Improving transportation and inventory management can help companies save time and money as well as minimize the potential for errors.

Smooth inventory flow, from warehousing products to delivering goods, is essential for keeping costs down and customers satisfied. Businesses should streamline their transportation operation, inventory and warehousing processes for efficiency.

Here are a few tips on managing these vital business processes.

Transportation Management
The Aberdeen Group (via Supply Chain Brain) recently cited various pressures prompting organizations to improve transportation management: high freight costs; the cost and service impact of transportation; corporate mandates; customer demand for faster deliveries; and administrative costs. Because of these issues, companies are seeking to determine exactly how much they are spending on transportation, where the money is going and how they can improve their process to lower costs.

The first step toward improving the transportation process is understanding the current system is like. “It is impossible to move forward unless you know where you are today and understand your true cost of freight,” the Aberdeen report, Transportation Procurement and Payment: Righting the Ship in the Middle of the Storm, says.

Companies must establish a current performance baseline, Outsourced Logistics advises. From there, companies can figure out where they should focus their attention and resources, and set goals for improvement. (Outsourced Logistics offers a scorecard that companies can use for the assessment phase.)

Successfully managed transportation operations share several criteria that companies looking to improve their operations should consider implementing, Outsourced Logistics adds. These include: having a transportation management leader; practicing strategic sourcing; using transportation management systems; making transportation management part of the overall supply chain strategy; and relying on fact-based metrics and scorecards to drive performance.

Once companies know where they need to go, they can take steps — such as appointing a transportation management leader and/or adding a transportation management system — to address their transportation issues.

Inventory and Warehouse Management
Directly tied to transportation management, companies must also control the amount and frequency of supplies coming in, in relation to the number of products going out. Having a successful inventory management system ensures that stock levels remain appropriately low.

“Part of your purchasing plan must include accounting for the depletion of inventory,” United States Small Business Association (SBA) recommends. “Before a decision can be made as to the level of inventory to order, you must determine how long inventory you have in stock will last.”

The SBA also offers the following tips for improving inventory management:

• Don’t spread rapidly moving stock too thin;
• Increase inventory turnover;
• Keep stock low;
• Make volume purchases for lower prices, but not for slow-moving inventory; and
• Have enough supply on hand but don’t get caught with obsolete items.

One strategy for inventory management is consistent inventory counts. By defining counting policies, companies can reduce counting variations as well as wasted effort. “Consistency brings you free improvement assuming it does not cost you to be consistent, and by and large, it does not, it’s just a matter of setting a schedule and sticking to it,” according to an MIT Center of Transportation and Logistics paper on inventory.

Less counting variation enables companies to find errors sooner, leading to less stockouts and unnecessary reorders.

Moreover, firms must also manage the people who are in charge of keeping track of the inventory. Implementing warehouse management systems enables warehouse staff to automate manual procedures such as counting, so they can concentrate on improving operations and managing exceptions rather than managing paper trails, Global Logistics & Supply Chain Strategies adds.

Transportation and inventory are two of the more tangible aspects of business. Companies must continuously assess both processes to improve how the overall business is run overall.

Resources

Transportation Procurement and Payment: Righting the Ship in the Middle of the Storm
by Brad Wyland and Scott Pezza
The Aberdeen Group, March 2009

Getting a Grip on Transportation Spend Management
Supply Chain Brain, May 20, 2009

7 Steps to Transportation Management Excellence
by Scott Sykes, Matthew Menner and Vincent Chiodo
Outsourced Logistics, June 1, 2008

7 Steps to Transportation Management Excellence
by Scott Sykes, Matthew Menner and Vincent Chiodo
Outsourced Logistics, June 10, 2008

Inventory Management
by Floyd D. Hendrick, Frank C. Barnes, Edward W. Davis, D. Clay Whybark and Murray Krieger
U.S. Small Business Adminsitration

Inventory You Can Count On
by David Opolon
MIT Center of Transportation and Logistics, June 10, 2009

There’s Still Room for Improvement in a Familiar Area of the Supply Chain: Warehouse Management
Global Logistics & Supply Chain Strategies, May 7, 2009