How to Manage Your Warehouse Inventory

If business is booming and you’re thinking about moving your ecommerce inventory into a warehouse space, you’ve got a wee bit of planning ahead of you (sorry!). 

Managing a warehouse isn’t just about stacking boxes. You’ll need to start with a solid game plan that will help you create good workflows, control inventory, and maximize productivity.

And you’ll need to do all of this in a way that ensures you can efficiently manage time and costs. But don’t let the planning phase deter you!

A successful warehouse system can cut your logistics spend and enable you to manage fulfillment more easily at scale.

In this article, we’re looking at how to manage warehouse inventory successfully so you can start scaling. We’ll walk you through effective strategies to help optimize your warehouse layout, forecast product demand, and handle returns.

Plus, we’ll look at the benefits of using a comprehensive inventory management system like Veeqo to help everything run like clockwork.

Table of contents

• Introduction to inventory management

• Choosing your inventory management system 

• Setting up your inventory system

• Implementing inventory control

• Optimizing your warehouse layout 

• Demand forecasting and planning

• Handling returns

• How to improve your inventory turnover

• Leverage technology for proper warehouse and inventory management

Introduction to Inventory Management

Transitioning to your first warehouse as an ecommerce seller is a big, exciting step. If you’re feeling a little overwhelmed right now, that’s totally normal! 

You’ll be operating at a larger, faster scale, with more people involved — so it’s important to put in all the necessary groundwork at the planning stage. 

Getting clear on how you’ll control incoming and outgoing inventory, and how you can organize your warehouse operations so they run smoothly will save you a lot of headaches further down the track. 

A robust warehouse workflow will include:

• Tracking inventory from suppliers, to the warehouse, and on to your end-users

• Picking, packing, and shipping orders

• Demand forecasting and planning

• Managing warehouse staff

• Keeping inventory organized 

• Ensuring stock levels are accurate

Without proper planning, you might end up with an annoying warehouse layout, constant errors in stock levels, slow times to fulfillment, and worst of all — unhappy customers. 

Understanding these potential challenges, and implementing the right strategies to reduce risks, can be the difference between success and struggle as you move to a warehouse fulfillment model.

Let’s take a look at how you can approach warehouse management when it’s time for your next stage of growth.

Read more: Tips On Moving To Your First Warehouse

Choosing your inventory management system

There are a few different systems you can use to manage incoming and outgoing inventory at scale.

Choosing the right one can make all the difference between stressing out over stock levels every day, or streamlining your incoming and outgoing goods process so you’re never out of stock or overstocked.

Spreadsheet systems

Excel is a popular choice for smaller ecommerce sellers. Spreadsheets are a great, low-cost way to help track inventory, and the software is relatively user friendly. But when you’re a mid-size to high-volume seller, the downsides of Excel can start to outweigh the positives. 

The main disadvantage of operating with Excel at a warehouse level is that there’s no real-time inventory tracking.

Your teams will have to manually enter in all the incoming and outgoing product details as often as possible to ensure stock levels stay accurate. Combine this with a few input errors on a busy shipping day, and your inventory can get messy pretty quickly.

3PL partners

Working with a 3PL partner is another way to approach managing warehouse inventory. As a third-party solution, they can provide warehousing space and fulfillment solutions for you. All you need to do is ship your inventory to them for storage and dispatch, and they’ll handle the rest. 

3PLs are an ideal choice if you want to be more hands-off with shipping and inventory. The downside is that there can be steep up-front setup costs, ongoing inventory storage and picking fees that eat into your budget, and you’ll have less control over your inventory management process. 

Inventory management system (IMS)

The best way to accurately control your warehouse stock is with inventory management software that is either standalone, or integrated into your ecommerce ERP.

Standalone software solutions like Ordoro and Veeqo are both popular solutions that help larger sellers manage their ecommerce inventory.

We’re a little biased — but Veeqo is one of the only inventory management systems that offers real-time inventory updates across all of your connected stores and marketplaces. That means when a customer orders the last item in stock via Amazon, it will be automatically marked as out of stock across your other stores and marketplaces. 

You won't need to worry about disappointing customers who’ve ordered items that are no longer available. Plus, your shipping teams can save tons of time that they’d otherwise spend updating that clunky spreadsheet. And did we mention Veeqo is totally free to use?

Setting up your inventory system

Once you’ve chosen the inventory system that’s best suited for your business, you’ll need to set it up in a way that helps you stay organized and accurate, and reduces your risk of shipping errors. 

Audit your existing inventory

Carrying out an initial stock audit will establish a baseline for your inventory levels, so you can start out with an accurate number of items for sale. This is especially important if you’re moving from manual Excel spreadsheets to an automated inventory system like Veeqo. 

Ensure that what you’ve counted by hand matches the inventory in your IMS or spreadsheet, and you’re ready to go.

Categorize and label your products

You’ll need to ensure your inventory is grouped into categories based on factors like brand, size, type, or other relevant criteria that will help warehouse staff quickly locate and pack items when they’re having a busy day.

These categories will then need to be organized in a way that makes sense for your warehouse layouts and workflows. For example, your most popular categories and products should be situated closer to the packing area so that staff don’t have to cover so much distance to find them.

Ensure everything is labeled clearly and consistently so staff can pick items quickly. Using a barcode scanner or mobile picking tool can ensure even greater accuracy during the fulfillment process.

Train your warehouse staff

Confident staff make for happy customers at the end of the day. Train your employees so they clearly understand how you want to manage your inventory and shipping process, and which part(s) of stock management and workflow they’re each responsible for. 

If you’re using inventory management software and other fulfillment equipment, make sure your teams get proper training on how to use them.

Implementing inventory control

One of the reasons we don’t recommend Excel when you’re managing warehouse inventory is that there’s no automated stock control built in. So if nobody updates your spreadsheet for a few hours, your online stock levels could be miles away from the actual levels you have on the shelf.

Maintaining accurate stock is critical for smooth operation of your warehouse. That’s why software with robust inventory control is essential. It prevents the frustrations of overstocking, stockouts, and other inventory discrepancies, which can all lead to unhappy customers and bad reviews.

Inventory control software can also help you reorder items at the right time, and factor into your demand planning and forecasting strategies.

Optimizing your warehouse layout 

Careful warehouse planning is the key to happy customers. By optimizing your warehouse layout, you’ll be able to achieve better operational systems and improve your order fulfillment speeds. 

Once you’ve chosen your ideal warehouse, you should start by evaluating the overall space so you can design your warehouse layout for maximum efficiency. 

Think about how you’ll organize your warehouse in terms of products and workflows. It can be helpful to begin with drawing a physical map of the space first. A diagram showing how orders will be picked, packed, and fulfilled can help you create a layout that flows smoothly and ensures that your products can be shipped quickly.

Consider things such as:

• Where your high-demand items should be placed 

• How to minimize the distance that someone needs to travel to fulfill an order

• How to optimize picking paths

• Where incoming and outgoing inventory should be located

Running an efficient warehouse takes a lot of up-front planning, but mapping out a workflow diagram can help you spot any potential friction points in your processes before you start the heavy lifting of bringing in furniture, fixtures, and inventory.

Demand forecasting and planning 

To maintain optimal inventory levels and ensure you can keep up with customer demand, you’ll need to get good at forecasting.

This will help you anticipate market trends, seasonal variations, big upcoming events such as Black Friday, and any potential disruptions to your normal trading volume.

For manual forecasting, you’ll need to:

• Use past sales data to try and identify patterns and trends in demand

• Adjust stock levels based on expected seasonal peaks and troughs

• Monitor market and competitor developments

• Work closely with manufacturers and suppliers to align on future demand forecasts

This process can take up a lot of your time, and it’s not the most accurate method anymore. 

With modern inventory management software like Veeqo, analytics and forecasting features are built in. Veeqo can analyze all of your sales data to help you to easily order more of the right products at the right time, and ensure you’re never overstocked with slow-moving items.

Handling returns

While you can’t prevent customers from returning orders (gosh-darnit!), you can make it simple for them to do so, and ensure they’re satisfied with the outcome.

If you’re working with a 3PL partner, there’s a good chance that they’ll take care of the return and restock process for you, based on your specific return parameters.

Otherwise, you’ll need to ensure that your return policies:

• Prioritize customer satisfaction and loyalty

• Reduce the associated costs of restocking, repackaging, and potential damage

• Ensure speedy reintegration back into your warehouse inventory

You should have a clear returns policy so customers understand how to return their items, and if any specific conditions apply to the item they’re buying. 

Your warehouse should have a process that makes it simple to track and manage returns, so you can ensure items arrive back safely and can be added back to inventory.

When items arrive back at the warehouse, they’ll need to be inspected to check they comply with your returns policy before they’re added back into stock. Once they’ve been checked, you’ll need to update your inventory to reflect the return and availability of these items.

You’ll also need to have a policy for items that return but can’t be resold. Will you trash them? Recycle them? Donate them? Having a course of action planned out will help you navigate this issue without it feeling so stressful.

If you’re using inventory management software, you can begin to look for any trends in returns to help improve your processes and products, and reduce the amount of time your employees have to spend on returns processing.

How to improve your inventory turnover

Good inventory turnover means good cash flow. It also reduces storage costs if you’re using a 3PL, and improves your overall business efficiencies.

Start by measuring how often your inventory is sold and replaced over a specific period of time, so you can begin to plan and forecast demand for the future. 

You can calculate turnover rate by dividing the cost of goods sold (COGS) by average inventory count in a specific period. If you’re using software like Veeqo, these calculations are just a few clicks away.

High turnover rates mean you’re doing great, but if you have a low turnover it could mean you’re either overstocking items, or you need to find a way to move inventory faster.

Start by regularly reviewing your sales data to identify your fastest and slowest-moving items. This will help you adjust your inventory to fit demand. Based on this knowledge, you might want to explore new products that are similar to your top sellers, and reduce or discontinue your slow-moving products. 

Sales and discounts can also help you to shift more inventory. Get creative with bundles and seasonal offers to pique your customers’ interest.

How to leverage technology for proper warehouse and inventory management 

As we mentioned earlier, it’s a lot simpler to kick off your warehousing journey with inventory management software versus a manual solution like Excel spreadsheets. 

Automating the shipping process as much as possible is one of the secrets to staying efficient (as well as profitable) when warehouses become part of your business model.

There are plenty of inventory management systems out there to suit a wide range of ecommerce needs and budgets, but if you’re looking for an option that’s both free and comprehensive, we suggest you check out Veeqo.

Veeqo's free software can help you manage shipping as well as inventory, so you can keep all of your orders and stock data in one place.

As part of the Amazon family, Veeqo natively integrates with Amazon and services like Amazon MCF. We’re also a Shopify Plus partner, so you’ll get the benefit of using software that’s equipped to handle the unique needs of high-volume sellers.

As technology progresses, you can look forward to warehouse inventory systems getting even smarter. AI, AR, blockchain, and IoT are becoming increasingly sophisticated, offering predictive analytics, automations, and advanced robotics which will help lower costs, speed up fulfillment times, and get parcels to customers even faster.

Read more: Building a Smarter Future with IoT in Warehousing 

As you continue to scale, you’ll need inventory management software that has the features and capabilities to grow seamlessly alongside your warehouses. That’s why we designed Veeqo. 

All of our enterprise-grade features like real-time inventory tracking, demand forecasting, and inventory control are completely free to use — so start warehousing smoothly from day one.

Sign-up to Veeqo for free to see how simple it is to manage warehouse inventory, shipping, and demand forecasting. You can access the lowest commercially available rates, based on our pre-negotiated pricing from UPS, USPS, FedEx, and DHL, and up to 5% back with Veeqo Credits.