Suppose that the warehouse records indicate that you have 500 units of a product on hand, but when someone orders those 500 units, you find that you only have 430 units available. These types of events can cause late deliveries, cancelled orders, added expenses, and unhappy customers.
Maintaining proper inventory accuracy is a crucial aspect of ensuring the smooth running of warehouse operations. More complex supply chains can make it challenging to deal with stock manually and via spreadsheets. Here warehouse management software for the supply chain can really help.
What Is Inventory Accuracy?
Inventory accuracy refers to the match between the number of items you have in your warehouse and the number that you report on your records.
If your inventory records indicate 100 units and a physical inventory count also yields a count of 100, then the inventory is correct.
If by a physical count only 85 units are found, however, then the difference must be explained.
Having accurate information on inventory can help businesses make informed purchase decisions, meet customer orders, optimize warehouse storage, and prevent overstocking or stockouts.
1. Provides Real-Time Stock Visibility
A key advantage of warehouse management software is that it enables teams to monitor inventory transfers in real time.
The system can update the appropriate stock records when goods come in, are moved between areas of storage, are picked for orders or when the goods are removed from the warehouse.
This provides warehouse managers with a more accurate view of what's in the warehouse and helps minimize reliance on outdated spreadsheets.
This visibility can also be used to inform teams of the availability of products and whether they can be moved from warehouse to warehouse for businesses with multiple warehouses.
2. Reduces Manual Data Entry Errors
Manual data entry is one of the frequent causes of inventory discrepancies.
It is possible for an employee to put in the incorrect amount, pick the incorrect product code, or leave a stock movement out. If these errors are repeated over time, the discrepancy between the recorded and real stock may increase.
A warehouse management system (WMS) can automate and streamline these tasks with barcode scanning, structured workflows, and automated stock updates.
Human checks are vital, but repeated manual data entry is less reliable because of the potential for human error.
3. Improves Receiving and Put-Away Processes
The accuracy of inventories starts right at the moment they reach the warehouse.
Employees should inspect the quantity, product information, packaging, and discrepancies between received goods and the purchase or delivery order.
Warehouse inventory management software can also be used to guide employees through the process of receiving goods and assist them in documenting any discrepancies before the goods are stored.
It can additionally assist employees in placing products in the best storage areas, which will make them more accessible when needed.
4. Tracks Stock Movements Within the Warehouse
Sometimes products are not kept in the same place. They might move from shelf to storage area, from picking area to warehouse, or from warehouse to warehouse.
These movements will not be registered properly if they are not entered correctly, and the total quantity may be correct, but the storage location may not
Today's WMS software provides the ability to monitor these internal movements, making inventory easier for employees to find and minimizing lost time locating missing inventory.
5. Supports More Reliable Order Picking
Wrong inventory data can lead to issues in order fulfillment.
A system can be configured to return a positive result even if the product is not in the assigned location. This may cause delays in picking, packing and dispatching.
A WMS can direct employees to the proper storage location and help verify that the right product and quantity are picked.
This boosts the accuracy of orders and assists warehouse staff in completing orders more efficiently.
6. Makes Stock Counting Easier
Although a business uses warehouse software, physical stock counting is crucial.
Rather than counting the total stock in the warehouse, companies can schedule cycle counting of specific products or areas more frequently.
A warehouse management system can facilitate this counting, compare the number of physical units to the number of units on record, and determine if there are discrepancies that require investigation.
This way, teams can avoid having little issues grow into big operational ones by correcting inventory records before they become bigger problems.
7. Helps Manage Multiple Warehouses
Companies that do business in multiple countries or regions can have stock in multiple warehouses.
If the stock is not connected to the systems, the stock data can get out of sync between sites.
Depending on the capabilities and integrations of warehouse software, it can offer a more uniform view of inventory across all facilities.
This enables companies to make informed decisions regarding restocking, stock transfers, and order fulfillment.
8. Improves Supply Chain Planning
Inventory accuracy impacts other areas besides the warehouse. It also affects customer service, purchasing, transportation, and production planning.
If the information provided in the stock is reliable, the purchasing team can make better decisions on replenishment. Customers will be better informed about availability, and fulfillment teams will have a better plan.
So, inventory plays a crucial role in overall supply chain performance, and hence, it is pertinent to pay attention to inventory accuracy.
9. Identifies Recurring Inventory Problems
Receiving errors, picking errors, damaged goods, unrecorded movements, and gaps in the process are all possibilities for inventory discrepancies.
Warehouse management software can keep records of transactions, enabling managers to explore the reasons for a discrepancy at different times and locations.
Businesses can use these records to pinpoint issues that arise repeatedly, make improvements to their workflows, and tailor training sessions for their staff working in the warehouse.
How to Choose the Best Warehouse Management System
The best warehouse management system depends on the size of the business, product type, workflows, and business needs.
When selecting a solution, ask yourself whether it supports:
Real-time stock updates
Barcode scanning
Receiving & put-away process
Storage location tracking
Order picking and dispatch
Cycle counting and stock adjustments
Multiple warehouses, as needed
Integration with other systems, including ERP, purchasing, sales, and accounting
Useful inventory reports and transactions history
This isn't about buying new, more advanced technology. It's about selecting warehouse management software that truly supports the way your business operates.
Frequently Asked Questions
1. How does warehouse management software improve inventory accuracy?
It allows for the tracking of stock movements and stock locations, minimizes manual entry through barcoding, and helps identify discrepancies between recorded stock and stock on the shelves.
2. Is WMS software suitable for small warehouses?
Yes. It reduces manual work and improves stock visibility for small warehouses. The system should be appropriate for the size, complexity, and budget of the operation.
3. Can warehouse management software eliminate inventory errors?
It is impossible to ensure that all records in inventory will always be accurate in any system. But with the right software, processes, employee training and regular stock counts, it's possible to minimize mistakes.
4. What is the difference between warehouse software and a warehouse management system?
The terms are frequently used interchangeably. A warehouse management system is generally a software program designed for warehouse receiving, storage, picking, packing, and dispatching functions.
5. Can WMS systems connect with ERP software?
A large number of WMS solutions are able to connect with ERP and other business software solutions. The degree of integration depends on the products used and their configuration.
Conclusion
Having accurate inventory is key to running an efficient warehouse and maintaining an effective supply chain. Without confidence in their stock records, businesses may experience order delays, buy what they don't need, waste time, and incur higher operating costs.
These issues can be addressed using supply chain warehouse management software that provides better stock visibility, movement records, improved stock-counting facilities, and links warehouse activities with wider business activities.
A good warehouse management solution, coupled with the correct working practices, can help companies ensure more accurate stock information and make better decisions on a day-to-day basis.