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Guide to Inventory Positioning & Improving Warehouse Efficiency

You are currently viewing Guide to Inventory Positioning & Improving Warehouse Efficiency

Inventory positioning is the strategic organization of your purchased goods so that your eCommerce business benefits from greater warehousing efficiency and customers enjoy consistent order accuracy. This article will provide insight into the importance of inventory positioning, share proven pointers regarding better positioning of your stock, and explain how outsourcing fulfillment to a 3PL can work out for you. 

What is Inventory Positioning?

Inventory positioning describes where and how the inventory is stored and refers to the location where the goods are physically stored in addition to their position with respect to the overall supply chain. There is no point in stocking a product only to be unable to locate it. Correctly positioned inventory lowers the storage costs and streamlines the order fulfillment services.

To calculate inventory position, you must consider all forms of inventory including raw materials, pipeline inventory, and finished goods. It can be easily calculated using the following formula:

Inventory Position = Sum of On-order and On-hand Inventory – Backorders

Tips to Correctly Position your Inventory

While the potential outcome of a newly adopted strategy might sound exciting, the process itself can be sufficiently overwhelming. There is always the fear of missing out on an essential step or not following the better sequence of events. For the best physical inventory positioning, it is important to plan the strategic location of warehouse fulfillment centers for various SKUs based on consumers’ demand and plan the size of SKUs based on demand forecasts. Here are some tried and true tips that will direct which way to go to get the maximum results.

Carry out Data-driven Demand Forecasting

For positioning the right amount of inventory in the right locations, it is essential to back it with data-driven forecasting of customer demand. Only then, eCommerce businesses can mitigate unpleasant situations such as stockouts and suffer from the inability of catering to customer demand or end up with dead stock resulting in financial loss and high inventory carrying costs.  It is important to note that forecasting should not be a one-time process but conducted periodically, specifically for peak holiday shopping times and seasonal trends as changes in demand during these times call for reconsidering inventory position.

Enable More Accessibility of High-demand Products

Products that are popular among the customers can be purchased and stocked ahead of time. To identify these product SKUs, you need to correctly forecast demand and identify units with high turnover rates as well. Storing such products in easily accessible regions cuts down on picking time and expedites the fulfillment process. Products with a lesser turnover rate need not be stored earlier to save up holding costs and only be purchased once a customer has placed an order.

Position Bulky Products Lower

To simplify warehouse operations and to prevent safety hazards from occurring, it’s wiser to position bulkier products on lower shelves and keep the lighter and smaller ones higher up. If the bulky products are high in demand, they must be stored on the lower racks in an easily accessible portion of the warehouse. However, if they tend to move slowly, it’s best to move them to the back of the storage area and make room for SKUs with a higher turnaround. Periodic warehouse inspections can ensure that storage is in compliance with the Standard Operating Procedures (SOPs).

How Can ShipBots Streamline Inventory Positioning for You?

Many eCommerce businesses choose to outsource inventory positioning to third party logistics companies (3PLs). Inventory positioning can be a lengthy and staggering process and getting it right is crucial to securing cost-effectiveness and time management as well as ensuring customer satisfaction.

ShipBots is a 3PL based in Los Angeles with a team of experts in end-to-end ecommerce solutions and its elaborate experience in providing eCommerce fulfillment services makes it a reliable choice. ShipBots stores your inventory efficiently and compactly which enables packing and shipping to be a faster process. The digital automation of key warehouse management operations makes it easier to track SKUs and maintain a transparent inventory record which is easily accessible from our integrated inventory management dashboard.

To learn more about how you can benefit from utilizing our services for inventory positioning, you can contact us here.