Inventory turnover is one of the most important metrics for any business. It tells you how quickly you sell and replace your stock over a specific period. A high inventory turnover means you are selling products quickly, which reduces the risk of a dead stock.
On the other hand, a low turnover highlights that products stay on shelves for too long. If left unnoticed, it can lead to major losses over time. Therefore, you should always try to improve your inventory turnover rate.
This is where WMS systems can help you. They will help you track inventory and avoid overstocking. Let’s explore how a warehouse management system can help you improve your inventory turnover rate.
Let’s explore how a reliable WMS can help increase your inventory turnover and make your business more efficient.
7 Ways WMS Can Improve Inventory Turnover Rate
1. Reduces Overstocking and Understocking
A reliable WMS helps you keep the right amount of stock throughout the year. It tracks sales trends, monitors stock levels, and sends alerts when you need to restock. This prevents overstocking and understocking, which can lead to missed sales.
For example, if a product is selling faster than expected, the WMS will notify you to reorder it before it runs out. If a product isn’t selling well, the system will suggest reducing future orders. This smart balance improves inventory turnover because you will always have the right stock available.
2. Speeds Up Order Fulfillment
A slow order fulfillment process can affect your inventory turnover. If orders take too long to process, products stay in the warehouse longer. A warehouse management system speeds up this process by automating picking, packing, and shipping.
It also offers barcode scanning and real-time tracking. These features enable workers to quickly find and ship products. This approach reduces delays and ensures customers receive their orders on time.
3. Minimizes Holding Costs
Holding inventory for too long costs you a considerable amount. Storage fees, insurance, and the risk of product damage or expiration can reduce the overall profit. A WMS helps reduce these costs by improving stock rotation and optimizing warehouse space.
It ensures that older stock is sold before newer stock. This approach prevents waste and keeps products moving. Lower storage costs mean you can invest in high-demand products, which ultimately boost sales and turnover.
4. Improves Demand Forecasting
One of the biggest reasons for slow inventory turnover is poor demand forecasting. When you don’t know which products will be in demand, you will be unable to manage stocks appropriately. A warehouse management system can help you in this regard.
It uses historical sales data, market trends, and seasonal changes to predict demand more accurately. With better forecasting, you can plan your stock levels accordingly. Moreover, you can also adjust prices or run promotions for slow-moving items to improve turnover.
5. Reduces Returns
Returns and damaged goods can slow down inventory movement. If a lot of products come back due to errors or poor handling, they take up space in the warehouse and reduce profits. A reliable inventory management system helps reduce these issues by ensuring accurate order picking handling.
It offers automated inventory tracking and barcode scanning. These features ensure that the right product is sent to the right customer. It also monitors storage conditions to prevent damage, especially for fragile goods.
6. Improves Supplier Coordination
Good communication with suppliers is key to managing stock efficiently. A WMS can help you by automating purchase orders, tracking shipments, and monitoring supplier performance. If a supplier is slow in delivering goods, the system will alert you to find alternatives.
Similarly, if a product is running low, the WMS can automatically send a restock request. This smooth coordination ensures that inventory moves quickly, which ultimately boosts turnover rate.
7. Optimizes Warehouse Layout
A disorganized warehouse slows down inventory movement. Your staff will take longer to find and pick items. It leads to delays in order processing. A WMS helps optimize warehouse layout by assigning the best locations for in-demand products. Moreover, it also improves the selection of routes.
Final Words
A reliable WMS can help you improve inventory turnover by improving demand forecasting, reducing returns, and optimizing stocking. However, you will get these benefits only when you choose the right software. Therefore, you should conduct deep research and compare multiple options to find the best WMS.
