Gone are the days when businesses needed to keep physical records of their inventory. Nowadays, technological advancement has made it much easier for warehouses and distribution centers to keep tabs on inventory levels.

Currently, there are several inventory management software that can help you with maintaining accurate stock records. Fishbowl, Cin7, and Stitch Labs are just a few of them.

The goal of having a tracking system is to maintain an optimal amount of inventory. You don’t want to keep a lot of inventory because it will mean spending more on holding costs and you also don’t want to keep too little because it might lead to occasional stockouts, delayed deliveries, and lost sales. Today, AI algorithms can analyze historical sales leads data, customer demographics, and even social media trends to predict future demand for specific products. This allows companies to optimize inventory levels and avoid stockouts or excess inventory.

Use Reliable Demand Forecast Systems

Demand is dynamic, making it a bit difficult to tell how much inventory you’ll need to meet customer needs. That’s where the need to invest in a proper demand forecasting tool comes into place.

A demand forecast system can help you estimate how much demand you’re anticipating in the future, allowing you to adjust your stock levels accordingly.

Usually, a good forecast system provides reliable insights and must take into consideration historical data, customer buying patterns, market trends, and other relevant factors when projecting how much inventory you need to keep.

Make Use of Safety Stock

No demand forecast system is 100% accurate. Hence, you need to have a buffer stock for smooth operations during uncertain times.

But then, when keeping this type of stock, be careful so you don’t be overambitious and end up spending more on unnecessary holding costs. Keep what’s just enough to cushion your operations in moments of stockouts or supply chain disruptions.

So, what is the sweet spot?

Well, we don’t have a one-size-fits-all kind of answer to that question. It depends on the type of business you’re running.

However, for most businesses, a safety stock equivalent to 50% of the average amount of inventory used during a reorder lead time works just fine. But of course, you have to keep adjusting this number depending on several factors like demand fluctuations, lead time variability, and other factors.

Optimizing Order Picking

Once an order has registered on your system and you have acknowledged receipt, the next move is usually to locate the required product from your inventory and pick it up from the shelves for preparation awaiting shipping. This process is what’s referred to as order picking.

Now, similar to order receipt, how quickly you can pick up the required items from your inventory can inject some degree of efficiency into your overall order fulfillment process, ensuring that you deliver products within the expected timeframe.

The cost of order picking accounts for 55% of all warehouse operation costs. That means if you can implement strategies to make the process more efficient, you can significantly cut on operation cost, making it possible to offer your products at a lower cost than the competition.

Here are some of the ways you can improve order picking:

Layout Your Warehouse Properly

The layout of your warehouse has a significant impact on how smoothly or inefficiently your order-picking process will run.

If you want to streamline inventory flow around the warehouse, you must ensure you have the ideal layout in place. Otherwise, it will be difficult for your employees to locate the required products, consequently leading to delays in order fulfillment.

That said, how can you have a well-optimized warehouse layout? Here are several tips to help you choose the best warehouse layout:

• Keep the frequently bought items at the most accessible spots.
• Have clearly labeled aisles
• Use vertical storage options
• Minimize the need for movement
• Ensure safety measures are in place

Also, remember to regularly analyze order data. Doing this will help you know if there are changes in the products ordered more often, helping you know whether or not changing the placement of items is necessary.

Invest In Order Picking Automation Tools

You should also consider embracing automation in order picking. The ongoing technological revolution has seen the emergence of automated order-picking innovations like conveyor systems, automated storage and retrieval systems, automated guided vehicles, and others. Integrating a Warehouse Management System (WMS) enhances these technologies by optimizing picking routes, improving inventory tracking, automating task assignments, and reducing errors through real-time data and analytics.

These tools greatly speed up the process of locating and moving products from the warehouse shelves to the packing area, making it much easier for employees to fulfill orders accurately and promptly.

Implement a First-In-First-Out (FIFO) System

While the FIFO system may not directly impact order picking speed, it can significantly affect order accuracy and customer satisfaction — 2 essential elements when we’re talking about order fulfillment.

With the FIFO system, it means that the items that came in first from the supplier are the first to leave to the customer.

In other words, when a customer orders for a product, if running the FIFO system, the item to pick will be the oldest among all of its kind. This technique helps eliminate product expiration issues, helping you avoid losses while simultaneously ensuring that customers receive fresh products every time.

When each product you’re sending to the customer is within the expiration date, returns are very unlikely, ensuring customer satisfaction and loyalty.

Pick The Right Picking Method

Finally, if you’re interested in optimizing order fulfillment, you also have to ensure that you’re using the ideal picking method for your operations.

Now, there are various order picking methods that you can deploy:

• Wave Picking: This order picking system works by grouping orders with similar products and then picking these items in batches.
• Waveless Picking: It’s a real-time order picking method whereby you don’t have to necessarily pile up similar orders to make up a batch before picking.
• Small Batch Picking: This technique involves grouping small orders together as they come to help reduce travel time. It’s ideal for operations where there’s a high mix of small orders.
• Zone Picking: This order picking method involves dividing the warehouse into different zones before assigning workers to pick items from specific zones. You can combine this picking method with another for greater efficiency.
• Discrete Picking: This method involves picking orders individually without having to group them together. It’s ideal for large, high-value, or custom orders where accuracy is of higher essence. \

As a business, ensure that you choose the most appropriate picking method for your operations to ensure that you achieve order accuracy and speed at the same time.

We don’t have a one “perfect” picking method that works for every business, which is why you must first analyze your operations and choose the method that best fits your needs.

Conclusion

Optimizing the order fulfillment process is one of the things you need to ensure if you want the success and growth of your venture. By optimizing order receiving, order processing, and shipment processes, you can achieve an efficient order fulfillment process that best delivers customer satisfaction.

And remember, you must stay updated with advancements in technology and consumer needs for you to continuously improve and stay ahead of the curve. Also, don’t downplay the essence of incorporating sustainability in order fulfillment as well as the importance of establishing good long-term relationships with your shipping partners. It can help save money.