Effective inventory management
Effective inventory management
High-quality inventory management is a fine line. On the one hand, late purchase of goods, which will affect undersales and loss of shelves. On the other hand, there is an oversaturation of goods, which entails an increase in areas, staffing table, wage fund and frozen funds, instead of working capital. How to reach the golden mean and what is needed for this? We will discuss in today's article.
What should be the process of inventory management: methods, analysis, indicators
The start of the supply chain and the definition of what algorithm the supply chain will work with for certain goods, product categories of products, product groups. It all starts with the fact that the retail chain must decide for itself on the strategy of working with a certain commodity group, how often it will be replenished, what level of availability of leftovers. Also, important factors are the product groups` representation and the level of freshness, how the arrangement of product will be done on the store shelves.
This is why projects such as assortment analysis, processing analysis and inventory analysis are being implemented. Actually, one of these algorithms is incorporated into the “warehouse map” tool developed by the Consulting for Retail team, which solves the first task of the supply chain to decide which way of processing this product group will follow through the entire supply chain.
The next important aspect in inventory management is the work of distribution logistics (distribution center, warehouse), subsequent transportation and delivery to end users.
If we talk about a distribution center, then its function and task is to support the needs of the business and the supply chain for the chosen method of inventory management and the method of processing the flow of goods. C4R solutions based on WMS systems allow realizing this principle of continuity and automating warehouse processes.
First of all, the auto order system must have an important algorithm here: orders must be formed with the right type, according to the right schedule, at the right time, taking into account and taking into account a number of factors that were considered above.
When we talk about distribution logistics and its service function, then the selected methods of commodity processing can refer to the following classic examples of inventory management:
- the work with stock balances
- the work without residue
Based on this, quite different options are possible.
Let's take a closer look at the management and work with inventories without a remainder. There can be classic pick-by-light picks, distribution from wheels and cross-docking schemes, when a supplier completes products for the end consumer. In turn, the cross-docking scheme can be in two variations:
- The supplier completes the goods and posts the invoice for recipient.
The distribution to the DC is created and the invoice is posted. - The distribution center, in turn, conducts commodity processing and can also affect the quantitative and qualitative recalculation of these products at the time of their processing.
In our practice of implementing inventory management systems, there is also such a thing as Allotment. Such a process is not used so often in the post-Soviet countries. In fact, this is another type of cross-docking, when the supplier makes a consolidated selection of products for retail outlets.
As a result, in the distribution center, bypassing the acceptance process, the products are distributed to the end points of sale and thereby the amount of the received goods is validated. That is, it is a kind of mixture of reception and distribution processes, which allows you to activate both processes, while adding a control point at the time of goods arrangement. The specificity of Allotment carries certain contractual relationships with suppliers and the ability to influence the supplier in cases of possible rejection.
Another part of the inventory management processes allows you to process the balances at the distribution center according to certain algorithms. These can be algorithms for static picking, dynamic picking and algorithms of the same distribution process from the remainder, when the products may not have a dedicated place for picking and the products can be selected according to their specific order schedule, performing the picking and distribution of products from the storage cell. This process may overlap with the receipt of products from another internal supplier, for example, from another area of the DC or from another distribution center, from which you can receive these products and distribute them in the target distribution and distribution process for shipment to the final consumer. This is the second branch of the process, which allows you to distribute products from the remainder.
As we said earlier, the choice of the correct method of distribution and management of commodity stocks is determined at the time of the introduction of this product into the DC assortment, into the retail network and is solved by the “warehouse map” tool.
Welcome to check your logistics business processes: download the checklist 'Warehouse Process Management: WVO' and see where and how improvements can be made.
Inventory management automation solutions
To build an effective system for managing inventory in a warehouse, the C4R team uses modern technologies for processing goods in their solutions, such as:
- Pick to zero, when the good is picked to zero and there is no remainder.
- Pick by line is a kind of cross-docking. When the packed goods are not processed, but sent to the recipient in the same form as it was received.
- Pick then pack when large loads are sorted into small items, assembled and packed before shipping.
- Cross-dock bypassing warehousing, in which goods are not placed for long-term storage, but only formed in a batch for shipment.
- Distribution and distribution of the remainder, for the most efficient management of inventory.
Ultimately, the choice of technology and methods for managing inventory should be made on the basis of modeling, calculating the cost of labor, through accounting and building a model that will include investments in building this process (design and installation of a conveyor line, purchase of a terminal, voice technologies). You should also take into account the receipt of ROI - an indicator of return on investment, which will answer the question: what technology can be used at the DC and how will it help?
C4R specialists, within the framework of consulting projects and warehouse maps, design, simulate and calculate these processes. In addition, based on the results of the work, solutions will be offered that can be you as projects for implementation.
Still have questions about C4R solutions for retail, logistics, and distribution? Write to [email protected] or fill out the form below. We will call you back!
