Warehouse Capacity Management | How To Plan Around Your Inventory

Posted on December 17, 2020

warehouse capacityAre you worried about how to manage your warehouse inventory so that you can deliver on time, every time?

This is a worry that a lot of businesses have in the ever-evolving world of logistical planning. The absolute boom in e-commerce sales that occurred in 2020 is putting quite a lot of pressure on the industry. Retailers, wholesalers, and manufacturers all need to think quickly about how to be managing their stock effectively so that customers and clients keep getting a high-quality service.

At the very heart of this is warehouse capacity management. This is all about using storage space effectively so that you maximize the range of stock you can offer your customers, while not taking up space with surplus stock of particular products. So, let’s jump straight in and work out how to manage warehouse capacity!

What Is Warehouse Capacity Management?

First of all, let’s do the groundwork. Warehouse capacity management refers to managing the levels of stock that you have stored in a warehouse.

What it involves is keeping a close eye on exactly how much of each product you currently have stored. You want to be managing your off-site warehouse locations so that you always have stock on hand to fulfill new orders from your customers.

But you also don’t want to be keeping an excess amount of stock if it is unlikely to be sold quickly. For example, if you sell clothing, keeping hundreds of items in the same size and design in the warehouse may not be necessary.

The goal of warehouse capacity management is to keep your business lean, agile, and streamlined

Why Is It Important?

There are a number of different reasons why warehouse capacity management is critical to business operations. Let’s look at them in detail.

1. Customer Demand

Customers have become very picky in recent years, and if they can’t get quick delivery on items, they are very likely to move to a different retailer for the same or similar product.

This is a trend that has really been boosted by retailers like Amazon, who are offering shorter and shorter delivery times for free. Customers are willing to go to smaller businesses to buy their products, but they still expect a competitive service.

If stock capacity is mismanaged, you may end up letting your customers down. If they see you are out of stock, they will just move on somewhere else. But, worse, if you inform them after they have made the purchase that you are actually out of stock, this may do serious harm to your brand image. This goes for retailers as well as wholesalers.

2. Minimizing Costs

At the other end of the extreme, you don’t want to be keeping too much stock in your storage facility. Space in warehouses is calculated quite precisely, so an extra few hundred products here and there will take up space and cost money.

So, you want to be managing your stock so that you always have enough stock on hand but never an unnecessarily large amount. This is critical to keep your business lean and keep cash flowing.

3. Inventory Visibility

It is also essential that you always have a good idea of exactly where your inventory is at all times. After all, your inventory represents money your business has spent, and that money is tied up until the product is sold. You can’t afford to take it for granted.

Inventory visibility simply allows your business to run more efficiently. It gives you the opportunity to assess exactly where all your capital is and lets you plan better.

4. Customer Experience

Lastly, as a run-on effect of using effective digital inventory strategies, you can offer a much better purchasing experience to your customers. In the first place, you can guarantee that stock is available for the products they are interested in, which increases brand confidence.

But, after that, you can also inform customers about which step of the process the shipment is now in. With live data coming back from the warehouse, you can inform customers that the order has been transitioned to the delivery service. Since Quality Warehouse and Distribution Co. uses trusted delivery operators like UPS, your customers can also benefit from further digital awareness of the status of their order.

All of this contributes to consumer confidence and improves brand image.

How Is Warehouse Capacity Managed?

The crucial element of modern warehouse capacity management is digitization. The layout of warehouses can be quite complex, which is why modern third-party logistics providers like Quality Warehouse and Distribution Co. has the digital infrastructure in place to make inventory management easy.

Using computerized labeling and computerized inventory, we are able to know exactly where all stock is being kept at any moment. Most importantly, we pass that information on to our clients.

Having this information in digital form makes it easy to make real-time decisions about when to make new shipments. It can also help with analysis of which products are selling well and which are not.

With a digital inventory on hand, you can easily run analysis to do things like forecast sales, estimate expenses, warehouse slotting, automate product flows, and organize in-house workflows.

These are all essential tasks that modern businesses are starting to do more and more. In fact, research suggests that businesses that do not get ahead of the digital curve may significantly suffer at the hands of their competitors.

Stay Ahead of the Game

When looking at warehouse capacity management, you always need to remember that the goal is to stay one step ahead—one step ahead of your competitors and one step ahead of your customers’ expectations.

Regardless if you are using shipping containers, trucks, or trains to move your products, having good information for inventory management will allow you to analyze and strategize how you can be delivering better and better services.

Here at Quality Warehouse and Distribution Co., we are absolutely committed to providing you and your customers with excellent service at all levels of logistical operation. If you want to know more about how our inventory management solutions can help your business, get in touch with us!