How to Optimize Inventory Levels in your 3PL Warehouse

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Did you know that the average time a product sits in one of Apple's warehouses is just 3.2 days? With the right tools and warehouse management, you can increase your ROI and keep your customers happy. Find out how you can start optimizing your warehouse inventory for higher ROI today.

Are you implementing the right inventory strategy? 

High-performing 3PLs base their revenue strategy around ensuring fast and regular stock movement through the warehouse, with a focus on flexible rate cards that offer a range of chargeable services. For this, you need data automation and easy, real-time access to your warehouse stock reports.

Running a 3PL warehouse, you want to keep the space on your shelves mainly used for rapidly moving goods that require handling, order management, and replenishing — all billable charges.

You don’t want to have your warehouse completely stocked with long-term goods charging low fees. Likewise, your customers will rarely want to see their stock sitting dormant on the shelf, they want to be purchasing and stocking popular items and generating sales.

What’s more, you can also support your 3PL clients to identify the ideal inventory to stock, giving you both the best possible solution. 

Let’s take another look at Apple’s warehouse inventory methods. When Tim Cook took the reins as COO of Apple in 1998 he worked to reduce inventory to the bare bones needed to meet customer demand. This way, they were able to free up space for new products and reduce wasted stock from over-ordering, giving them greater flexibility and the ability to respond to market behavior. 

  • The driver behind this focus was to cut costs and free capital, and saw all inventory as a rapidly depreciating asset, factoring depreciation to as much as 2% per week.
  • In addition to the costs associated with storing inventory, with new products being released on a yearly basis, old products immediately diminish in value.
  • In this case, matching their manufacturing output with sales demand meant their production lines could switch to the newest devices without an enormous inventory of older items on their hands.

Inventory management using expiry dates and lot numbers is common-place in food and grocery items, however, taking the approach that "every product has an expiry date" (even for things like electronics or clothing) can be an effective lens to ensure that 3PL inventory levels are synced to demand, warehouse storage space is optimized, and capital is free for other business purposes.

Ready to optimize your 3PL inventory levels and see higher ROI? 

How to optimize 3PL inventory levels 

Optimizing your 3PL inventory starts with understanding your customer’s stock and ordering trends, which means you need to have easy access to your warehouse inventory data and stock reports.

One of the most common requirements of running a 3PL warehouse is simply providing your customers with an accurate stock report. Your customers should have access to real-time and historic data, showing their stock levels and ordering trends over time, in order to make data-led decisions around replenishment, discounts, reordering, and more.

  • Traceability is key: Being able to see historic stock levels is really important when you need to get an idea of how your stock has changed over a period of time. 
    CartonCloud’s WMS lets you run a report for any point in time for stock and stock movement reports; giving you transparency and accountability over stock movement and trends over time.

When working out the optimum amount of stock to hold at a 3PL, only two things need to be considered:

  1. How many typically sell within a period
  2. Lead-time and frequency for getting more

To determine the magic number for your warehouse, you’ll want to look at the sale trends for each inventory type (how many are ordered on average per month), restock timeframes (how long it takes to order more in), and the costs associated with handling/ storage and restocking. 

With this data, you can identify stock with lower overheads and greater returns, and identify the minimum levels you would ideally want to have in the warehouse at any time to cover sales. 

If you want to go deeper, you can also explore the seasonality of stock and buying trends to anticipate changes in trends and ensure your stock levels stay ahead of the curve. 

The highest-performing 3PLs also explore wider industry data including delivery delays and backlogs, rising operational costs, and warehouse rental prices to build out a more intelligent business model that accounts for a wider range of variables. 

What tools do you need to optimize 3PL warehouse stock? 

If you're looking to calculate your own optimum 3PL stock levels, you will first want to ensure you’re using an intuitive Warehouse Management System that is cloud-based. A cloud-based system allows you to continuously update stock levels and inventory reports in real-time without requiring additional stock take.

Your 3PL WMS system should simplify reporting, giving you and your customer access to report dashboards to review and analyze the data you need when you need it — without manually drawing unique reports for each customer.

A great way to identify trends for 3PL inventory optimization is to use a Stock Movement Report. This report highlights stock coming in and out, and shows stock levels within the warehouse.

For more in depth reporting and analysis you can use a Business Intelligence Dashboard, pulling data from across your system to generate real-time reports and insights that can be used to manage your growing 3PL with accuracy and agility.

Next, deliver these insights to your customers to use in their inventory planning. If you’re using CartonCloud you can offer your customers access to their own customer dashboard where they can run their own reports at any time.

With this information, you can work with your customers to identify the best stock selection for the highest ROI throughout seasonal changes and trends. 

Flexible, online warehouse management training 

Want to know more about optimizing 3PL warehouse stock management? Check out our CartonCloud Academy, with training courses and bite-sized tutorials designed to give you the tools, and knowledge to master your business growth. 

Want to know more about CartonCloud? 

We’ve helped over 450 logistics companies worldwide to streamline their operations and grow with accuracy and ease. Our world-class customer service, local support, and powerful software have made us a leader and industry favorite 3PL warehouse system.

See the difference for yourself, book your FREE DEMO today and get a free software of our tour with our experienced team. 

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Streamline your logistics operations today

Streamline your logistics operations today
Oct 23, 2023
Aug 10, 2023
 min read

Streamline your logistics operations today

Streamline your logistics operations today