Warehouse Inventory in Supply Chain

Warehouse Inventory: Introduction

Stock or stock inventory is the collection of all stored goods and materials used for sale to consumers and the production process as a whole. Efficiently handling, keeping track of, and managing the warehouse stock can be challenging for most logistics companies or companies that come with distribution centers or warehouses. This is because the stock inventory handling is predominantly dependent on the profitability of the organization or the business.

Warehouse Inventory

Warehouses are an intrinsic part of supply chain logistics because the accumulation and storage of stock avoid product shortages and can even potentially decrease the unit cost of the product. Sufficient storage of the product additionally ensures its immediate availability to fulfill the customer’s demands. Warehouse inventory management also helps foresee and handle stock excess and depletion that might lead to an imbalance in the stock amount leading to the reduction of the firm’s competitiveness.

Warehouse Inventory

What is Warehouse Inventory Handling?

Warehouse inventory management not only involves the process of receiving, storage, and tracking inventory in a warehouse but also handling the warehouse staff, optimizing costs and space required for storage. All steps involved in this process directly impact fulfillment, shipment of goods and products, and customer service.

When businesses store their goods in a warehouse for the prime purpose of selling and distributing, warehouse management is integral to the supply chain. Tracking in-hand business products and maintaining the optimal levels to rapidly fulfill customer orders all fall under the umbrella of warehouse inventory handling. A foolproof warehouse management plan in a business calls for trustworthy inventory management software to mitigate any risk of loss and theft, tracking stock and leading to happier customers through quickly fulfilled orders.

Warehouse inventory handling is a part of inventory management focused on tracking incoming and outgoing products and the location of each item. Inventory management is similar to warehouse management, which is more inclined towards operating a particular storage facility, including data on the quantity, location, and operator performance of products. To efficiently conduct proper warehouse inventory handling, you must appoint a professionally experienced warehouse manager and implement an inventory management system to monitor the process and incoming and ongoing products. 

Warehouse Inventory

Why is Warehouse Inventory Management Important to Your Business?

Inventory management is directly proportional to the amount spent on logistics costs and the supply chain’s efficiency. However, there is much more to warehouse inventory management other than merely storing inventory on the racks in a warehouse. It is the prime reason why numerous organizations have started outsourcing this business function to a third-party company. We have listed a few reasons warehouse inventory management is an intrinsic part of direct-to-consumer brands that are responsible for their own warehouses:

Eases order fulfillment accuracy

A warehouse needs proper management and planning process, lack of which might lead to unnecessary delays and hiccups in the order fulfillment process. Poor inventory organization, mismanaged picking and packing, and no stock control in the warehouse are some of the major problems caused due to inadequate warehouse management. By implementing better warehouse management processes and technology, order accuracy becomes more efficient, organized, and faster, leading to more customer engagement.

Boosts warehouse productivity

Proper storage and record of warehouse inventory and automated daily tasks provide warehouse staff both the time and the mental set up for planning and strategizing on logistics and growth. An efficient warehouse staff helps companies considerably cut down on labor costs and also helps ship orders faster.

Efficient shipping and faster deliveries

Better inventory management in a warehouse directly impacts the shipping speed and the company’s overall production power. Warehousing processes can be quickly sped up and optimized by automating order processing or by expanding network distribution by dividing the inventory amongst numerous fulfillment centers. DTC brands have recently opted for automated shipping with the help of tools to quicken the shipping process, update stock levels and push order tracking of e-commerce to customers. Automating the shipping process helps in increasing output to efficiently manage larger orders.

Cuts down on costs

Needless to say, efficient management of warehouse inventory helps cut down on unnecessary expenditures, including labor, fulfillment costs, and storage. Optimized storage, automation of warehouse processes, organized inventory for the quickest method of picking and packing, and applied technology for task automation potentially reduce the chance of unnecessary human error. By gradually improving the bottom line of your supply chain, your companies can easily make a more significant profit margin. It is important to remember that renting out warehouses has proven to be costly in recent times. One great solution is to outsource warehousing to save costs and boost the profit margins of supply chains.

Increases customer satisfaction

A well-performing warehouse seeks to deliver orders to customers on time and with minimal errors. Warehouse inventory management should be a priority for improving customer satisfaction due to comparatively shorter shipping duration, lesser shipping costs, and more order accuracy. Moreover, problems related to orders and customers, such as exchange or return orders can be easily solved with properly managed warehouse processes and inventory.

Warehouse Inventory

How to Manage Warehouse Inventory?

Proper warehouse management leads to a successfully running business with happy customers and clients. There are five processes integral to warehouse inventory management implementation which can help companies grow in the long run:-

Optimization of the warehouse layout

Optimizing the layout of warehouse space is the first step in warehouse management. It helps to organize inventory for the smooth picking and packing process and also saves on additional costs. You can also determine if the warehouse’s current layout is suitable for your organization’s order fulfillment process. 

Tracking and monitoring warehouse inventory

Managing inventory is integral to any e-commerce retailer. To have better control over stock, investing in inventory management software can help you automate the process of order picking, give you real-time inventory tracking, help in inventory demand forecasting, help make inventory reports, optimize levels of inventory, and the like. A foolproof inventory storage system and software will complete these tasks in minimal time, saving you many manual costs. Software or inventory apps can help you easily track and manage your inventory and save time in performing inventory and warehouse audits. 

Picking and packing

Optimizing the process of picking and packing leaves no scope for human error. For instance, companies allot the most accessible area in a warehouse known as the “golden zone” for best-sellers. Companies adopt many other practices for optimizing the picking and packing process.

Handling shipping

Self-fulfillment of orders can bring in additional costs; therefore, many organizations opt for blind shipping, drop shipping methods, or 3PLs in which the shipping duties are left for the manufacturer to take care of. 

Optimizing and reporting

Consider investing in a WMS or a warehouse management system because it can help optimize operational performance and generate inventory reports. A reliable WMS automatically improves the fulfillment performance by the hour, ensures staff efficiency, shipment of orders on time, and many more. It can additionally provide you with reports about the daily operations and even the inventory insights to make informed decisions for better warehouse management.

Warehouse Inventory

What are Some of the Best Inventory Warehouse Organization Ideas?

Supplying products via multiple channels on time can be overwhelming and does not come without added challenges due to constant pressure from the number of orders placed in numerous locations and inventory demands. However, most companies have devised great organization ideas they rigidly follow to help make inventory management a smooth process. They are listed below:

  1. Opt for money-saving options: Warehouses inventory management systems should always choose options like ROI and lean operations to cut down on costs. Cross-docking is an excellent system that increases efficiency and decreases handling and storage time. It allows businesses to manage warehouse inventory seamlessly and provide more accessible storage. 
  2. Maintain accuracy of inventory levels: An inventory management system is responsible for generating vast amounts of data about the products and their movement in the warehouse. A complex management system can overwhelm you, whereas simpler systems analyze and find the required results. This can help you save massive money and even eliminate extra inventory and shift orders. 
  3. Change the floor plan: Restructuring your warehouse’s floor plan might seem unlikeable, but it has been proven more efficient. Supply and demand of products are subject to change daily; therefore, you should make arrangements for storage changes too. Try modifying the storage plans to suit your business model. 
  4. Monitor employees: Employee monitoring and effective inventory tracking are bound to take your management game up a notch. Use strategies to add suitable security protocols to make tracking employees a much easier process. Make sure you take note of the results and change the protocols in accordance if they don’t work out. Eventually, your monitoring process will be fine-tuned. 
  5. Monitor high selling or bestselling items: Tracking sales and orders for every single product or consumer is one of the most significant advantages of warehouse management. This data is intrinsic for every organization to keep track of the company’s high-selling products. You can position these in a particular location in the warehouse for finding and following them quickly. This makes the inventory management process more efficient as a whole, where storage and shipping are carried out quickly. For big clients, this is one of the best methods to adopt. 
  6. Use reliable software for inventory management: The right software and proper inventory management are necessary to run an e-commerce organization efficiently. Do not rely on backdated inventory management systems because newer and more efficient technology has already been introduced. They have the prerequisites to cater to the needs of modern users and do not lag. These tools enable you to get real-time updates on your inventory and products. They can additionally have RFID tags for quicker and more accurate inventory tracking. 
  7. Consider flexible tracking options: Movable and flexible tracking options enable you to locate a product, the way to access it, and determine if it is ready to ship. You can easily find where you stored the items with movable tracking, making the whole process fast, efficient, and more intuitive. Several businesses also opt for fixed tracking based on their requirements. Fixed tracking helps to easily manage and assign item locations with accuracy and efficiency. A combination of fixed and movable monitoring is ideal for optimal results. 
Warehouse Inventory

How Do Warehouse Inventory Management Systems Work?

Public companies must track inventory to comply with Securities and Exchange Commission (SEC) rules and the Sarbanes-Oxley (SOX) Act. Businesses are required to keep records of their management processes to prove compliance.

Inventory management aims to understand stock levels and stock location in warehouses. If you produce on-demand, the inventory management process starts when a company receives an order from a customer and continues until the order ships. In alternative scenarios, the process starts when you forecast your demand and generate POs for the required raw materials or components. Analysis of sales trends and organized storing of products in warehouses are some other crucial parts of the process.

An inventory management system assists companies to recognize when to order more stock, which stock to order, and in what quantities. These systems keep track of stock from purchase to sale. This approach detects and responds to trends to assure there is always enough stock to meet customer orders and to warn of shortages in advance.

Warehouse Inventory

What are Some Tips to Improve Your Warehouse Inventory Handling?

Here are some of the best tips for warehouse management that one can implement in their system for improving inventory control shipping speed:

  1. Train your staff members for efficient management of your warehouse 
  2. Use your turnover ratio for storing inventory in accordance
  3. Regularly perform cycle counts 
  4. Strengthen the security of your warehouse 
  5. Label every item in your inventory
  6. Implement cross-docking to cut down on material handling 


Inventory management in a warehouse is crucial for running a company because it helps monitor in-hand and required stocks, thereby mitigating the risk of inaccuracy in records and stockouts. It is the most integral part of the logistics operations that determine the health of a company because order fulfillment is entirely dependent on the management of your warehouse. A disorganized warehouse can lead to severe consequences like the loss of inventory and delays in shipment. These situations can be easily avoided with an effective warehouse management system. 

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Here are some steps to efficiently manage inventory in a warehouse:

  • Track any inbound logistics
  • Optimize warehouse space for better movement
  • Take care of the putaway process
  • Strategize the stock takes
  • Monitor the cycle counting
  • Monitor the lots and serial numbers.

It is a template that lets users maintain and keep track of the inventory bin locations inside a warehouse. With this list, you can get a pick list printed, be flagged during reordering, get information on particular bins, and track the inventory value.

The average time that a company stores its inventory before selling is called Days in Inventory (DIO). To calculate the days in inventory, you will need to divide the average inventory cost by the cost of sold goods and further multiply that by the length of the period (usually 365 days).

Inventory cycle time is the time needed to produce and deliver an order to a customer, retailer, distributor, or consumer.

It is the average duration between an order placement by a customer and the shipment of an order. The formula for order fulfillment lead time is as follows:

Time order shipped from the warehouse = Time order placed by the customer / Total number of orders shipped.

Ideally, a good inventory ratio should be between 5 and 10 for most companies. This states that the company’s inventory is sold and restocked every 1-2 months. This ratio forms a good balance between possessing enough stock in hand and not requiring to reorder often.

Order cycle time is the average time needed to ship out an order from the time of order placement without calculating the shipping time. This is one of the most integral KPIs for tracking any order fulfillment process.

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