When your inventory is managed well, other parts of your business reap the benefits. However, the importance of centralised inventory management isn’t always appreciated and can be overlooked by business owners.
In this article, we explore the definition and importance of having a centralised inventory system - and who it's best for.
Centralised inventory control minimises errors and keeps everything in one accessible location.
What is centralised inventory?
Centralised inventory is when a company maintains a single hub that manages the inventory in the main location.
Essentially, this model focuses on using one single, large warehouse to manage everything that is coming and going.
While different parts of the warehouse are used to store different items, everything is housed under one large, warehouse roof. All inventory is housed in the same way and handled by the same people and methods of transportation. This reduces factors affecting inventory management.
The main benefits of a centralised inventory model
Let's take a quick look at the benefits of implementing a centralised system.
These benefits include:
- All of the inventory is in one location. This means there is more consistency with the staff working at the warehouse.
- All involved workers are working together. There is steadiness and regularity when everything is managed in the same place.
- Gain more control and transparency over processes. When everything operates within a central control point, a task such as stocktaking becomes significantly more streamlined when it’s in one location.
- Minimises mistakes between warehouses. Poor or incorrect communication coming from other warehouse sites are eliminated when all in one place.
Couple this with a powerful inventory management software that can track the movement of inventory coming and going, and you've got a winning combination.
Who benefits from centralised inventory?
The benefits are across the board, from management, staff, supply chain and customers.
The consistency allows for management to communicate better to staff. For instance, it allows them to train staff better since they only have to show them how to do one type of stocktake in one warehouse, rather than multiple ways in multiple locations.
The supply chain will have one consistent delivery location and this makes shipping logistics to customers swift and timely.
Keeping a centralised inventory system in place will reduce human errors and communication issues.
Is centralised inventory right for your business?
Centralising inventory comes with a number of benefits, but the impact of these benefits will depend on your unique business processes and needs.
Let's take a quick look at how specific industries may benefit from centralised inventory.
Online retailers
Retailers that only have eCommerce channels or a single brick-and-mortar store will benefit most from centralised inventory. Since they are mainly concerned with packing and shipping, they have fewer logistical challenges compared to other businesses who might have multiple channels.
Brick-and-mortar retailers
Centralised inventory creates operational efficiency. With a single location of all stock, retailers with a physical store will ensure that the entire business are all looking at the same stock instead of guessing how many of a certain product is in another warehouse. Using warehouse inventory management software will also help increase inventory visibility across the team.
For physical store owners, there are no discrepancies over the inventory data, allowing them to make informed business decisions.
Multichannel retailers
In a multichannel retail business, there are a lot more things to factor in as retailers try to keep data in sync across channels. Implementing a centralised inventory model allows everything to be processed from a single location, preventing double selling or selling stock from another channel.
