Managing inventory can be daunting, especially when you're working across multiple branches, operating units, or locations. But with the right strategies and tools, your multi-location inventory management can be streamlined and efficient.
These 7 best practices can help.
What is multi-location inventory management?
Multi-location inventory management is the process of overseeing and controlling inventory across multiple locations or warehouses. For businesses that manage multiple brick-and-mortar locations, it ensures that there's enough stock available to meet demand across them all—whether that's customer demand for retail products, manufacturing demand for parts and supplies, or anything else.
By effectively managing inventory across multiple locations, businesses can enhance their customer service, reduce costs, and improve profitability.
Why is multi-location inventory management important?
Have you ever ordered your favorite morning snack only to discover your local coffee shop was out of it? Multi-location inventory management helps companies track and manage inventory across various locations, ensuring that products and supplies are readily available when and where they're needed.
By implementing a centralized system with real-time visibility into inventory levels and locations, businesses can reduce stockouts, optimize stocking levels, and improve operational efficiency.
Ideally, the system should include a forecasting component so you can plan ahead for spikes in your inventory demand, such as a holiday rush or any high-volume season. This leads to better customer satisfaction, increased sales, and higher profitability.
What are the main challenges of multi-location inventory management?
Inventory management is a tricky balance—no company has infinite room for excess inventory. The right inventory level at any given time will ensure you have enough to cover your needs without running out of space.
Some of the main obstacles that make multi-site inventory management a significant challenge include:
- Geographical expansion—especially into brand-new areas where you can't yet predict demand
- Unexpected demand—viral social media trends, for example, can spike consumer demand to unprecedented levels
- Logistical challenges—the day-to-day operation of moving thousands of items across thousands of miles is tremendously complex in and of itself
- Supply chain interruptions—when a key supplier misses a delivery deadline, entire inventory systems can be thrown out of whack
- Production complexity—the more complex your manufacturing operations become, the more challenging they are to supply
- Visibility and planning—additional locations make it harder to visualize and plan for inventory needs across them all
7 best practices for managing inventory across multiple locations
When managing inventory across multiple locations, use these 7 best practices to help ensure both efficiency and accuracy.
1. Standardized approval systems
It's tough to streamline your inventory management when different locations have different approval processes for purchasing and restocking. Those kinds of variations tend to require manual processes, making it hard to centralize your inventory operations.
Put standard operating procedures in place to ensure that all locations are following the same systems and guidelines. This will help streamline the approval process and avoid delays.
2. Centralized inventory management system
Using a centralized inventory management system across multiple locations can also help streamline operations and improve efficiency. This may include:
- implementing real-time tracking systems
- utilizing barcode technology
- consolidating orders to reduce shipping costs
- optimizing warehouse locations for easy access
- conducting regular audits to ensure accuracy
3. Regular inventory audits
By conducting audits regularly, you can ensure that your stock levels are accurate and up-to-date, reducing the risk of stockouts or overstocking. Audits also help identify any discrepancies or areas that might need improvement in your inventory management processes. Regular audits can improve accuracy and ultimately increase profitability across all of your locations.
4. Forecasting and demand planning
With the right data analytics and forecasting tools, you'll have an easier time predicting inventory demand at each location. This can help you reduce stockouts while also reducing the need for safety stock.
When paired with a strong logistics and distribution system that allows for quick restocking when needed, this kind of demand planning can have a significant effect on your bottom line.
5. Efficient logistics and distribution
Logistics and distribution come down to knowing what inventory you have where, when you'll need to restock, and the most efficient ways to get that inventory where it needs to go. Easier said than done!
Due to the complexity of multi-location inventory management, most companies either rely on logistics and distribution software to manage their warehousing and transportation or outsource the job to a third-party vendor.
6. Real-time visibility
The closer you can get to real-time visibility in your inventory management, the faster you'll be able to react to new situations as they develop. This includes tracking inventory every step of the way—as it leaves the warehouse, in transit, upon arrival, and when that inventory is either used or sold.
To achieve real-time inventory visibility across multiple warehouses or other inventory locations, you'll need to automate the process. Manual systems just don't scale as your operations expand. Technology like barcode scanners and GPS trackers make it easy to keep track of all those moving parts.
7. Centralized procurement
Centralizing your purchasing activities can help you ensure consistent supply chain management while avoiding duplication or overstocking. This includes sourcing suppliers, negotiating contracts, and maintaining relationships to ensure timely delivery to each location.
Centralizing your procurement can also help lower costs. Placing larger orders and negotiating larger contracts can help your procurement team lock in significant discounts with vendors and suppliers, and managing multiple inventory locations together can minimize shipping and delivery costs.
How BILL can help with payments for multi-location businesses
When you're running a sophisticated ERP for multi-location inventory management and financial reporting, manual bill-pay systems simply can't keep up. Across every location, you'll need to see:
- Which shipments have been paid for and which haven't
- When upcoming invoices are due
- Which invoices offer early payment discounts
- Whether invoices match purchase orders
- Whether actual deliveries and payments match expected deliveries and payments
BILL's financial automation platform syncs with the most popular ERPs to keep your inventory and payments running smoothly. Automate your approval workflows, choose from a variety of payment options for better cash flow control, and even automate your 3-way matching to make sure those invoices match up with purchase orders and inventory receipts.
Need to streamline your multi-location payments? See how BILL can help.
What customers say about BILL
Millennium Physicians uses BILL to manage 39 physical offices. According to their CFO, “Since automating AP with BILL, we’ve been able to repurpose one full-time accounting employee to focus on more impactful strategic work like diving into financial performance and cash flow.”
Arizona Auto Parts uses BILL across 9 locations, 3 recycling yards, and some 20 companies with more than 300 employees. Their controller says, "We run thousands of transactions every month, all with a back-office staff of only 7 accountants. Without BILL, we couldn’t do it. We just couldn’t.”
IAMCP uses BILL to manage financials for 37 chapters across the country. Their CPA and treasurer says, “No way we would function at the level we do now without BILL. It has saved me at least 20 hours per month because AP is automated from front to back.”
Multi-location inventory management FAQ
Here are quick, easy answers to some of the most commonly asked questions about multi-location inventory management.
How does inventory tracking work?
The essence of inventory tracking is simple—track all your inventory as it comes in, and track it again as it's depleted. In practice, this means counting pieces as they arrive, double-checking actual box counts against purchase orders and packing lists, and counting pieces again as they're used, sold, or lost.
Conducting regular inventory audits—counting all your inventory and comparing your counts to your records—is also important to make sure your inventory records are up to date. Audits help identify potential theft or other losses due to any number of issues from insect infestations to water damage.
How to track inventory across multiple locations?
As a company scales across multiple locations, inventory management is often one of the first systems to outgrow manual processes. Using inventory management software with multi-location capabilities soon becomes essential. Pair this with automation tools that let you track your inventory in real time for maximum efficiency and effectiveness.