Warehousing is one of the most important operations in supply chain management. It refers to storing and maintaining goods until they are ready for distribution and managing inventory to make the right products available at the right place and time. With changing business trends, warehouses have become modern.
Modern warehouses have integrated technology as opposed to traditional warehouses, which were only storage places for products. So, the various warehouse operations are now managed by a warehouse management system.
What Is a Warehouse Management System?
A warehouse management system is software that enables businesses to manage warehousing efficiently. These systems aid in real-time monitoring and tracking of a warehouse, ensuring that every operation is streamlined to optimally use resources for order fulfillment and goods shipping.
Stockouts and Overstock: An Overview
One of the most important functions of a warehouse management system is inventory management. It is the process that ensures that the right amount of stock is always available to meet the customer’s needs easily. Every business should aim to maintain an optimal inventory level to avoid understocking or overstocking.
- Stockout
Stockout happens when the right amount of stock is not available for sale and delivery. So, in a stockout, a business will not have a sufficient amount of products to meet the customer’s needs. This also means that the business will miss sales opportunities and render its customers dissatisfied.
- Overstock
Conversely, overstocking means that there is more stock available than is required and demanded. When a business has more inventory than is demanded, it leads to the accumulation of inventory in the warehouse and increased costs for managing the inventory. Additionally, overstocking can lead to product obsolescence. So, the products may become outdated, and eventually, the business has to consider these products as waste.
Thus, a business must avoid both stockout and overstock to work productively and optimally.
Warehouse Management System to Reduce Stockout and Overstock
One of the best solutions that businesses can adopt to reduce stockouts and overstock is to make use of a warehouse management system. When it comes to inventory, warehouses involve four operations: receiving, picking and packing, storage, and shipping.
- Receiving involves unloading the inventory received from suppliers and preparing it for storage
- Storage means that the goods are stored in accessible locations so that they can be retrieved as and when required. It involves the protection of products from damage and theft, and maintaining them in an organized manner.
- Picking and packing are processes wherein stored products are retrieved to fulfill customer demands. Picked products are packed safely to prevent damage and labelled for easy identification, ensuring that the right products are delivered where required.
- Packed products are then shipped to their destinations
A warehouse management system optimizes these processes and ensures efficiency and accuracy. Moreover, with warehouse management systems, real-time inventory visibility is possible across multiple warehouse locations to help prevent stockouts and overstocking.
With real-time visibility, the warehouse management system sends an alert when any product is low in stock and can be replenished as required. Likewise, when overstocking happens, real-time warehouse management ensures that extra products do not pile up in the warehouse storage, maintaining accurate inventory levels.
To Sum It Up
An optimal level of inventory is essential for any business to be profitable and operate cost-efficiently. A warehouse management system enables businesses to do just that.
