Inventory positioning refers to the physical location inventory occupies within the warehouse and the wider supply chain. Part of any supply chain or warehouse manager\u2019s role is to ensure that inventory is positioned in the optimal location in order to ensure efficient movement of goods, the safety of stock and personnel, as well as quick, reliable fulfillment.<\/p>\n
In this article, we\u2019ll take a look at why managing your inventory position is important, how to position your inventory effectively in the warehouse, and some widely used inventory positioning strategies.<\/p>\n
Good inventory positioning is significantly more complicated than what initially meets the eye. Businesses need to plan the layout of their warehouse carefully, with early consideration of where different types of SKUs will be stored, when they\u2019ll be moved, and how they\u2019ll be moved.<\/p>\n
This helps to make sure that goods can move through each stage of the fulfillment process as quickly as possible while mitigating the risk of items getting damaged, lost, or shipped to the wrong place.<\/p>\n
Similarly, inventory positioning also incorporates the type of storage that SKUs are stored in or on, whether that be racking, bins, picking towers, pallets, shelves, fridges, or high-value cages. Good inventory positioning management ensures that the right SKU is stored in the right place.<\/p>\n
Inventory positioning also refers to the position of inventory in the wider supply chain, particularly in relation to the physical location of the goods and how that improves or supports supply chain efficiency, outbound and inbound logistics<\/a>, and the fulfillment process.<\/p>\n For the vast majority of businesses, optimized inventory positioning means more money. If companies can fulfill orders quickly and accurately, customers will be happier and operational costs will be lower. Let\u2019s break this down in more detail.<\/p>\n Your workforce needs to be able to access inventory safely and, in most cases, quickly. It should be easy to find, with the location clearly marked on a warehouse management system.<\/p>\n If access to inventory is poor or unclear, the fulfillment process<\/a> can be significantly hindered as your pickers will struggle to collect orders in good time.<\/p>\n When we talk about inventory flow, we refer to the speed and ease at which inventory moves through the warehouse.<\/p>\n Flow can be interrupted by all sorts of things, whether that\u2019s wrong items being sent to the warehouse, issues with technology<\/a> or communication, or poor inventory positioning.<\/p>\n Speed is everything when it comes to fulfillment. With same-day and next-day delivery being almost essential to offer in some industries, having an organized warehouse is a must. Poor inventory positioning makes it difficult to meet next-day or same-day timescales consistently.<\/p>\n If inventory isn\u2019t positioned well, goods are going to go missing, orders are going to get shipped incorrectly, returns are going to happen<\/a>, and customers are going to be increasingly unhappy. All of this costs time and money, and then there\u2019s what can\u2019t be fixed \u2014 your reputation.<\/p>\n Similarly, if stock is continuously getting lost or moving slowly through the warehouse, you\u2019re going to end up paying for more storage costs.<\/p>\n Now that we\u2019ve taken a closer look at why inventory positioning is so important, let\u2019s consider some steps we can take to improve inventory positioning and some industry best practices.<\/p>\n Warehouse layout optimization is an essential component of inventory positioning. Before inventory ever even enters the warehouse, consideration should be given to how the inventory will flow through the warehouse, where inventory will be stored, and where it will be processed, packed, shipped, and so on.<\/p>\n It\u2019s important to have defined areas on the warehouse floor that are dedicated to individual operations within the overall warehousing process, such as packing, quality control, and storage. How each of these areas lies in proximity to each other is key to optimizing the overall inventory positioning strategy.<\/p>\n Capacity planning is also important for inventory positioning. The needs to be enough room in the facility to account for future growth, as well as to have the flexibility to reposition inventory if required.<\/p>\n It makes little sense to have your most popular products at the furthest away corner of your warehouse. You\u2019ll want to ensure that products that sell well are located closest to your packing area so that pickers can access them easily.<\/p>\n If products are extremely popular, you may want to consider keeping some in bins (if appropriate) right by the packing area, so they can be fulfilled as quickly as possible.<\/p>\n The same principle applies to the wider supply chain, too. You should position your inventories close to popular markets. For example, if a particular SKU sells best in the EU, it makes little sense to keep the bulk of your stock in the UK. Working with 3PLs that have an international network of fulfillment centres<\/a> can help you to achieve this.<\/p>\n It goes without saying, but you\u2019ll want to keep heavier items close to your packing area, whether that\u2019s on pallets, on the lowest floor of the picking tower, or on the lowest shelves.<\/p>\n It\u2019s not just important to health and safety – it also means you don\u2019t have to worry about transporting heavy SKUs far.<\/p>\n Having a forensic understanding of your inventory<\/a> both in and out of the warehouse will massively improve your ability to understand inventory positioning properly. One way you can achieve this is by using an inventory management system to keep track of where inventory is, what\u2019s selling, what\u2019s struggling, and which markets are most profitable.<\/p>\n By fully harnessing the power of a sophisticated inventory management system, you can ensure optimal stock is being held at all times, reduce last-mile delivery costs and delivery times via smart allocation, raise new orders at the right times, and run sales and discounts when they\u2019ll have the most impact.<\/p>\n 3PLs like J&J Global Fulfilment<\/a> have facilities that have been designed around optimal inventory positioning. Built from the ground up with the fulfillment of lightweight, fast-moving products in mind, our international network of fulfillment centres allows us to process inventory and orders super-quickly.<\/p>\n With 97% of orders shipped same-day and 99.9% of orders accurately picked and packed, we\u2019re the number one 3PL for brands looking to scale up their business fast.<\/p>\n In addition to our fulfillment service, we also have an award-winning, custom-built inventory management system, ControlPort\u2122 <\/a>. Our software – available to all clients – gives you a detailed breakdown of inventory costs, sales, BBE dates and more, all in real-time, allowing you to make informed decisions about your inventory and do what needs to be done to ensure your business grows.<\/p>\nWhy inventory positioning is important<\/h2>\n
Inventory access<\/h3>\n
Inventory flow<\/h3>\n
Fulfilment speed<\/h3>\n
Costs<\/h3>\n
How to optimize inventory position in the warehouse and wider supply chain<\/h2>\n
Warehouse layout<\/h3>\n
Position inventory based on volume<\/h3>\n
Consider weights, dimensions, and movability of inventory<\/h3>\n
Use an inventory management system<\/h3>\n
Outsource your fulfillment to a 3PL<\/h3>\n