Inventory management planning

Simply put, a warehouse is just a giant storage center where you keep inventory that you sell directly to customers. It can be both time-consuming and expensive to manage large amounts of physical inventory. But it’s worth it to ensure your goods are safe and have a long shelf life. To maximize your warehouse profits, follow these tips.

If you’re looking to increase your warehouse profits, you need to be sure that your warehouse is working at peak efficiency and that the correct amount of inventory is on hand at all times. Inventory management might not be the most exciting part of business, but it’s an essential one. 

That’s why we’ve put together these 10 tips for boosting profit and ensuring smoothness. Timely delivery of products and materials to customers as well as quick, accurate restocking of shelves and other warehouse fixtures.

10 Tips for Maximising Warehouse Profits

One of the most important factors in maximizing warehouse profits is to make sure your warehouse is set up to be as profitable as possible. Everything from stocking inventory, receiving shipments, and managing employee hours can affect your overall profit margin. Every minute you don’t have products stocked, ordered, or ready to ship means lost revenue. Here are 10 tips that can help maximize your warehouse profits 

1. Properly organize your inventory with proper shelving units and racks. Stacking items on top of each other doesn’t only take up unnecessary space. It also leads to inconsistent temperatures within a given storage unit. Which leads to product degradation over time (i.e., items breaking due to expansion or contraction). In addition, having an organized warehouse cuts down on time wasted looking for items employees need at any given moment. And significantly lowers errors when it comes to sending orders out. 
2. Be specific when ordering inventory so that you aren’t paying more than necessary and can eliminate excess inventory. For example, if one vendor offers red widgets for $1 per piece while another is offering them for $0.90 per piece, do not order 10,000 of them from the first vendor! It may seem like a great deal. But if you only need 1,000 then purchasing extra inventory will lead to either having lots of unsold products or requiring another purchase before those items expire. By doing the math, it might make sense to pay more upfront to get exactly what you need instead of purchasing too much. 
3. Don’t fill every spot in your warehouse with inventory; leave room for growth by stacking pallets along walls or placing unused boxes under shelves. The idea here is to conserve your inventory storage capacity for future growth opportunities rather than use it all now. Unused capacity costs nothing and can easily be used as you add new products or increase sales levels without having to make additional purchases right away. 
4. Make sure you know where everything is at all times; whether it’s equipment or inventory, tracking things helps manage resources better and gives workers the peace of mind they won’t lose track of something critical during their day. As simple as it sounds, knowing where inventory is located allows workers to focus on fulfilling customers’ needs instead of searching for a part needed to fix machinery or look for items required for packaging orders. 
5. Consider investing in automated tools like a conveyor belt system that moves inventory around your facility rather than relying solely on people’s power to transport boxes and equipment from place to place. Automation can greatly speed up operations and save money in areas such as labor and shipping costs. However, automation comes with a price, and it’s important to investigate your company’s current financial situation to see if it can be used.
6. Ensure equipment is running smoothly and is in good repair. This might sound obvious, but many businesses overlook basic maintenance issues or incorrectly assume their employees maintain/fix machines on their own when needed. Depending on your business, an improperly-functioning piece of equipment can severely impact your production rates or even cause you to be unable to fulfill customer orders. 
7. Look into inbound shipping options. If your suppliers ship products to you via truck, plane or train, consider asking them if they’ll let you store their product at your warehouse until it’s time for the shipment to arrive. Shipping costs can vary widely depending on weight, carrier and size of the shipment. Sometimes, using a combination of shipping methods can be less expensive than just one. 
8. Utilize local connections to reduce inbound shipping costs. Ask your suppliers if they’re willing to ship products to you directly from their warehouse or storage center rather than sending them all the way across the country.
9. Pay attention to overages. Just because your inventory has no expiration date doesn’t mean it should go unchecked for years on end. Many materials degrade over time, or their condition is not suited for storage in certain environments. So make sure you are periodically checking on inventory to make sure it hasn’t expired or fallen below acceptable standards of quality. 
10. In extreme cases, you might look into liquidating old inventory. This doesn’t happen often. But if your warehouse is bursting at the seams with items that are impossible to sell or are taking up space for a similar product you could still sell. It’s worth investigating if someone would be interested in buying those products from you. Some companies will be happy to buy you out of seasonal or overstock inventory. 

Optimize information flows with an ERP system.

An ERP system facilitates and automates crucial business processes, making it possible to optimize information flows between logistics partners. The best way to maximize profits is through a seamless flow of goods from the warehouse to the fulfillment center. And then on to the customer. Every interruption in that process can lead to missed deadlines, which means lost profits. An ERP system ensures that both internal operations, as well as those involving shipping companies, are consistent and well-coordinated. 

As such, it’s an essential part of any warehouse management strategy. By working closely with your logistics partners and by continually reviewing shipments both incoming and outgoing. You can reduce overall costs, eliminate errors, and streamline operations. After all, you have enough problems to solve without throwing new ones into the mix; an ERP system will help you keep your head above water by simplifying daily logistics procedures. 

It’s important to remember that while an ERP system can help you generate a larger profit, it isn’t a dimple cure-all. Using an ERP is an ongoing process that requires both discipline and adaptability. While things may go smoothly in one area of your warehouse, it could be suffering elsewhere. That’s why it’s so crucial to remain vigilant; stay on top of new developments, and avoid being complacent, ready to make improvements when necessary. After all, logistics are as competitive as they are complex. And if you don’t keep up with changing business conditions and new technologies, you risk falling behind the competition or even shutting down altogether.

Final Thoughts

With a growing list of ways that businesses can increase warehouse profits, the key is to identify your company’s needs and get creative about how you approach logistics and inventory management.  Working with a team of professionals is one way to get help. But don’t be afraid to try something new on your own. It might take some trial and error before you hit on that one tip that really changes your business.