An Expert Guide on Warehouse Inventory 

Learn about warehouse inventory, including its importance, types, and challenges, and get the tools your brand needs for efficient management.

Jim Sharkey
October 22, 2023
Learn about warehouse inventory, including its importance, types, and challenges, and get the tools your brand needs for efficient management.

When I founded Mochila a decade ago, I knew our unique approach would disrupt the ecommerce fulfillment industry. Today, we continue to serve modern brands with a boutique style and tech-centered team that takes pride in offering personalized service. 

As a leading player in the industry, we’re well-versed in ecommerce brands’ everyday operations, including warehouse inventory. In this article, we aim to share with you some of what we’ve learned over the years about how to manage warehouse inventory.

What Is Warehouse Inventory Management? 

Warehouse inventory management involves the organization, control, and administration of products within a warehouse or storage facility. This process includes tracking and managing inventory levels, orders, sales, and deliveries to ensure that the right products are available at the right time. 

It encompasses various activities such as forecasting demand, setting reorder points, conducting regular stock audits, and optimizing storage space. Ultimately, the goal of warehouse inventory management is to minimize costs associated with holding inventory, prevent stockouts or overstocking, and improve overall operational efficiency. 

Why Is Effective Warehouse Inventory Important for Businesses? 

Effective warehouse inventory management is the foundation for meeting and exceeding customer demands. It ensures that products are available when customers need them, avoiding lost sales and dissatisfied customers.

Proper inventory management improves efficiency by optimizing storage space and streamlining the order fulfillment process. An accurate and up-to-date inventory prevents fulfillment errors, backlogs, and other costly mistakes. Plus, it keeps businesses prepared for high-demand periods like holidays and special sales.

Following best practices results in accurate inventory records that facilitate better demand forecasting, allowing businesses to make informed decisions about stock levels and reorder points. Additionally, effective inventory management helps businesses comply with industry regulations and standards, reducing the risk of penalties.

What Are the Different Types of Warehouse Inventory? 

Depending on the nature of a warehouse and the types of products your brand sells, there can be a variety of inventory categories. Each requires a different management approach. Typically, there are three types of warehouse inventory: 

Raw Materials

These are the unprocessed materials used to produce finished goods. If you’re in the apparel industry, these would be fabrics (cotton, silk, etc.), dyes, threads, and accessories like buttons and zippers. 

Raw materials require careful monitoring to ensure a smooth production process.


Work-in-progress (WIP) inventory includes goods that are still being manufactured. WIP in the apparel industry would be cut pieces of fabric that have yet to be sewn together, or clothes that don’t yet have buttons sewn on.

Managing this inventory type is crucial as it affects the production timeline and ultimately, customer satisfaction. It’s especially important for brands that work with manufacturers to make quality products.

Finished Goods

These are the final products ready to be shipped to the customer. Following the example above, it would be the finished shirts, pants, jackets, dresses, or whatever clothing you’re manufacturing. 

Managing this inventory is vital to meet customer demands and ensure timely deliveries.

How Is Warehouse Inventory Categorized? 

You can systematically categorize your warehouse inventory to improve efficiency and streamline operations. At a minimum, everything inside should be assigned an SKU (stock-keeping unit) to help maintain accurate inventory records. Once an SKU is assigned, it’s a matter of separating the products into specific categories. 

Here are a few examples of common categories: 

Product Type

The nature of the products, such as electronics, clothing, or perishable goods, is the most important category to consider. Different product types may require specific storage conditions and handling procedures, so proper categorization is crucial.


Products are categorized based on their location within the warehouse, which can be divided into zones, aisles, shelves, or bins. This aids in efficient space utilization and makes picking and packing operations quicker.


Inventory can be categorized based on the quantity available, such as high-volume or low-volume items. Keeping a close eye on quantity helps when you’re prioritizing restocking operations and managing inventory turnover.


Value is a crucial aspect to keep in mind when storing items in your warehouse. High-value items may need to be stored separately or in a different area to minimize the risk of theft or damage to expensive items.

Frequency of Movement

Fast-moving items are often placed in easily accessible areas, while slow-moving items are stored in less prominent locations. This categorization helps optimize the picking process and reduce unnecessary movement within the warehouse.


Seasonal products may be categorized separately due to their demand fluctuations. Categorizing by seasonality assists brands in planning for storage space and managing stock levels according to demand patterns.

What Are Some Common Challenges in Warehouse Inventory Management?

Every warehouse has unique challenges to address. But there are a few common challenges practically every warehouse encounters. Here are a few examples: 

Maintaining Accurate Records

One of the most significant challenges in warehouse inventory management is keeping accurate and up-to-date records of stock levels, product locations, and order status. Incorrect data can lead to various problems that affect the bottom line.

Managing Stock Levels

Striking the right balance in stock levels is crucial. Overstocking results in higher holding costs, while stockouts can lead to lost sales opportunities and dissatisfied customers. It's a delicate balance that requires careful planning and monitoring.

Timely Deliveries

Ensuring products are delivered to customers on time is essential — especially if they choose express shipping methods. Consistent punctuality involves efficiently managing the fulfillment process, from picking and packing to shipping and delivery. Delays at any stage, even early ones, can result in late deliveries.

How Can Businesses Overcome Warehouse Inventory Challenges? 

We know more than anyone that dealing with the challenges of warehouse inventory management can be difficult. Here are a few of the most effective ways to overcome these challenges:

Implement Best Practices

Focusing on best practices can help ensure that your warehouse inventory management is both effective and efficient. 

Some best practices include: 

  • Regular audits: Conduct inventory audits to maintain accuracy and prevent discrepancies. Use cycle counting and annual audits to validate records and rectify errors.
  • Accurate records: Use inventory management software to maintain accurate, up-to-date records for tracking stock levels and order status. Detailed records improve demand forecasting, restocking planning, and reduce lead times.

Leverage Technology

Using the right technology and tools can significantly enhance the inventory management process. Here are just a few examples of highly beneficial technology:

  • Barcoding and RFID systems: Barcoding and RFID systems ensure accurate tracking and efficient order processing. They provide instant access to product information, speeding up picking and packing processes.
  • Warehouse management systems: Implement a comprehensive warehouse management system (WMS) for optimizing warehouse layout and operations. WMS integrates with business systems for seamless information flow and manages inventory control, labor, and space.

Train Your Team

Continually training your team on new systems and processes is vital for successful implementation. Here are a few strategies that you should employ to ensure that your team is properly trained:

  • Comprehensive onboarding and regular workshops: Comprehensive onboarding and regular workshops are essential for new and existing team members. Setting aside time for hands-on training and updates on industry trends, tools, and techniques helps warehouse staff do their jobs efficiently.
  • Encourage cross-training and mentorship programs: Encourage cross-training and establish mentorship programs for knowledge sharing and collaborative learning. For instance, experienced staff should mentor new members, enhancing skills and work culture.

The Takeaway

Managing warehouse inventory is the foundation of any successful product brand. It ensures that products are available when needed, improves customer satisfaction, and ultimately helps businesses succeed.

Here at Mochila, we pride ourselves on our personalized approach to warehouse inventory management and ecommerce fulfillment. We understand the challenges that modern brands face, and we’re here to help.

If you’re looking for a personalized, tech-centered fulfillment partner, consider partnering with us. Reach out to us today to meet your warehousing and fulfillment needs.


Work-in-Progress (WIP) Definition With Examples | Investopedia

What is Inventory Management Software? | US Chamber of Commerce

RFID vs. Barcodes in Supply Chain: Which Should You Choose? | TechTarget

What Is A Warehouse Management System (WMS)? | Forbes

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