8 min read
Aug 31, 2020
Inventory management

How To Organize Inventory in Your Warehouse

Organize your inventory in 5 simple steps to reduce labor costs and drive productivity in your warehouse.

Rahul KumarContent Writer

There are many reasons why you should be organizing the inventory in your warehouse. Customers will get their deliveries on time, and your staff won’t have to run around trying to find products. An organized inventory will also ensure your other warehouse management processes run smoothly.

You may have the largest warehouse, but if the inventory it stores is unorganized, your operations and productivity will be affected. A clutter-free, organized warehouse will make it easier for you to make space for new stock, ship items without delay, restock on time, and even welcome clients—or customers, if you have a B2C fulfillment center—for visits.

70% of online shoppers will look for a product elsewhere if it is unavailable rather than wait for it to be restocked.

That said, organizing inventory isn’t an easy job. It’s time-consuming and labor-intensive, but if you get it right, you’ll be making the most of your warehouse space. In this article, we’ve shared some step-by-step instructions to help you organize inventory, right from the time the delivery truck arrives at your warehouse doorstep.

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What are the benefits of organizing inventory?

Before diving into the details, let’s first understand how organizing warehouse inventory will benefit your business.

More storage space in your warehouse

By organizing inventory, you’ll be reducing clutter and freeing up more warehouse space for other items. On any given day, it’s less costly to organize your inventory by optimizing existing warehouse processes than it is to purchase or rent more storage space.

36% of warehouses and/or distribution centers in the U.S. cited insufficient space for inventory and/or operations as a major issue.

A safer working environment for your staff

Given the type of equipment used in a warehouse, employee safety should be your top priority. The large racks, shelves, machinery, and industrial trucks your employees work with every day are potential safety hazards. And safety risks only increase when there’s clutter! Having inventory tucked away into their designated locations will keep your warehouse floor clutter-free and reduce the chances of accidents.

Quicker processing of your orders

An organized inventory means your employees will know where exactly an item is kept, so they’ll spend less time wandering around different sections of the warehouse trying to find the item. This will not only help you serve customers quickly but also make it easier to dispatch orders for delivery.

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Organize your warehouse inventory in 5 simple steps

Follow these five simple—but effective—steps to organize your inventory and turn your warehouse into a high-functioning machine.

5 steps to organize your warehouse inventory

Step #1: Designate an inventory receiving area

For all new inventory coming in from suppliers, designate a receiving area where your staff can sort items and move them to their respective places within the warehouse. The receiving area should ideally be at the back of your warehouse, as the front area is usually busy dealing with clients/customers or shipping out orders.

Step #2: Place bestselling products nearest to the warehouse front

During the sorting process, check for your bestsellers and keep them at a place that’s easily accessible to customers or nearest to the delivery bay, most usually the warehouse front. If your inventory comprises items with an expiry date or a certain shelf life, instruct your staff to put the new stock behind the old one, so items are sold in an orderly way to avoid wastage. 

You can also organize items based on their sales volume and frequency, from front (the delivery bay) to back (the receiving station). This will significantly reduce the time and effort it takes your staff members to transport more-popular products to the delivery point.

Step #3: Label all products and name their storage areas

Once all your products are at their designated locations, tag them with a physical sticker and a stock-keeping unit (SKU) label. A physical sticker usually mentions the name of the product, while a SKU label comprises a unique code made up of letters and numbers. This code is scanned to match your digital inventory list, so you have an accurate account of inventory levels, including on-hand physical inventory and out-of-stock items.

Next, name all inventory locations based on the products they store. For example, if you’re an automobile components supplier, your warehouse storage areas can have names such as “ignition system zone” (contains spark plugs, ignition coils, etc.) and “battery zone” (contains battery cables, battery caps, etc.). This way, you’ll have a well-defined warehouse layout, and it’ll be easier for your staff to store and track items.

Step #4: Use the slotting technique

The slotting technique involves storing similar types of items together. You can decide the similarity based on various parameters, such as physical size, selling frequency, combo deals, seasonal items, or any other characteristic. Efficient slotting will allow you to reduce labor costs and increase warehouse efficiency. Also, your warehouse staff will take less time to locate items.

Step #5: Restock empty shelves regularly

As you sell items, your shelves will start becoming empty, and you’ll need to restock them regularly. Set a fixed time and frequency (daily, weekly, or monthly) to refill your empty shelves. This will increase inventory accuracy and reduce unnecessary chaos among staff members when items show up on your inventory reports but not on the warehouse shelves.

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Next step: Use technology to organize inventory

Inventory organization is important, but what’s equally important is using the right technology to support your inventory management efforts. Even large, established corporations struggle with manual warehouse organization methods that have become obsolete. With the right technology, you’ll be able to optimize warehouse operations by automating inventory control, order fulfillment, and supply chain processes.

Invest in inventory management software to maintain a digital record of all your inventory items. An inventory management system monitors the stock level, tracks shipment, and also alerts you about products that are about to go out of stock. You can use it alongside hardware devices, such as a POS system or a barcode scanner, to record the sale or purchase of items in real time.

Visit GetApp’s inventory management and warehouse management software categories to browse top-rated tools and shortlist the one that best suits your warehouse operation. You can filter the tools by free options, customer rating, iPhone support, business size, features, and more. 

You can also check out GetApp’s Category Leaders report to identify the top market players for warehouse inventory management. 

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