Warehouse Inventory Management: Inventory Standards for CPG Companies

Ethan Townzen
May 9, 2024
Warehousing quality associate checking inventory

Have you ever wondered how warehousing companies and 3PLs efficiently manage their inventory amidst the chaos? In logistics, maintaining precise inventory standards for CPG companies is the key to success. Let's delve into the intricacies of warehousing inventory standards and how they improve everyday operations.

What Are Warehousing Inventory Standards for CPG Companies

Simply put, inventory standards encompass the guidelines and protocols established to manage inventory effectively. From categorization to handling damaged goods, these standards ensure smooth sailing in the complex world of warehousing.

Categorizing Inventory: The Key to Organization

One of the fundamental principles of inventory management is categorization. Categorization is the process of sorting inventory into distinct categories such as new, old, and damaged inventory. Warehouses and 3PLs streamline their operations and optimize space utilization. Categorization provides up-to-date inventory statuses for what’s viable and can be sold to customers and what can’t.  

Dealing with Damaged Inventory: A Step-by-Step Guide

Dealing with damaged inventory requires a systematic approach to minimize losses and maintain operational efficiency. Here is a step-by-step guide to how we effectively manage damaged inventory at Buske Logistics:

  1. Identification: Conduct regular safety inspections to identify damaged items promptly. A great example of visible signs of damaged inventory is an infestation of fruit flies. This typically happens for CPG products when spilled product has made contact with the corrugate in the pallet. Corrugate or cardboard is inherently dirty with insect eggs. The liquid causes them to hatch and produce flies, causing infestation. Other signs are simply broken and crushed products.
  1. Documentation: Document the extent and nature of damage for accurate record-keeping. This includes the 3PL updating their WMS for accurate inventory. We use Made4Net and promptly update our WMS when we record damaged inventory.  
  1. Segregation: Separate damaged inventory from usable stock to prevent contamination or misallocation. This could be a separate bay location or an area in the warehouse for products to be disposed of.
  1. Evaluation: Assess damaged items for salvageability or disposal based on predefined criteria. This criterion happens in the onboarding process with the client.  
  1. Reporting and Tracking: Report and track damaged inventory for analysis and improvement of inventory management processes. Depending on the EDI and API connections with the 3PL’s WMS, the inventory numbers and statuses can be automatically updated in the ERP such as NetSuite.  

Managing Old Inventory: Strategies for Optimization

Old inventory poses unique challenges to warehouse operations, but with the right strategies, warehouses can turn them into opportunities for optimization. Whether it’s reducing waste or maximizing space utilization, there are multiple ways to manage old inventory effectively. Here are some effective strategies to do so:

  • FIFO (First In, First Out) Method: Prioritize the sale or use of older inventory to prevent obsolescence. This method ensures that older items are utilized first, reducing the risk of spoilage or expiration.
  • Discounting and Clearance Sales: Offer incentives to clear out old inventory and free up storage space. Discounting or offering clearance sales can stimulate demand for older inventory, making room for newer, more profitable items.
  • Repurposing or Recycling: Consider exploring alternative uses or sustainable disposal methods for obsolete inventory. Warehouses should explore repurposing options and methods to minimize waste and maximize sustainability. This could include donating the product to food pantries.

Maintaining Inventory Separation: Keeping New and Old Apart

To uphold inventory standards effectively, warehouses must maintain strict separation between new and old inventory. Ensuring products are easily identifiable and managed by lifecycle stage. This practice preserves new item quality and boosts efficiency in managing older stock.

  • Physical Segregation: Allocate separate storage areas or shelves for new and old inventory.
  • Labeling and Marking: Clearly label items to indicate their status and prevent mix-ups.
  • Inventory Management Software: Implement software solutions with robust tracking capabilities to monitor inventory movement and maintain separation.

Ensuring Compliance with Inventory Standards

Adherence to regulatory requirements, such as the ISO 9001 standard for quality management, is paramount in warehouse operations. These guidelines ensure that inventory processes meet or exceed industry benchmarks.

  • Regulatory Compliance: Stay abreast of legal obligations and regularly update processes to align with changes in inventory management to avoid penalties.
  • Industry Standards: Embrace best practices endorsed by industry organizations, such as International Warehouse Logistics Association to enhance operational efficiency and customer satisfaction.

Advantages of Effective Inventory Management

Implementing robust inventory standards offers a myriad of benefits that can propel warehouses to new heights of success. From optimizing inventory accuracy to streamlining operations, effective inventory management plays a crucial role in warehouse success. Here are some key advantages:

  • Increased Efficiency and Productivity: Streamlined processes result in faster order fulfillment and reduced downtime. This allows warehouses to meet customer demands more effectively.
  • Reduced Costs and Waste: Optimized inventory management leads to lower overheads and minimized losses. This ultimately contributes to improved profitability and sustainability.
  • Enhanced Customer Satisfaction: Accurate inventory tracking ensures timely deliveries and improved customer service. This fosters stronger relationships with clients and enhances brand reputation.

Conclusion: Elevating Your Warehouse Operations

In conclusion, the implementation of effective inventory standards is crucial for warehouses aiming to thrive in today's competitive landscape. By adhering to best practices and embracing innovation, warehouses can maximize efficiency, minimize costs, and deliver exceptional service to their customers.

Reaching Out for Support: Warehousing Inventory Solutions

If you're ready to elevate your warehouse operations and optimize your inventory management practices, reach out to Buske Logistics today. Our team of experts is here to provide tailored solutions that meet your specific needs and propel your business to new heights of success.