Multi-Warehouse Inventory Management: Challenges and Solutions

Table of Contents

1. Introduction
2. What is Multi-Warehouse Inventory Management
3. Challenges of Managing Inventory in Multiple Warehouses
   – Lack of Inventory Synchronization
   – Challenges in Inventory Allocation
   – Inefficient Inter-Warehouse Stock Transfers
   – Substandard Order Routing Process
   – Underutilized Warehouse Space
4. Let’s Manage Multiple Warehouses with Ease
5. Frequently Asked Questions (FAQs)

As your business grows, so does your inventory. And with more products to store and manage, one warehouse isn’t enough. So, it’s time to expand to multiple locations! But with great growth comes great responsibility (and a few headaches). 

The transition from a single warehouse to a multi-warehouse operation introduces various challenges, the most common of which is inventory management. 

So, how do you keep everything running smoothly across these multiple locations? 

Don’t worry; we’ve got the answer for you. With the right strategies and tools, you can tackle these challenges head-on and keep your operations smooth. Let’s dive in!

What is Multi-Warehouse Inventory Management?

Multi-Warehouse Inventory Management is the strategic distribution and control of inventory across multiple storage locations to optimize operational efficiency and meet customer demand. It involves coordinating the storage, tracking, and movement of products across multiple warehouses so that the orders are timely fulfilled. 

It’s all about strategically placing your goods closer to your customers’ locations so you can deliver faster and save on shipping costs. Consider a company like Blinkit, a prominent online quick commerce service in India. Blinkit strategically positions its warehouses in major cities such as Delhi, Mumbai, Bengaluru, and Chennai. Also, within these cities, the company operates various dark stores. 

These are small, localized warehouses or fulfillment centers that are located closer to residential areas. This approach makes sure that products are readily available near customers, which reduces SLA breaches and facilitates faster order processing. 

Challenges of Managing Inventory in Multiple Warehouses

Managing inventory across these warehouses isn’t as easy as it sounds; it comes with its own set of challenges. Let’s try to decode the solutions to these challenges!

1. Lack of Inventory Synchronization

It is one of the primary challenges in multi-warehouse inventory management. This issue arises when inventory data is not updated in real-time across all warehouses, leading to inconsistencies and inaccuracies. 

Neemans, a shoe brand, encountered similar challenges. Because its products were available in multiple warehouses, it struggled to maintain accurate inventory records. This led to issues in tracking product availability, resulting in overstocking in some locations and stockouts in others. 

The brand adopted a robust tracking and inventory management system to overcome these challenges and synchronize inventory across all warehouses.

2. Challenges in Inventory Allocation

Allocating inventory to multiple warehouses can be challenging for brands if it’s not handled carefully. The key question is figuring out which products should go to which warehouse. 

Since each warehouse has its own mix of products, it is very important to strike the right balance to avoid running out of stock or having too many products. 

Data and reports really help with this problem. They help businesses make smart decisions about where to allocate their inventory. By setting clear rules, brands can ensure everything runs smoothly and their products get where they’re most needed.

3. Inefficient Inter-Warehouse Stock Transfers

When you are dealing with multiple warehouses, each facility often serves different purposes, such as a parent warehouse that can be used for product assembly and child warehouses that can be used for e-commerce fulfillment. This warehouse ecosystem can pose logistical challenges, particularly in ensuring seamless inventory transfers between locations.

A significant issue is inventory damage during transit. It’s common for items to get flawed or damaged, and without proper documentation and tracking, these discrepancies can pile up. This leads to more damaged goods and no way to reconcile them in the records.

For example, a leading children’s wear brand in the Philippines faced this challenge. They tackled it by implementing a gate pass scanning system designed specifically for multi-warehouse operations. This system ensured smoother and more accurate stock movement, significantly reducing the problem.

4. Substandard Order Routing Process

Brands often encounter challenges routing customer orders to the right warehouses, which can lead to frustrating shipment delays and SLA breaches. For instance, Upscalio is a technology consulting and software development company that partners with digital-first brands selling on e-commerce marketplaces. 

The brand faced similar issues until it implemented a Unicommerce’s sophisticated warehouse management system that uses proximity-based order allocation within its warehouses. This system allowed orders to be fulfilled from the nearest locations where inventory is readily available. If inventory isn’t available in the nearest warehouse, the system intelligently routes orders to the next closest facility.

You can also optimize order allocation using parameters such as order priority, warehouse capacity, etc. This approach enhances order fulfillment speed by reducing delivery times and ensuring accurate order processing.

5. Underutilized Warehouse Space

Another big challenge in managing inventory across multiple warehouses is not making the most of available space. This happens when warehouses aren’t organized efficiently, leading to wasted storage capacity and higher operational costs.

To address this challenge effectively, sellers can analyze their warehouse infrastructure, layout, and operations to understand current usage patterns. You can then create a warehouse plan, optimize storage by using shelf management systems to assign dedicated shelves and create distinct zones for efficient inventory management.

For example, dedicated shelving for different inventory types, like fast-moving vs slow-moving items, can boost storage efficiency. Inventory practices, such as prioritizing upcoming orders and storing them strategically, will help you minimize underutilized space and enhance overall warehouse efficiency. 

Let’s Manage Multiple Warehouses with Ease!

Managing inventory across multiple warehouses is undoubtedly challenging, but with the right approach, it can greatly enhance your e-commerce business operations. Using a robust warehouse management system with features like inter-facility stock transfer, precise order and inventory allocation, and effective shelf management is key to streamlining warehouse operations.

By optimizing how you organize and move inventory across your warehouses, you can ensure orders go out on time and customers stay happy. Whether it’s preventing stock shortages, speeding up deliveries, or making the most of your storage space, a well-planned approach can make a big difference.

So what are you waiting for? Embrace these practices and tools to easily manage your network of warehouses today!

Frequently Asked Questions (FAQs)

1. What is the warehouse inventory cycle?

Warehouse inventory cycle is the process of regularly counting a small portion of your inventory on a regular intervals. Also known as cycle count this auditing method helps you identify and correct discrepancies in inventory levels.

2. What is the difference between a warehouse control system and WMS?

A Warehouse Control System (WCS) manages real-time warehouse operations and is responsible for managing material handling equipment like conveyors, pick-to-light modules, carousels, etc. On the other hand, a Warehouse Management System (WMS) handles broader warehouse functions such as inventory management, picking, packing, and shipping.

3. What is the role of automation in warehouse management?

Automation in warehouse management improves efficiency by automating tasks like order processing, inventory tracking, and replenishment, reducing human error and speeding up processes. By automating tasks, you can optimize the use of space and resources, enhance inventory accuracy, and improve the overall productivity of your warehouse.