Warehouse management is a challenging task that requires experienced staff and the right tools for them to do their jobs effectively. To control productivity and accuracy, managers need to be abreast of every detail around how the warehouse operates because one inefficient process may cause a bottleneck that can slow everything else down.
Some bottlenecks are temporary disruptions caused by such things as machinery breakdowns, absent staff or an unexpected material shortage that can often be flagged early and resolved with minimal impact.
Others, however, can have longer-term effects and inhibit a business’ potential for growth such as work stations unable to be optimised because the machinery is operating at maximum capacity, activities that require a set timeframe to complete or ones that have complicated verification processes.
One such bottleneck that will potentially inhibit business growth is an inventory bottleneck due to poor inventory control and that fails to meet the company’s growing demands.
An inventory bottleneck is caused by a material variance. A shortage of inventory in one part of the production process can have a domino effect on the entire operation. Imagine, for example, you are a small craft brewery and halfway through bottling your latest IPA you discover you’ve run out of bottle caps.
Not only is it necessary to halt the whole bottling process but the unfilled bottles are taking up space needed for new delivery and the unbottled beer is left in the tank you need to use for fermenting the next batch. Labelling and packing can’t be completed, staff are idle, dispatch is disrupted, and you don’t have enough inventory stock available for shipping to customers.
Something as seemingly innocuous as a few bottle caps has the potential to cause chaos to your brewing operations and it’s not only a lack of work-in-progress inventory crucial to producing a final product that creates an inventory bottleneck. If you have goods exposed to spoilage sitting in the factory waiting to be used, you could be under the misconception you have the necessary stock on hand when in fact, it has expired or perished.
If you don’t know enough about your inventory needs because you lack a real-time view of your entire inventory stock, then you need to invest in the right tools to keep your inventory control streamlined and efficient.
Regularly look at every area of the business to find where you can implement and action continuous improvement: are your sales, production, inventory control and customer service activities fully optimised and running as effectively as they can be?
When looking to eliminate potential bottlenecks, a vital area to investigate is your capacity to deal with any new business. You need reliable technology to run your day-to-day business operations and the technology to provide the product the business is offering.
If you land any new business, do you have the resources available to keep up with the work? Plan for every possibility to help anticipate and eliminate potential threats to organisational growth. This involves having the right tools in place to support business functions, documented processes and the well-trained, qualified staff to undertake the necessary activities.
Implement reliable quality control to ensure that every order and product is accounted for correctly, using checklists. Take the time to properly receive product into stock and have a comprehensive labelling system so that staff know exactly where to locate any stock items.
Inventory stock should be monitored the moment it is received into the warehouse and placed in its correct stocking bin. Maintaining an organised warehouse helps to optimise inventory control.
Poor forecasting is perhaps the most common cause of bottlenecks. Overpredicting demand leaves you with a warehouse filled with products that don’t sell and forecasting too low can lead to unfulfilled orders, client dissatisfaction and missed opportunities.
Additionally, market conditions and customer expectations are continuously evolving so to keep pace with the market you need to ensure your operating systems are flexible and able to adapt to changing business needs. Cloud-based solutions provide the tools to help manage contemporary market demands, they are adaptable to a growing business and can track inventory stock via a single system that provides real-time visibility.
Article by Melanie Chan in collaboration with our team of Unleashed Software inventory and business specialists. Melanie has been writing about inventory management for the past three years. When not writing about inventory management, you can find her eating her way through Auckland.