Inventory levels and streamlining logistics processes

Until recently, it was Just in Time logistics that reigned supreme in the e-commerce industry. However, events that have taken place have highlighted the shortcomings of this concept, and companies are increasingly inclined to increase the amount of stockpiled products or materials.

What are inventory levels?

Let’s start by explaining what are inventory levels? In the most general terms, it is the amount of products that a company has at its disposal. Within this framework, we can distinguish between maximum and minimum stock levels. Minimum stock means having enough products to fulfill all orders. The maximum, on the other hand, determines the number of products that can be stored in the warehouse so that they do not generate additional costs.

Inventory level

The right level of inventory

Now that we have clarified the basics, it is necessary to elaborate on what this right inventory level is. It is the amount of products that, without generating additional storage costs, and freezing money, was enough to fulfill the orders placed by customers in between deliveries. And also a thoughtful buffer of inventory in case of unforeseen events and to minimize the risk of delaying subsequent deliveries.

Analyzing and updating inventory holdings is essential. From the logistics operator ‘s point of view, the biggest advantage of maintaining proper inventories is that it promotes better organization of all activities taking place in the warehouse, and the WSM system, which we have already mentioned more than once, comes to the rescue. Increasing the organization prevailing in the warehouse will translate into turnaround time for orders and reduce the number of errors made, thus reducing complaints.

Costs of excess inventory

It has been known for a long time that holding more inventory of products, semi-finished products and materials generates additional costs, and the primary goal of any company is to minimize costs while maximizing profit. For this reason, ongoing analysis of inventory allows you to effectively manage their current state, so that each order is completed in the shortest possible time taking care of every detail.