Inventory 101: The Two Building Blocks of Today’s Warehouse

 In Best Practices, Inventory Management

This blog post on inventory management best practices was written by our friends at NETSTOCK. Learn more about them at

Building blocks of inventory success

Managing all of the complexities around your inventory can seem intimidating, but in reality, there are just two primary building blocks that every inventory-based business should focus on first and foremost. Let’s take a look at those two fundamentals that will help nearly any business with stock coming in and out of their warehouse.

1. Getting your inventory under control

The first building block of inventory management is control. You need to know what you have, in what quantities, and the location of your stock. SalesPad delivers this with excellence; it gives your business accountability and visibility as you manage the physical product in your warehouse. 

With SalesPad in place and configured to give you that control, you can begin working on the other primary building block of your inventory: replenishment. 

2. Balancing your inventory levels

Getting replenishment right means establishing and maintaining the right amount of stock in the right place at the right time. Every ordering decision your team makes should sustain this balance of items to fill your customers’ needs without over-investing in excess stock.

There are different buzzwords for this process, and the most popular is probably “inventory optimization.” No matter what phrase you use to describe this process, it always comes down to maintaining a balancing act in your warehouse: enough stock on hand to fill your orders, but not so much that you’re tying up your working capital in excess stock that’s gathering dust on your shelves. 

Deep dive into both building blocks

Now that we’ve established what the two building blocks for a successful warehouse are, let’s look at them with a little more detail and focus specifically on what smarter inventory replenishment and demand planning could mean for your business.

These two aspects of inventory management might sound similar, but they actually involve very different processes and tools. Ultimately, they work hand in hand to help you create a smarter and more profitable warehouse. Both are critically important to running a successful distribution, retail, or manufacturing business.

Understanding Inventory Control and Inventory Replenishment

Inventory control handles the inventory that is already in your warehouse. In conjunction with your ERP, an inventory control solution organizes the following key areas:

  • Receiving inventory
  • Processing stock takes
  • Processing inter-branch transfers and receipts
  • Picking, packing, and shipping stock
  • Processing purchase orders on suppliers
  • Processing customer invoices on your sales

Inventory control is the supervision of non-capitalized assets and stock items. If you’re still relying on spreadsheets and data dumps from Microsoft Dynamics GP, then making the move to SalesPad is a must. If you’re already on SalesPad, it’s time to look at the other side of inventory management.

That brings us to inventory replenishment, which is the strategy for balancing the amount of working capital that is tied up in inventory with service-level goals across multiple SKUs. Inventory replenishment offers advanced forecasting to ensure that you always have the right quantity of the right product at the right time and in the right location. Inventory replenishment tools provide:

  • Demand planning and forecasting
  • Calculating safety stock
  • Calculating reorder points
  • Identifying fill rate percentages
  • Identifying obsolete items
  • Streamline your ordering process
  • Optimizing warehouse levels

Here’s visual to help you sort out the differences between these two building blocks:

Inventory management with Netstock.

Inventory Control and Inventory Replenishment

Basically, the distinction comes down to this: inventory control is all about keeping your inventory sorted, scanned, and organized. Inventory replenishment is all about keeping the right levels of inventory so you never have too much or too little at any given time. Dynamics GP gives you a reliable source of truth, but you need additional tools like SalesPad to leverage that valuable data in your ERP software.

The key to improving your replenishment is understanding your demand forecasting. You need a tool that looks at the sales profiles of all of your items to help you create data-based forecasts. From there, you can include replenishment cycle and lead times to create a safety stock policy for your items, putting you in the driver’s seat with your inventory investment, rather than simply buying more stock and hoping that keeps you covered. Dynamics GP can’t provide you with that insight, but it does have the necessary data that can be leveraged to help you with that. 

For both sides of inventory management, using the right tools to handle the above tasks is absolutely critical. If you’ve already got SalesPad running in your business, you’ve got the control piece settled. Now, it’s time to look for a tool that helps you keep your levels at the optimal amounts through a more automated ordering process. Together, these tools will create a far more profitable warehouse, day in and day out. 

Using the wrong tools to do these jobs results in disorganized inventory where some items are ordered too frequently and others aren’t ordered frequently enough. Orders will take too long to process, fill rates will be at a lower level, and the profit of each sale will be dramatically hindered by time-consuming processes that keep you in the dark.

When it comes to inventory replenishment, there is no better or more affordable tool on the market today than NETSTOCK. With robust algorithms and analytics to help you process and interpret your data, NETSTOCK gives you the visibility into inventory replenishment that you’ve always needed — that means eliminating stock-outs and cutting costly excess stock. Working in concert, SalesPad and NETSTOCK are the tools you need to drive more profit from your inventory.

The end result is smarter purchase orders that help you keep costs down while boosting your service to your customers. If you haven’t seen the app in action yet, take a few minutes to watch this video. You can contact us anytime to learn how NETSTOCK could free up significant amounts of your working capital.

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