Running a business with physical products poses a number of challenges — one of them being inventory.
Maintaining and controlling steady stock levels is an obstacle many retail business owners face on a daily basis, and that problem is compounded when your inventory is in more than one warehouse.
While holding stock in multiple warehouses poses its own challenges, there are some simple tactics retail business owners can implement to help streamline your supply chain and ensure that stock levels remain steady.
Why Use Multiple Warehouses?
Before we dive into advice on how to manage inventory across multiple warehouses, let’s first take a look at the advantages of this strategy.
The Advantages of Multi-Warehouse Operation
Many brands begin with a single warehouse to host all their inventory — and that works for them, for a while. With one warehouse, it’s easier to keep an accurate count of all your inventory and keep your supply chain simple.
However, once companies begin to scale, having one warehouse in a single location may no longer cut it. When a brand targets a growing global audience (or even just a large region like North America), shipping your items from a single warehouse may cause shipping delays for your customers.
There are also potential cost-savings — having inventory hosted at multiple warehouses near the largest geographic concentration of your customers can reduce transport costs. Let’s look at a scenario:
If your only warehouse is in New York but you have a growing contingent of customers in Los Angeles, the transport costs to get products across the continental U.S. regularly add up. However, if you opened a California warehouse, fulfillment costs could be far less expensive per order (even after factoring in the cost of the warehouse and logistics for your second warehouse).
Companies can also use multiple warehouses to consolidate certain products. Using the same example above, consider this:
Brand A has their primary fulfillment center in New York, but a large number of Los Angeles customers buy 75% of its best-selling product. The company can stock a California warehouse with those top products so that L.A. customers can get quick shipping (and you save on overall transport costs).
The Challenges of Multiple Warehouses
Although a multi-warehouse strategy has its advantages, using more than one fulfillment center can also pose some serious challenges.
If you’ve already split your stock between two or more warehouses, you’re likely aware of the most common frustrations of this strategy. Some of the biggest obstacles a business can face include:
- Maintaining stock counts: When you have more than one warehouse, ensuring that all your products stay stocked can be a challenge. Stock levels and sales can quickly fall out of sync. When you’re working in one warehouse, it’s easy for the others in your supply chain to be “out of sight, out of mind,” which can lead to low inventory counts before you know it. Out-of-stock products can lead to supply chain inefficiencies and lost revenues.
- Cross-warehouse communications: Because warehouses tend to be some distance apart, it’s impossible to have employees who run those warehouses jammed into one office. With remote employees managing each warehouse, companies often run into communication issues. Missed or mixed messages can cause errors or bottlenecks. And a lack of face-to-face interactions can curb spontaneous discussions around streamlining or improving processes.
- Mixing up files for different warehouses: When companies don’t maintain separate file systems for each warehouse (like inflow, outflow and invoices), it’s easy for orders and shipments to get mixed up between warehouses — especially if you use a centralized filing system.
Although these are just a few of the common challenges companies face, it’s possible to operate multiple warehouses efficiently and keep your sanity intact.
Tips to Manage Inventory Across Multiple Warehouses
Keep Data Synced Across Locations With the Right Tools
As with any process, using the right technology can make inventory management far easier.
When you have multiple locations that require inventory management, you need a tool that’s robust enough to fulfill your needs. Using inventory management software like Stitch Labs, you can automate some of those tedious, manual processes and gain more transparency into your operations across all the locations where you house inventory.
When looking for the right inventory management tools for your business, ensure your technology of choice can:
- Monitor stock levels across all locations
- Transfer products from one warehouse to another
- Sync with other crucial components of your business (like your eCommerce back-end and/or accounting software)
- Build fulfillment workflows that scale
- Create purchase orders
- Run reports that offer transparency into your inventory and operations
Revamp Your Warehouse Layout
It isn’t enough to simply automate your back-end processes — retailers should also take a hard look at the physical warehouses.
Examine the layouts of all your warehouses. Are they optimized for efficiency? Is the layout logical and easy for employees to navigate? If all of your warehouses are well-organized, then the layout can positively affect the rate at which customers receive their orders. When products aren’t categorized properly or your warehouse is a confusing maze, it takes longer for employees to find and ship them out to customers. And as we know, faster, accurate shipping equals higher customer satisfaction.
But before ripping out all your shelves to start over, take a look at a few simple ways you can update your warehouse to streamline the fulfillment process:
- Move popular products closer to the exits so employees can quickly send these orders out (since these will need to be fulfilled regularly).
- Make sure every shelf is labeled and all shelves have the appropriate products.
- Create an easy-to-read map of your large warehouses. Send digital versions to all relevant employees and post copies in strategic locations throughout your warehouse locations.
- Bigger isn’t necessarily better — especially when it comes to warehouse space. Measure the travel time of your products (the time it takes for an employee to find and select a product for a customer’s order). Upping your building size may give you more space for storage, but it can also significantly increase travel time, leading to fulfillment delays.
Take Geography Into Account
When setting up a new warehouse or moving an existing one, don’t forget to take geography into account.
Choosing the right location for your warehouse is crucial to fulfilling orders faster. After consulting sales data, you can find the regions or cities with high concentrations of your customers and factor it into your decision about the next warehouse location.
While it might be tempting to simply put a warehouse as close as possible to your customers, choosing one geographic location over another has inevitable tradeoffs. For example, if you put a warehouse in a large city where most of your customers live, you’ll likely pay more rent and labor costs. On the other hand, if you choose a space in a rural area, your rent costs will be lower but transport costs will increase.
Every potential warehouse space will have pros and cons — the trick is to find a balance between proximity to customers and other overhead expenses.
Moving Forward With Optimized Inventory Management
Retailers with multiple warehouses often run into a unique set of obstacles — as does any company with multiple locations that require management. However, with the right tools and tactics in place, companies can optimize their warehouse management strategy and set themselves apart from their competitors.