Column: Managing the warehouse equals profits

By Andi Gray

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Our warehouse — it’s substandard. Inventory is too high. Things get lost. We can’t find what we need when we need it. We know there are related issues. How do I fix it?

Thoughts of the Day: You can’t do it all. The right employees can make a huge difference. Set up procedures. Invest in tools. Consider farming out the warehouse function. Make time to learn about best practices in your industry.

Customers depend on their vendors to get them what they need, when they need it, no excuses. Managing the volume, cost and markup on materials that go to customers can impact profits and customer satisfaction.

Someone has to be in charge of the warehouse. It shouldn’t be the owner who has bigger issues to solve, including how best to handle inventory to meet customer needs as the company grows.

Reflect on who you have or should have in the warehouse. Here are some questions to evaluate warehouse personnel.

• Do they like keeping track of details?

• Do they have a high need to be right?

• Can they look at reports and compare reports to physical counts?

• Can they multitask?

• Do they have the communication skills to deal with vendors?

• Can they command the respect of co-workers?

• Do they have the strength and stamina to keep up with the workload?

• Are they willing to take charge and accept responsibility?

• Can they blow the whistle or ask for help if there’s a problem?

• Will they grab onto automation?

• Will they work extra hours if needed?

Inventory management starts with calls for supplies. Log orders into a system. After delivery, verify that the vendors’ quotes match the bills you receive. Log specific inventory pieces out as they’re used and make sure they’re charged to the client who will benefit.

Have supplies come to a central location. Make someone responsible for accepting delivery. That person ensures everything is received as ordered and in good shape.

Keep control with a check-in/check-out system. Limit the number of people who can walk into the warehouse. Keep shelves neat and well labeled to help spot when inventory is low and needs to be reordered, as well as to identify inventory that builds up and needs to be moved out. Keep moving older inventory to the front of the warehouse and put someone in charge of finding ways to use it up.

Inventory tools can reduce waste and days of goods on hand. Days that goods sit around, instead of being put to work and charged off to the client, ties up money that could be used elsewhere in the business. Waste costs more than 100 percent because of lost opportunity.

There are lots of tools on the market to track inventory. Scanners and bar coding save time and increase accuracy. GPS systems on pallets help track goods on and off trucks and at clients’ sites. Using iPads and truck stocking systems helps make inventory management in real time.

If you’re not prepared to manage inventory, consider outsourcing. Some vendors will receive, store and later deliver the finished goods to your clients. Others will stock your trucks or ship via common carrier when you request it. Bulk centers can streamline processes and take advantage of staffing efficiencies. You still have to periodically audit to ensure they’re not wasting or losing items. If you have lots of goods coming in and going out, consider cross docking to speed the turnaround — especially important when dealing with perishable items.

Whatever solution you choose, set goals. Reduce the time goods sit, cut down on waste and increase ability to service customers by having exactly the right inventory all the time.

Turn to your industry association for ideas on best practices. Team up with companies larger than yours, who can show you what they’ve invested in. Hire experts to help you plan your warehouse of the future. Have a vision of where you want to go.

Looking for a good book? Try “Warehouse Management: A Complete Guide to Improving Efficiency and Minimizing Costs in the Modern Warehouse” by Gwynne Richards.

Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business-consulting firm that specializes in helping entrepreneurial firms grow. She can be reached by phone at 877-238-3535. Do you have a question for Andi?  Please send it to her, via email at AskAndi@StrategyLeaders.com  or by mail to Andi Gray, Strategy Leaders Inc., 5 Crossways, Chappaqua, NY 10514. Visit AskAndi.com for an entire library of Ask Andi articles.

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About the author

Andi Gray
Andi Gray is president of Strategy Leaders Inc., strategyleaders.com, a business consulting firm that specializes in helping small to midsize, privately held businesses achieve doubled revenues and tripled profits in repetitive growth cycles. Interested in learning how Strategy Leaders can help your business? Call now for a free consultation and diagnostic process: (877) 238-3535. Do you have a question for Andi? Email her: AskAndi@StrategyLeaders.com. Visit AskAndi.com for an entire library of her articles.

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