Article > Inventory Control and Warehouse Automation Explained

Inventory Control and Warehouse Automation Explained

warehouse with boxes and bins. Clear floorspace looking out to a busy warehouse.

With the fast-moving nature of today’s eCommerce landscape, it’s challenging to balance inventory stocks to match customer demand. Both overstocking and understocking are  detrimental to your business in different ways.

Fortunately, inventory management can help keep your stock at the right levels and provide real-time updates on your inventory situation. What do inventory control and warehouse automation entail? Read on to find out.

What is Warehouse Inventory Management?

Warehouse inventory management is the entire process of handling inventory items from arrival to shipping. It replaces manual processes across aspects like inventory tracking, staff management and storage space to ensure orders are promptly fulfilled and shipped.

While warehouse inventory management seems “invisible” to customers, it directly impacts their satisfaction. Subpar inventory management leads to shipping errors and delays, which lead to dissatisfied customers.

What is Automated Inventory Management?

Automated inventory management is a system that allows you to monitor and manage inventory in real time. Automated inventory management works with your order management software to ensure every single item received or sold is recorded as soon as possible.

Real-time data visibility means you don’t have to do physical inventory counts as often. Instead, you can just check your dashboard and get a good idea of your current inventory situation. Automated inventory management also notifies you to order more products if you’re about to run out of stock. 

How Does an Automated Inventory Management System Work?

An automated inventory management system works by tracking and managing your inventory in real-time and providing you with the information to make informed decisions regarding your business.

Here’s how an automated inventory management system helps your business:

  • Records incoming products quickly with mobile barcode scanners
  • Sends notifications when you’re running low on stock for certain products
  • Works with your order management or point-of-sale software to monitor current inventory levels in real-time
  • Gauges product performance to see which ones are popular and which ones aren’t
  • Forecasts customer demand and predicts the next high season based on past sales data
  • Creates reports on inventory levels, profit margins and other important metrics to assist in decision-making

Why Invest in an Automated Inventory Management System?

You should invest in an automated inventory management system to ensure your warehouse or fulfillment center is well-managed and you can ship products to customers on time. Here are some additional reasons to implement an automated inventory management system:

Save Time Wasted on Manual Inventory Management Processes

Manual stock updates on spreadsheets often take hours, especially if you have a lot of products. Automated inventory management systems will update your inventory records as items enter and leave the warehouse or fulfillment center, so you don’t have to do manual stock checks as often.

Get Complete Inventory Visibility in Real-Time

Real-time stock tracking is indispensable when it comes to monitoring stock levels. With complete inventory visibility, you’ll know when to order more products before you run out of stock. Some advanced inventory management systems even remind you to put orders in when stock is about to run out.

Prevent Stock Miscalculations and Inventory Loss

Stock miscalculations can lead to lost sales and reduced customer satisfaction because the items they wanted aren’t there. Unfortunately, stock miscalculations and inventory loss are often common when you do manual stock checks. Inventory management systems ensure all stock is accounted for, which means your records will match what’s in the warehouse or distribution center.

Spot Problems Earlier

Issues like stock theft and product damage can hurt your bottom line if left unaddressed for too long. Instead of checking for theft or damage in monthly or annual inventory checks, automated inventory systems can detect stock discrepancies as they happen, allowing you to solve the issue before they become bigger problems in the future.

Scale Your Business Easily

Scaling your business often leads to increased warehouse space and more inventory transactions. If your inventory system is still fully manual, you need to hire many more people to keep up with the increased demand.

However, inventory management systems make scaling easier because you don’t need to increase your workforce. You can upgrade to a better inventory software package to handle the increased transactions.

Why is Warehouse Inventory Management Important to Your Business?

Warehouse inventory management is important to your business because it directly influences labor costs and supply chain efficiency. However, there’s more to it than just efficiency and cost savings.

Excellent inventory management automation directly influences customer satisfaction, despite customers never interacting with your warehouse staff in any way. This is because a well-managed warehouse or distribution center ships its goods quickly and accurately, ensuring customers get the product they want on time.

Benefits of Inventory Control and Warehouse Automation

What can you get from inventory management automation? Here are several benefits you can get by implementing inventory management systems:

Improved Order Fulfillment Accuracy

Poor warehouse management and disorganized inventory often result in customers receiving the wrong products. Naturally, this increases complaints and decreases customer satisfaction, so you want to avoid sending the wrong items.

Inventory management automation improves the accuracy of your picking process by organizing your shelves and guiding warehouse workers to the right items, increasing inventory accuracy and reducing human error.

Smarter Coordination

The job of an inventory coordinator is to ensure your company has all the products, materials and supplies needed to operate according to predetermined standards. Inventory automation software helps the coordinator accomplish their job by providing real-time visibility and updates on everything happening in the warehouse.

Instead of spending time inspecting inventory conditions and addressing bottlenecks in person, coordinators can work with the warehouse team remotely to solve issues in your supply chain and warehousing.

Faster Shipping and Deliveries

Thanks to the Amazon effect, today’s customers demand one or two-day shipping for almost all eCommerce products. Good warehousing practices can fulfill that expectation by improving the speed of product processing and order fulfillment.

However, you may have difficulty promising nationwide one or two-day shipping from only one warehouse. You can consider working with third-party logistics (3PL) companies to distribute your stock across multiple warehouses nationwide to expand your reach and deliver faster.

Boosted Warehouse Productivity

Automating manual tasks in warehouse operations like inventory storage and record-keeping can save you a lot of time. Moreover, taking focus away from these repetitive, time-consuming tasks frees your staff up for more strategic tasks like inventory growth planning and developing new shipping strategies.

Additionally, automating warehouse operations helps it scale easier. Instead of hiring more people to manually store and record inventory, you can upgrade your system to handle the added demand of running larger storage spaces.

Increased Customer Satisfaction

Excellent warehouse inventory management is a direct positive influence on customer satisfaction and happiness. You can promise faster shipping, accurate order fulfillment and even reduced shipping rates by improving your inventory management. Combine these factors with high-quality products, and you’re almost guaranteed to secure customer loyalty.

Good warehouse inventory management can make things right even when things go wrong. Great return handling means the customer gets the item they need quickly, preventing prolonged complaints.

How to Choose an Automated Inventory Management System

There are many choices for inventory management systems today, each with different features and benefits. An inventory management system must suit your business needs, so you get your money’s worth. Start your search by analyzing your business processes and requirements to ensure you have a good picture of what kind of automated inventory management software you need.

Once you’ve identified your business needs, consider these four things when choosing an inventory management system:

Features

An inventory management system’s features are one of its most important aspects. Check your list of requirements and determine whether the features of your prospective inventory management system can fulfill those needs.

Software Integrations

You may have pre-existing software like eCommerce platforms, warehouse management systems and point-of-sale software. Check whether your prospective inventory management system can integrate with them without any conflicts.

Learnability

There’s always a learning curve for new inventory management solutions. You need software that’s easy to learn if you want your staff to use them effectively as soon as it’s implemented.

Client Support

Implementing warehouse automation systems is a long-term deal, so you need to ensure the software development company is always there to help. Ask about their client support options and check online to see how well they’ve treated past clients.

Warehouse Inventory Management Best Practices

Good inventory management practices complement automated systems to help you deliver the best output. Here are several best practices used by modern warehouses worldwide to improve your warehousing operations:

Minimize Manual Input

Whether it’s handwritten or typed, manual inputs are prone to mistakes. Implement barcode and RFID (radio frequency identification) tags on your inventory items to minimize manual labor and human error.

Additionally, scanning a barcode or RFID tag on handheld devices only takes split seconds compared to writing or typing product records.

Standardize Picking Procedures

Your inventory-picking process should have standard operating procedures to save time. One useful picking best practice is to pick items in batches or waves instead of going to the floor every time an order comes in.

Reduce Human Contact With Products

Even if advanced warehouse automation isn’t viable, reducing human contact with your products is a good way to lower occurrences of product damage. Only allow your staff to touch products if absolutely necessary.

Put Popular Products Near Packing Stations

Inventory management systems can analyze which products are most popular based on sales and other factors. Put your most popular products nearest to packing stations to ensure you can ship them quickly without retrieving them from across the warehouse.

Get Feedback From Everyone

The best warehousing solutions don’t always come from managers or supervisors. Hold regular 360-degree feedback sessions where everyone from floor workers to upper management can speak their piece and discuss what can be done to improve warehousing operations.

Iterate Warehousing Improvements

You’ll never create the perfect warehousing operation on day one. Instead of sweeping changes at once, iterate on your warehousing improvement efforts. Apply changes in batches and evaluate whether they work before introducing more improvements.

Key Takeaways

Warehouse inventory management monitors your entire warehousing operation to increase efficiency, order fulfillment accuracy and delivery speeds. Good warehouse management is essential to securing consumer satisfaction and loyalty despite not interacting with customers directly.

It’s not enough to implement an inventory management system. You must choose one that fits your business needs, integrates with other tools like your warehouse management system and follows industry best practices to ensure you get the most out of your software. 

Inventory Control and Warehouse Automation FAQs

How much does it cost to automate your warehouse?

The cost of automating your warehouse depends on the building size and what automations you want to implement. Simple systems that improve your picking process can start from $500,000, while full-fledged warehouse automation costs millions of dollars.

How do you organize inventory in a warehouse?

Different companies organize warehouse inventory differently. However, the general best practices are:

  • Label products clearly.
  • Store products frequently bought together near each other.
  • Store popular stock items near packing stations.
  • Stack inventory higher to use the vertical space.

What is physical automation in the warehouse?

Physical automation in the warehouse uses robots, drones and robotic systems in warehouse operations. These robotic solutions can scan arriving packages, pick items from shelves and even pack products for shipping.

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