in place to do all of this is imperative. WMS technology like Akatia’s WAM will help significantly in your inventory position tracking. It will help you to create insightful reports to support demand planning, implement pick and putway routes and optimize other processes, understand which products or customers you’re fulfilling most for, and analyze your location capacities and which locations are best suited for which products.

Having the right inventory on hand and in the right quantities is important, but knowing where it should go so as to make the best use of it should be part of the equation. In doing so you will maximize your warehouse locations and optimize your inventory management related processes. So make inventory positioning a part of your ongoing warehouse and inventory management plan. Your business and customers will benefit because of it.

If you’re looking to transform your warehouse and inventory management, click the link below to get in contact with us. We’d be happy to speak with you!


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