The fulfillment process you have in place reflects on the business as a whole, and directly impacts several areas, including:
One of the biggest problems in warehouse inventory management is the lack of automation, and this in turn leads to an error-prone, labor-intensive warehouse process that adds more costs than necessary. The result is a poor bottom line. Basic warehouse processes may start with receiving inventory for manual verification and manual update of computer records, and thankfully, a warehouse management system allows a company to be more competitive by implementing processes that involve RFID and other automation technologies. This strategy improves efficiency, minimizes errors, and lowers costs, while also getting inventory into the records faster.
And what happens in a warehouse environment that lacks automation? First and foremost, the company pays too much for the warehouse operation. But beyond that, the error rate is high. Shipments may be incorrect, and because the process is manual, there is a higher likelihood that the customer will get the wrong item. This not only results in a dissatisfied customer—who may not make repeat orders in the future—it also results in higher freight costs, since the company will bear the cost of shipping out the correct item. Beyond that, it will result in weaker cash flow, as invoices will not get paid as expected.
Bringing in a new level of automation into the warehouse and streamlining warehouse inventory processing will just mean better business overall. In this automated environment, when inventory is received, it will be scanned in and verified against purchase orders in real time, resulting in immediate updates, and eliminating the need for redundant data entry. The automation, usually using RFID tags or other similar technology, also results in faster and more efficient picking, since any time a shelf is consolidated or inventory is moved, it can be scanned before and after moving, so that the computer stays up to date on the location of every pallet. Also, because the picker is using a bar code scanner in real time, there is less incidence of picking the wrong item.
Managing warehouse inventory properly will also have a major impact on the purchasing department. Implementing this level of automation will give the purchasing department up-to-the-minute information on quantities that are needed, and also long-term information about usage patterns that will help in making future buying decisions. The warehouse inventory system may be integrated with a forecasting system, which analyzes the warehouse data and sales records to accurately predict needs.