16 Jul

Product Storage Cost: 10 Tips to Reduce and Control Inventory


When you hear the word stock what comes to your mind? Well, many respond to this question saying that they always relate storage to “challenge”, which is normal, because dealing with this process really involves balancing several factors and, whoever is inserted in the logistics world, recognizes this need.


One of the aspects that make up the basis of effective storage is inventory control, this factor has a direct influence on the smooth running of the activity, that is, once it is well aligned, it can promote a reduction in the company's storage costs, now, if if there is no good planning and management, it can represent financial loss and harm the operation to the point of affecting the end customer.

brclog has been in the market for 18 years and understands the impact that inventory can cause in a process and that is precisely why we are sharing this content. Our goal is that you can get to know some details about storage costs and that you enjoy our tips to gain a competitive advantage in this area.


So, join us in this reading and, if you have any questions, just look for the our team, we are available to help you.


The main storage costs


After all, what does the term storage cost mean? In a practical way: it is all the expenses that are involved to store the products for a certain period, something that can be quite broad, as it goes beyond the costs of the stock itself, it is also related to the cost in relation to receiving, handling and shipping , from the moment the raw material enters the stock until the moment when the sale takes place.


Now, let's talk about some details regarding the main storage costs, which are:


- Structure


In the event that your company has its own space, it is necessary to consider the structural costs, such as: water, electricity, internet, maintenance and insurance. What if the place is rented? Well, the costs mentioned are accounted for in the same way and in addition there is also the expense of the lease.


Suppose you are in doubt about acquiring a location or starting a partnership, in this situation we recommend that you do a detailed research and analyze the pros and cons for your operation. brclog can help you with this, including, on our website you can know the details of the infrastructure that we offer to customers who need to store their products in a practical and safe way.


- Maintenance


The “depreciation” factor is also considered one of the main storage costs and is often overlooked. All equipment that is part of the operation needs review and maintenance, if this cost is not foreseen in the financial planning, it can negatively impact your company's strategy. Therefore, it is essential to know the life of the equipment and schedule periodic preventive maintenance.


- Labor


For an operation to be efficient, it is necessary to have a team at the head of the processes, which involves costs, such as employee salaries, benefits and rights, as well as occasional cases such as temporary hiring and expenses for training.


- Materials


Proper packaging guarantees the preservation of the product until it is delivered to the final customer, in addition, it also allows the company to transmit its visual identity. Of course, this involves costs that must be accounted for. Other items are also included in this account, such as furniture (shelves and tables) and pallets.


- Technology


Technology is present in virtually all areas of society and business, so it is no different in the logistics world. With regard to the warehouse, it is necessary to guarantee automation and manage processes, something that can also be done through WMS systems (Warehouse Management System), which help to maintain efficiency during the storage and dispatch of goods, offering more strategic layouts and reduced waiting and storage times.


- Transport


The transport factor works in the same way as the structure. If the vehicles are owned, the costs involve the supply and maintenance of the vehicles, in addition to the payment of fines and tolls. In case of contracting third parties, there is also the cost of the service that was provided.



What is the importance of inventory in the logistics operation?


We can say that inventory is one of the processes that is part of the foundation for the smooth running of an operation. This is because it is directly connected to the purchasing, sales and logistics sector, which are just some of the examples that can be cited.

Therefore, it is clear that the storage of products can promote an advantage or loss for your company. It is precisely for this reason that it is vital to use all available tools to guarantee an efficient stock management.



10 Tips to Reduce and Control Inventory

Let the top 10 recommendations!


1. Record all entries and exits in a computerized system 


Registering the stock in a spreadsheet can be an invitation to human error, in addition to generating major problems in its operation. Therefore, our first recommendation is to use a computerized system and feed it with all the details about the products. Today, there are several specific tools for inventory management, which have several functionalities to minimize failures during the process.


To reach this stage, brclog has a robust system that allows storage by FEFO (First Expires, First Out), FIFO (First in, First out) and LIFO (Last in, First out). In addition to enabling the integration between supplies, production and distribution, the WMS system blocks items with a near expiration date, and thus generates management status reports in all phases of the stored material, providing the material manager with adequate tools for inventory policy management. Learn more about this solution by clicking on here.

It is worth mentioning that for such a process to flow fully. brclog also has a specialized IT area, which makes all the difference in this new technological scenario.


2. Buy in the right size and work with reduced stock


A reduced stock is much easier to control and this can happen through the application of the “pulled system” or “pull” method, where the demand “pulls” the production line. In this view, the productive sector starts to buy raw material only when there are orders for the final product.


It is true that in some situations it is necessary to make a larger stock, as in the preparation of something seasonal, for example. Therefore, it is essential that there is communication and planning aligned between the sectors involved, as the objective is to work with the reduced stock whenever and whenever possible and viable for the company's operation.


3. Standardize product descriptions in the system


Setting a standard for the items is a very important aspect to avoid confusion in the stock. One way to achieve this goal is using the control sheet, which allows you to know what the product is without having to go to physical stock, that is, the more details, the better. Of course, the most efficient way to do this is with a computerized system.


4. Automate part of inventory control


A part of inventory control involves repetitive activities, which takes a lot of time from the team. The automation of such processes helps to avoid errors and speed up the completion of these tasks, which frees employees to be focused on other parts of the process that need planning and strategy.


5. Establish periodic stock inspections


As much as all other tips are followed to the letter, failures in the process can happen and, before they become real problems for the operation, it is recommended to establish a routine of periodic inspections of the stock. They can be semiannual, monthly and even daily, everything depends on the type of product stored and the risks involved, the goal is that the inspection routine fits with the company's needs.

Once this activity is established, in addition to correcting errors, this will be an opportunity to investigate why failures happen, so it will be possible to improve the processes that lead to them.


With this in mind, brclog makes available to its customers the systematization of the inventory process (cyclical and annual), aiming at the constant assessment of stock availability and offering adequate levels of OTIF (ON TIME IN FULL attendance) on time and in its entirety as planned. 


6. Have a loss reduction program


Losing a product in stock is a common situation, but it can be avoided by creating a loss reduction program. For this, it is necessary to carry out some measures, such as:

  • Use an integrated management system;
  • Monitor the volume of purchases;
  • Receive products carefully;
  • Pay attention to the expiration date;
  • Establish fixed inventory management rules;
  • Create and monitor control and result indicators;
  • Perform an inventory inventory.

In addition to these actions, it is possible to include others that are in accordance with the need for the operation.


7. Value security when closing contracts


In practice, having security when signing contracts means ensuring that the products being sold are actually in stock. For this to happen, it is important to exchange quick information between the sectors involved (sales and inventory) and, something that can help is the consultation of an integrated management software that, as already mentioned, is a tool that optimizes the management of the inventory, therefore, helps to avoid headaches when it comes to closing contracts.


8. Use good separation practices


Good separation practices also facilitate inventory management, through which it is possible to create a standard that meets the needs of the operation. Here are some of the top items:

  • Separation by size;
  • Similarity separation;
  • Care to maintain integrity.


9. Prevent theft and diversion

Preventing theft and diversion is a crucial measure for controlling inventory and also for preventing financial losses. Measures such as inspecting cargo during receipt and inserting cameras in stock can help a lot in this regard.


10. Refuel intelligently


In addition to carrying out a strategic planning for the stock, another way of making the smart replenishment is studying the consumer behavior, because it is possible to understand which products are more likely to be sold.


Now that you have a complete picture, it will be easier to reduce and control your company's inventory. And of course we will not leave you alone on this mission, brclog has the best storage solutions and is ready to adapt to your business. Search our team, learn more about our advantages, and don't forget: #JuntosVamosMaisLonge.


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