Many inventory warehouses operate as distribution centers. A company receives products from its suppliers or manufacturing departments and prepares the merchandise for delivery to customers. In a successful business, this is often a relatively rapid process with items spending very short periods of times on warehouse shelves.
Sometimes, however, companies keep stockpiles of products in their warehouses in anticipation of future needs. This type of inventory may cost extra to store, but it could prove vital in certain circumstances.
Some businesses try to promote lean inventory storage procedures by only stocking the products that will instantly move out to consumers. Customer demand is tricky, though, and companies may have to stockpile materials that has to wait for the right sales period.
Demand media said warehouses store anticipatory inventory to prepare for times of high demand. Receiving products well before customers need them allows warehouse workers to prep specialized merchandise or redesign warehouses for efficient picking strategies. This is sometimes a preferred practice for seasonal items, and anticipation inventory becomes a regularly scheduled event.
Anticipation inventory can also be helpful in incidents where demand forecasting is wrong. Supply Chain 24/7 suggested inventory surplus helps prevent stock outs when there are problems with planning. Companies that don’t anticipate trouble must scramble to find solutions and waste time and resources on readjustments.
Warehouses receive products from vendors, wholesalers or manufacturing plants. The consumer psychologist department of the University of South Carolina said the supply chain has to account for numerous trends that could crop up like technology advances and changing supply prices.
A manufacturer may want to increase production while costs are low. Warehouses build up anticipation inventory to prepare for an increase in the price of raw materials. The manufacturing section of a company may also build up a stockpile of products so employees can keep their jobs during times of low demand. When an inventory warehouse works in conjunction with a production line, managers must take the needs of both business departments into account when planning operations.
If, on the other hand, warehouses receive their products from a third party, companies can build up anticipation inventory to safeguard against miscommunications. Organizations often buy extra products while a relationship with a supplier is good. A third party may even warn a business customer about future obstacles.
Managing anticipation inventory
Demand Media said anticipation inventory may cause forecasting problems. If warehouses don’t carefully account for each piece of merchandise on premise, a broad overview of ordering records may indicate incorrect demand trends. For example, if a warehouse orders a large supply of anticipation inventory, the sales staff has to know the materials don’t belong to existing customers.
A mobile warehouse inventory management system can create real-time data. Managers should collect every order in a central software solution using very specific terms. Warehouse workers who have mobile tools can check where anticipatory inventory belongs and can update supervisors about movements. Constant digital trails give employees insight into the expected performance of inventory and lets them report actual results.
Companies can download the Warehouse Mobile Data Dynamics NAV Module Data Sheet to reevaluate any inventory procedure.