One of the major factors that contribute to hidden costs lies in the warehouse. Many companies that don’t have automated warehouses software take a physical inventory only once a year. When the physical inventory is finished, misplaced items are often found. Customer orders that couldn’t be fulfilled because the inventory was misplaced were canceled, resulting in lost sales.
Other losses in the un-automated warehouse result from manual picking and shipping. Very often the pickers cannot find products that were misplaced and choose substitute items or the wrong quantities. At the staging point, one person packs the orders while a second person verifies that the right products and quantity are being shipped. Even with the best scenario where the right products were picked and shipped, it takes two people to perform a task that can be done by one person in an automated warehouse.
Having an automated warehouse will result in 99% inventory accuracy, requiring less manpower, reducing cost and increasing efficiency.
* Received Inventory is scanned and the computer records are instantly updated resulting in accurate information.
* Pickers are instructed by hand-held or voice picking devices about which location and shelf the inventory is stored, eliminating errors.
* Before the inventory is shipped, it’s being scanned again and verified that the right product and quantity are being shipped by one person vs. two people in an un-automated warehouse, resulting in accuracy and labor cost savings.
* Inventory that gets scanned on a timely basis is compared to the computer data. If a discrepancy is found, it’s being addressed immediately and the computer information is adjusted.
* Accurate shipments result in fewer credits or adjustments, freeing the accounting department to take advantage of vendor discounts for early payment.
* Not having disputed invoices resulting from incorrect shipments helps shorten the Accounts’ Receivable payment cycle.
Keeping track of inventory while in transit:
Keeping track of inventory in transit and its expected arrival date at the warehouse provide the ability for orders to be shipped against the in-coming inventory. Once the inventory arrives at the warehouse docks the orders get filled, the freight bill is calculated, and the invoice accompanies the shipment. The remaining inventory is then stored in the warehouse, becoming inventory available to be sold. Using this method saves on the labor costs of putting inventory into the warehouse and then shipping it out.