What is Active Inventory in Fulfillment?
Active inventory refers to the portion of inventory that is readily available for immediate use, sale, or distribution. It represents the inventory that is actively managed and considered as the “on-hand” stock available for fulfilling customer orders or replenishing store shelves.
Characteristics of Active Inventory in a Fulfillment Operation
The following items are common characteristics of active inventory in fulfillment operations.
- Availability: Active inventory is physically present within the warehouse or distribution center and is accessible for order fulfillment. It is ready to be picked, packed, and shipped to fulfill customer orders or replenish stock levels.
- Allocated for Sale: Active inventory is allocated for sale or distribution, meaning it is assigned to specific sales channels, customers, or store locations. It is considered as part of the available stock that can be sold or distributed to meet customer demand.
- Managed in Real-Time: Active inventory is usually actively managed and tracked in real-time using inventory management systems, warehouse management systems (WMS) and even Warehouse Executions System such as VARGO’s COFE WES. The systems are continuously updated to reflect changes in inventory levels due to sales, returns, or replenishments.
- Primary Picking Locations: Active inventory is typically stored in primary picking locations or forward picking areas within the warehouse. These locations are strategically positioned for efficient and quick access during order fulfillment processes.
- Timely Replenishment: Replenishment of active inventory is crucial to maintain sufficient stock levels. When the active inventory depletes or reaches a predefined threshold, replenishment processes are typically triggered to ensure continuous availability of products.
- Demand-Driven: Active inventory is directly influenced by customer demand. It reflects the inventory items that are in high demand and likely to be sold or distributed in the near future. It is continuously adjusted based on sales patterns, forecasts, and market trends.
Managing active inventory effectively is essential for businesses to meet customer expectations, minimize stockouts, and optimize order fulfillment processes. Accurate tracking, timely replenishment, and efficient inventory management systems play a crucial role in maintaining an optimal level of active inventory to support sales and customer satisfaction.