Multi location inventory management is a hurdle which manufacturers need to pay especially close attention to if they want to make sure growth is not stunted.
Last updated: 23.08.2022
Setting up multi location inventory management is a tough task for many a growing manufacturer, especially if they also have production sites spread across the land. That’s why gathering the right tools and strategies is vital to making sure that business still runs as normal.
There’s no sweeter sight than the steady growth of your manufacturing business.
As you watch the fruits of your labor come to the fore, and your sales reports read as fine as ever.
But there’s no doubt that success brings challenges in itself. And one of the main obstacles to taking your business to the next level is always going to be a matter of space.
Whether you have decided to take your operation global or even just require extra storage, it’s very likely that at some point you will encounter issues of multi location inventory management.
In other words, you are going to have difficulties managing stock and how it moves around, especially if you also manufacture at multiple locations too.
The complications can be endless when there is more than one production schedule and stock room to manage. And without the proper tools, you may well feel that your growth is getting stunted.
Like a flower that’s outgrown its pot. Without a new pot, your business will lack the space to grow and risks suffocating.
Now, that might seem like a tough hill to climb. But there are methods you can use to lighten the load, and thankfully there is smart manufacturing software out there which deals with this precise issue.
But before we get to that, let’s dive into what multi location inventory management really means, and how it applies in the modern world of manufacturing businesses.
Why do Businesses Need Multi Inventory Management?
Now if you haven’t quite come to the point of requiring multiple sites for inventory, you might be wondering what all the fuss is about.
After all, how much space do you really need?
But the point of having multiple locations for your inventory isn’t always just a matter of meter squared.
The reasons for needing to manage inventory on this scale can be incredibly wide.
So, here are just a few of the big hitters:
Sync with manufacturing
Though your production line and manufacturing routing are likely to have started out in one location, that doesn’t mean it’s going to always stay that way.
In fact, many manufacturing businesses find themselves spread out across multiple manufacturing sites due to the availability of skilled labor, rent costs and even direct access to consumers.
Especially if they are selling to a range of customers across state or national lines.
But that does mean that you’re also going to want somewhere to store your materials in each of these locations. Otherwise, you’d constantly have to be ordering materials in for each set of orders.
Imagine the chaos.
There is a limited set of companies that have the resources to totally manufacture their products globally.
You need to have some hefty resources to manage production and inventory this way.
Ideally, you want to be in a position where you can not only track the inventory and production status of your partners but also purchase materials for them too – contract manufacturing software can be of huge help.
Multiple sites can often be a part of one single production line.
Like building a car, you have your seats and engines built in one factor, and those subassemblies are sent to another location to be fitted into the car.
The idea being that subassemblies are rarely stored for longer periods, and almost always on the move to the next workstation. This approach is also known as lean manufacturing, a system which has become commonplace in manufacturing since its inception.
There’s a lot on the line when you stick all your inventory into a single warehouse.
Any problem that occurs with transport or even the unlikely event of a fire could have drastic effects on the business.
Having a backup location for inventory mitigates that risk and means that you have a fall-back option in unfortunate circumstances.
On first look setting up a secondary warehouse might seem counter-intuitive when it comes to reducing costs.
But consider the fact that the costs of transportation and labor can be much higher depending on the location of your warehouse. If you are further from consumers and delivery infrastructure, then there’s going to be greater costs for you to incur.
Most of the times it’s not needed for them to track inventory in these locations, but it does happen under certain circumstances. For example, if you have a consignment inventory agreement with a reseller, in which case they only pay for the stock after it is sold.
Right, so we know why manufacturing businesses need inventory management for multiple locations. But what are the challenges that come with this approach?
Unsurprisingly, there are more than a few problems that arise when you split your cozy business up around the land.
For one, you’re now going to have to maintain stock counts for more than a single warehouse. That takes time and organization, especially if you are moving materials between the two.
And the management of communication between warehouses is, of course, an issue in itself. Employees are much more likely to miscommunicate when they are not working in the same location.
This can lead to bottlenecks in both manufacturing processes as well as managing orders.
But even more important than issues of communication and stock counts is that manufacturing businesses find it difficult to manage their production in line with inventory levels when multiple sites are involved.
Imagine setting up your production schedules when you have to also factor in materials that are being stored in a completely different location.
It gets especially tricky if you are also manufacturing in multiple locations and need to manage material inventory at the same time. Many organizational issues can arise when materials need to be used for different products and these crossover warehouses.
No doubt that managing inventory for multiple locations is tough when raw materials and production are thrown in the mix.
Don’t fret though.
There are solutions here, some of which are going to make an immediate difference.
Tips for Inventory Management Multiple Locations
1. Adopt multi location inventory management system
The right software can take you a long way when it comes to multi location inventory management.
Because as vital as it is to manage stock, there’s no point in the endeavor if you don’t consider how your materials are being used and your orders being fulfilled.
2. Locate warehouses artfully
Don’t underestimate the impact geographical location can have on your business.
You want to position your warehouses as closely as you can to each other, whilst also keeping them near consumers too. This way you can save on transportation and logistical costs.
Just be aware that the closer you are to consumers and urban areas, the more likely you are to pay a higher cost of rent, labor, and manufacturing overheads. Striking the right balance is key here.
3. Plan for demand
Forecasting customer demand is a tough task to undertake regardless of your industry.
But taking the time to work on demand planning means that you will better be able to optimize your inventory. In which case, there is less chance you will incur carrying costs due to overstocking, a high-risk event with multiple inventory locations.
4. Optimize warehouse layout
The way your warehouses are laid out can have drastic effects on the efficiency of your overall business.
You should take the time to make sure your various material inventory is as close as possible to the appropriate workstations. And keep products that are sold most often close to your shipping area.
In the same way, you should carefully consider which of your warehouses store different stocks. Any unnecessary additional transportation can ultimately delay deliveries to your customers.
Even a detailed map of the warehouse posted at the entrance can help employees gain a quick grasp of where everything is.
5. Set safety stock
Knowing when to purchase more materials becomes a lot trickier when inventory is spread out. Especially if production also occurs in different places.
As a result, you will have to pay more attention to your stock levels to ensure you don’t run out and cause delayed deliveries.
Ideally, you set an amount of safety stock for each of your items, as well as reorder points to make sure you don’t have to dip into your safety net more than necessary.
Multi Location Inventory with Smart Manufacturing Software
Katana tracks your entire order fulfillment process, from multi location inventory management to manufacturing and sales. But what’s really great is that you can split your locations up so that they take on these elements accordingly as well. If a location only holds inventory, then you will just have the options to manage stock and purchases, which makes organization much simpler.
Alright, so clearly there are ways that you can manage your multiple sites for inventory without totally losing track.
But there’s a lot of details to be managed here.
Materials, finished products, purchase orders and not to mention the warehouses themselves.
That’s why many manufacturing businesses make use of software which supports multi location inventory management. These can help automate your inventory management and keep track of how stock moves between locations.
Ideally though, you should look for a solution that also includes support for production scheduling and multiple manufacturing sites as well.
Katana Smart Manufacturing Software is an all-in-one solution that tackles inventory, production, and sales all at the same time. There is an emphasis on businesses with multiple locations in use for any of these elements.
The system will keep track of quantities of materials and inventory for each of your locations separately. On top of that, whenever a sales or manufacturing order is fulfilled, the necessary inventory will be reduced automatically.
This means that your inventory for each location is clear to see, in real-time, and in accordance with your production schedule.
So, let’s imagine for example that materials are running low in one location for a set of sales orders, but you have a surplus in the other warehouse. With Katana, you can quickly make a stock transfer from one location to the other and your quantities will be updated automatically.
This way you can manage your manufacturing business from a single, visual dashboard and eliminate the need for constant tedious calculations altogether.
If you’re more of a visual person then be sure to check out this video explaining Katana’s multi location features.