Inventory Management and Bin Stocking Systems
Bin stocking is an inventory management tactic in a warehouse management system that assists in tracking how much of a given item is available or which goods are stocked. When a company uses warehouse inventory management software, they use bin stocking and inventory control to ensure that the product they require is always accessible when they need it, without relying on rush orders or locating storage space. They can optimize their revenues by carrying the least inventory while maintaining client happiness in a warehouse management system.
Inventory Control in Two Bins
What Is the Definition of Two-Bin Inventory Control in Warehouse Management System?
Two-bin inventory control in a warehouse inventory tracking system is a mechanism for determining when to refill products or materials utilized in manufacturing. When the first bin’s contents are emptied, an order is made to replenish or replace them. The second bin is meant to contain enough products to sustain production until the first bin’s order arrives. In brief, the first bin has the bare minimum of working stock, whereas the second bin contains reserve stock or leftover stuff.
The two-bin inventory control approach is also known as Kanban (in Japanese) in the warehouse management system, and it is basis to the just-in-time (JIT) production process.
How Does Inventory Control in Two Bins Work?
One of the most problematic struggles businesses are confronted with is effectively controlling stock levels. Inadequate inventory could lead to missed sales opportunities and losing ground to the competition. On the other hand, overstocking raises the risk of damage, spoilage, theft, and higher carrying costs. It can also require greater storage space and longer periods between recouping money from acquired items and reinvesting it in growth initiatives.
The two-bin inventory control system is a fundamental strategy used to assure that businesses minimize these risks and have, more or less, the proper amount of stock to fulfill demand without overstocking.
In its most basic version, the procedure is as follows:
- The first bin is positioned above or in front of the second bin.
- On the bottom of each container is a reorder card.
- Stock is collected from the easier-to-reach first bin.
- When the first bin runs out of space, it is replaced by the second bin.
- The first bin is restocked using the reorder card.
- When the requested merchandise comes, it is placed in the empty bin, and the cycle begins again.
This method is widely used in manufacturing, warehousing, and wholesaling businesses along with e-commerce.
Particular Considerations
Two-bin inventory control is generally utilized for low-value commodities purchased and kept in large quantities. On the other hand, higher-value items are subject to the perpetual inventory system.
Furthermore, the quantity ordered for the reserve stock (bin no. 2) can be changed based on past patterns of variance in the depletion rate of the working stock (bin no. 1).
It is critical that the fresh order made after emptying the first bin arrives before the second bin is empty, or else the procedure will fail. Because the inventory placed in the first bin is also the inventory that is sold first, the inventory technique utilized for both bins is first-in, first-out (FIFO).
Bin Stocking Benefits In Inventory Management.
Inventory control can be difficult, especially when there are so many sectors of a corporation to manage. Inventory management systems, in general, may be challenging and need great attention to detail. There are several benefits to having an automated warehouse inventory control management software. These are some examples:
- Customer Support
A quick response time can increase the likelihood the consumer has a positive image of your organization. Knowing exactly where your inventory is and how much you have allows you to quickly and easily satisfy client requests—profit increases due to the capacity to serve consumers more effectively.
- Planning
Keeping an accurate inventory count allows you to understand, track, and forecast your customers’ purchasing habits. This will enable you to more accurately determine when you need to restock things and how much of each item you need to keep on hand at any one moment. This improves customer service lowers expenses and eliminates the risk of running out of goods.
- Expense Management
Efficiently managing and controlling your inventory allows you to minimize or avoid many maintenance and operating costs associated with carrying inventory. By constantly keeping the correct quantity of stock on hand, you may save storage and warehousing costs, as well as any costs associated with acquiring excess, unproductive inventory. Because the item a client need is always in stock, it does not need to be expedited, which saves on shipping expenses.
- Limit deterioration and obsolescence of inventory
To limit the deterioration and obsolescence of your inventory, Inventory levels can be properly maintained to meet consumer demand by tracking what’s in stock and projecting inventory changes. With a warehouse inventory management system, you have 24/7 visibility of your inventory and limit potential waste by preventing surplus product orders from being placed.
- Concentrate on Large Projects
By employing an automated warehouse inventory management system, you can free up resources to concentrate your efforts on significant projects and materials. In the beginning, bin stocking may be a time-consuming operation but in the long run, it will save you time and money.
What exactly is Lot Tracking in Warehouse Management System?
Lot tracking in a warehouse management system is a business approach that allows you to track each unit of inventory that enters and exits your warehouse. This usually entails keeping track of all raw materials you purchase from your suppliers, the components used to make completed goods, and the finished units you provide to your clients.
Large and small manufacturing companies with a warehouse management system use a lot tracking system as part of their inventory management strategy. Lot monitoring allows each organization to trace product batches throughout the supply chain.
A lot tracking system begins with the manufacturer and includes distributors, merchants, and other supply chain organizations, and it will continue till the product reaches the individual clients. In order to work efficiently, the system needs to include everyone that touches that finished good.
Furthermore, while merchants may not continuously monitor which customers purchased a particular product, they can readily trace returned goods to a purchase order and manufacturer invoice. You can identify the original batch of the product in an issue using a lot tracking system. Your system can determine which customers received things from the same set in real time. You promptly contact your consumers and ask them to remove the impacted product. Because of this end-to-end traceability, you are able to respond quickly and effectively when problems arise.
What Purpose Does Lot Inventory Management Serve in Warehouse Management System?
Lot control also adds another degree of control to your inventory. It allows you to “tag” a product with an expiration date, configure inventory rotation, and systematically guarantee that the items with the shortest expiration date ship first. It does more than merely track the expiration date of an inventory lot.
With lot control, you can manage your inventory’s serial numbers, account for the physical location of your inventory, and arrange your warehouse. At any moment, lot control software will give you the exact position of a certain item in your inventory. In the unfortunate case of a recall, you can reassure your clients, and your client’s consumers you know where every product is and have taken the appropriate measures.
When is Lot Control Software Beneficial?
Lot control software is critical if you have perishable goods, serialized goods, or highly controlled commodities. Lot control software is particularly useful if your warehouse has unique areas, such as a temperature-controlled room. Lot control software manages and helps you control and manage all the variables of your inventory.
Expiration dates are used to control lots.
As shown in the last example, lot software allows you to manage lot numbers and track the expiration dates of your inventory. The lot function in a cloud-based system enables you to establish clear communication channels between your warehouse and the FDA or any other regulating body interested in lot numbers.
Benefits of LOT tracking system in inventory management
- Control Product Recalls
In 2020, the United States recalled 257 consumer products and 418 food products, in 2021, the numbers were 218, and 414 respectively. Recalls occur for a variety of reasons. They can happen when a company detects an issue and decides to remove a product from the market on its own. Other times, a company may be forced to recall a product after government authorities, such as the FDA, express concern. For example, in 2021, Food products associated with onions from ProSource Produce were recalled because of the potential risk of salmonella.
A lot tracking system is crucial in a product recall situation. With a robust lot tracking system, you can instantly identify the batch in trouble, as well as the consumers who got items from that batch. You can immediately contact your customers and inform them that the items have been removed from the shelves with that information. A quick recall will prevent future harm to the consumer’s safety and your reputation.
Furthermore, when you obtain the lot information from your suppliers, you can determine what raw ingredients was utilized to make the contaminated product. You can then decide whether the issue developed due to use in your manufacturing processes or from your supplier.
- Keep track of product expiration dates.
In order to maximize your profits, your organization must sell as much merchandise as possible. In the case of manufacturing, if your items have limited shelf life, this process becomes considerably more complex, and lot tracking becomes more important. Your system should alert you when items are approaching their sell-by or expiration dates.
Those items with approaching sell-by dates or expiration dates can then be discounted to secure a sale. The first stage is to use a First-In-First-Out (FIFO) delivery method, which may not always be available. Customers’ rules on the accepted range of sell-by and expiration dates might vary.
A big-box shop, for example, may only buy items with a minimum shelf life of two months. On the other hand, a cheap retailer may accept items with a minimum of one month of product shelf life left. You can quickly plan and determine which product batch should go to clients with robust inventory management and batch tracking system.
A lot tracking system will also alert you when your stock is about to approach its sell-by or expiration date and quantify and highlight stock lost due to expiration. As a result, if your product is nearing its expiration date, you’ll be able to determine which batch contains expired items quickly.
You can then take steps to sell or, in the worst-case scenario, write off the merchandise and reclaim important storage space. More crucially, your lot monitoring system should enable you to examine your monthly waste due to product expiring or approaching sell-by dates. Then you may concentrate on lowering your monthly waste and comparing it to industry best practices.
- Observe Legal Requirements
In recent years, the US FDA has tightened regulations for manufacturing, distribution, and retail enterprises. The FDA has particular standards and criteria that all businesses must follow, including product recall processes.
A lot tracking system is now required to be in place aids when dealing with any potential product recall complications. Furthermore, proof of a lot tracking system is a legal need for functioning in some businesses.
For example, the Medication Supply Chain Security Act (DSCSA) mandated that pharmacists preserve and track the drug lot information that they sell. As a result, most pharmacies refuse to work with suppliers that cannot provide lot tracking information.
If you work in the food industry, you should pay close attention. With President Obama’s signature of the Food Safety Modernization Act (FSMA) in 2011, the FDA now has more sweeping authority to take action against any firm whose food products may represent a safety risk to consumers. Having a lot tracking system helps you respond quickly to any food safety issues that arise, and this will help you avoid being punished by the FDA and being forced out of business.
- Certification
Lot monitoring is vital for more than simply regulatory reasons. It is also necessary to get industrial certifications. The International Organization for Standardization (ISO) compliance certification, for example, is a highly respected certification. To obtain this accreditation, you must have many tracking systems in place.
Once you have received this or any other industry accreditation, you will be able to more effectively express to your customers that your brand is trustworthy. A high-quality brand whose items are well-made.
Once you have received this or any other industry accreditation, you will be able to more effectively express to your customers that yours is a trustworthy brand. A high-quality brand whose items are well-made.
- Is Lot Tracking Necessary for My Company?
Lot traceability is likely to be significant for you whether you are a small or large firm, or a food or industrial enterprise. While the type and style of information may differ between sectors, keeping track of inventory through lot monitoring as part of your inventory control plan is a required business necessity for your company to succeed. Here are some instances of how various sectors make use of lot tracking.
- Food Service/Restaurants: Keep track of expiration dates for food goods.
- Pharmaceutical Companies: Medication and drug tracking standards are analogous.
- Manufacturers: Monitor production batches in case a product recall is required.
Also, lot monitoring software automates lot assignment and sell-by/expiration date alert messages, resulting in a variety of cost-saving options, such as,
- Lower manual labor expenses
- Lowering the costs involved with manually handling a product recall
- Cost savings when dealing with lot tracking compliance
What Is the Best Way to Begin?
“An ounce of prevention is worth a pound of cure,” as the saying goes. So, how can a lot tracking system help you prevent your company from future disasters?
You can get by with a manual or spreadsheet-based lot tracking system if you just start producing a few items. However, this may be difficult to manage and is prone to human mistakes. Manually tracking lots becomes increasingly time-consuming as your organization expands, and it is difficult to rely on spreadsheets to track things supplied to clients. Furthermore, selling your items from several warehouses can further confuse matters. All the difficulties described above can be solved using lot tracking software.
Finally, we know your business is a priority and you need to get the best value for every investment. That’s why the inventory management system is always designed in such a way that you can easily configure it and it suits your needs and you can add additional functionality as your business grows.
ERP Gold provides advanced inventory management solutions with lot monitoring, so you have 24/7 real-time visibility to your inventory for end-to-end traceability. You can see what is on order, what is inbound, where everything is, what is being processed, what is outbound and what is at your customers. You get the complete picture of your inventory. We keep you on top of expiration / sell-by dates, we organize your information in case of a recall, and we keep you compliant with legal and regulatory obligations.
Are you ready to take the next step with your inventory? ERP Gold’s Inventory Management software solution is ready to help you, we help you manage all aspects of your business from sales, and purchase to production, delivery, and even returns of products in real-time with greater accuracy and efficiency. ERP Gold is here to help you with all your inventory management and control issues! Click HERE to read more about how we can help, call us at 888.334.4472 for a free consultation. If you want us to call you, fill out our contact form HERE. Or click HERE to schedule a free consultation or demonstration of how we can help you.