Multi-Location Inventory Management – A Definitive Guide

Shubham Sinha |Updated on: March 21, 2024

Today, many Indian retail businesses like Spar, DMart, and the likes, have stores located across the country. While these big brands have the resources to run multiple stores in different locations effectively, small to medium-sized brands struggle with it. They often find inventory management challenging, which gets even more complicated when opening stores in multiple locations. 

As a business owner with multi-location stores, you may also struggle with managing your inventory in different locations. Considering how difficult it can be at times, we have shed light on the nuances of multi-location inventory management and jot down some tips to help you streamline it, while improving the profit-earning potential of your business.

What is multi-location inventory management?

Multi-location inventory management is a process where a business has to manage inventory in more than one place. This includes following all warehouse and inventory management but for multiple locations. 

With manufacturing, storage, and distribution facilities situated all over the country, multi-location inventory management may get complex. However, when you employ the right tools and techniques, you can get a good hold of this process and manage your business more efficiently than ever. 

In such a system, it is a good idea to use updated software for automation and collaborating with different locations for effective management of inventory. Having a robust supply chain management and business management software helps get the basics of multi-location inventory management right.

When does your business need multi-location inventory management?

How do you decide if you need to implement a multi-location inventory management system in your business? If you meet one or more of these conditions, then you probably need it:

• Your operations are spread across more than one retail location, needing more than one warehouse for storing your stock
• Your stock includes different types of products in different sizes or products with varying demands
• Your business practices lean manufacturing, which means different sites perform different operations. For example, in an automobile company, different sites are exclusively designed for parts manufacturing, design, painting, and assembly
• Your business wants to segregate between high-value items and low-value items so that you can have the items with a high value at a warehouse closer to you
• You want to mitigate risks that may arise when you store all your inventory in a single location

3 Problems you may face when employing multi-location inventory management 

Does multi-location inventory management appear to be the solution for all your stock-related problems? That’s a good sign, but before going ahead with its implementation, understand some of the challenges involved in this. Being aware of these challenges will help you prepare for worst-case scenarios and ensure a successful implementation.

#1. Accurately tracking and managing inventory across all locations: Doing this in a single location is challenging! However, the challenges only grow as the number of inventory locations grows. Using a proper and centralised tracking system is a great way to overcome this challenge and track inventory across all locations accurately.

#2. Having a robust supply chain cycle and logistics system: With the increase in inventory locations, it is important to update your distribution centres, logistics system and supply chain cycle. If there are lags in these systems, getting the products out of the warehouses to reach the customers might get delayed.

#3. Assigning products correctly to the different locations: One of the most common challenges you will face when running multi-location inventory management is to assign the products correctly to different locations. A minor mistake could lead to a loss of sales in one location while simultaneously creating excess stock in another location.

Apart from these main challenges, some of the minor bottlenecks you may face in your regular operations are a lack of communication among different locations, difficulty in tracking inventory in real-time on these sites and more. However, when these are not identified and corrected early, it may lead to bigger issues like delayed or missed customer orders and loss of reputation.

Advantages of using technology for managing inventory across different locations

• Improved communication among the different locations and real-time notifications regarding stock-out, product availability, discounts and other important information
• Optimised use of warehouses, especially by e-commerce companies to deliver products quickly to customers, leading to increased customer satisfaction
• Having warehouses in locations with increased customer demands can cut your shipping and operating costs considerably

What are the best practices of multi-location inventory management?

• Use updated multi-location inventory management software to automate important processes such as stock reordering, supply chain improvements, invoicing and more
• Analyse different locations to study their fixed order and reorder levels to avoid excess stock or stock-out issues
• Study the market trends, customer feedback and historical sales data of different locations to get an almost accurate forecast of the number of products that need to be assigned to these sites
• Making strategic choices when it comes to deciding the locations for your warehouse; care should be taken to have your inventory locations close to high-demand areas to save money on shipping, transportation and other logistics processes

Bottom Line

Setting up a multi-location inventory management system can be challenging, but once you get it right, you will see a huge impact on the performance of your business. 

Using the right business management software like TallyPrime for automating your inventory management will help in reduced operational costs, quicker and more accurate delivery of orders, increased customer satisfaction and increased business profitability.