What if a warehouse wasn’t solely a place to store inventory but just another stop along the distribution path to a customer? That’s the idea behind an inventory management strategy known as rolling inventory, in which a delivery truck becomes an extension of the warehouse: Rather than warehouse employees going through the time and expense of offloading and storing an entire truck’s worth of goods into the warehouse, some or all of the goods remain in the trailer. The trailer is then rolled to the warehouse yard, where it remains until it’s scheduled for final delivery.
The rolling inventory gambit is that the costs of unloading trucks just to refill them later is higher than the costs of keeping full or semi-full trailers in a warehouse yard. But rolling inventory is not just about leaving products on trailers. It may also lead to efficiencies in warehouse operations, cutting down on costs associated with product sorting, storage, equipment and warehouse space. Rolling inventory can also expedite delivery, making for happy customers.
What Is Rolling Inventory?
Rolling inventory — a strategy first proposed in 2003 by researchers at the University of Massachusetts in Amherst — seeks to cut down or eliminate the unloading/loading process. Inventory stays in the trailers, which are parked in the warehouse yard. When the inventory is needed elsewhere, the trailers are already packed and ready to go. By implementing rolling inventory, businesses can save on labor/handling costs — which can account for up to 65% of the cost of warehouse fulfillment, according to one estimate — optimize warehouse space and hasten order delivery to meet customer demand.
Unloading cargo into a warehouse is not a trivial matter. Space must be allocated for the products, which employees need to physically move out of a trailer and inside the warehouse. Inventory management systems need to be updated to reflect the cargo’s new location, not to mention that all of this moving about increases the chances for product breakage and theft, as well as product COGS. Then, when the inventory is ready for delivery, the whole process must be reversed.
Key Takeaways
- Rolling inventory is an inventory management strategy in which some or all of the goods that arrive at a warehouse remain in the trailer rather than being unloaded and stored in the warehouse.
- Rolling inventory offers a flexible way to manage labor and warehouse costs.
- Rolling inventory can be handled three different ways: ready-to-go, partial truck and full truck.
Rolling Inventory Explained
Rolling inventory is a warehousing strategy that eliminates the need for all or some inventory to be carried off a truck trailer and into a warehouse, only to be reloaded later for delivery. Instead, products are kept on the trailers at the warehouse until they’re needed, at which point they head out to their final destination. Rolling inventory is not an all-or-nothing strategy; rather, it’s designed to supplement existing infrastructure.
What makes rolling inventory possible is technology. It requires inventory and warehouse management systems that provide for the real time, automated tracking of products so managers know at any given time what’s incoming, on hand and ready to go out to customers, and can schedule accordingly.
Rolling Inventory Policies
Rolling inventory can be handled several different ways, defined by how much inventory stays in the trailer. These so-called rolling inventory “policies” are not mutually exclusive, meaning a company may choose the most appropriate one on a case-by-case basis. The idea behind them all, though, has to do with pairing a product-laden truck’s arrival at a warehouse with an outbound shipment.
Full-truck policy: In a full-truck policy, the trailer arrives at the warehouse and is immediately stored in the yard with its original contents. When the trailer is ready to be sent out, it’s driven to the warehouse dock, where workers unload products that are not part of the next delivery and load other products that are part of the outbound order. This method cuts down on handling costs and saves warehouse space.
Ready-to-go policy: Under ready-to-go, the trailer arrives at the warehouse, workers unpack what’s not needed for the next order and add to it products that are on that order, too. The trailer is then stored in the yard until it’s time for the shipment’s delivery. Its benefits are the same as those of the full-truck policy.
Partial-truck policy: Similar to the ready-to-go policy, employees unpack an arriving trailer of everything not needed for the next order. However, rather than add more products for the outbound order at that time, the partially filled trailer is stored in the yard until it is ready to be filled with the remaining goods. This strategy is advantageous when adding perishable goods to a delivery.
What Are the Benefits of Rolling Inventory?
The main benefits of rolling inventory boil down to a series of savings associated with inventory and warehouse management processes:
- The first, and perhaps most significant, savings is in labor costs, since rolling inventory negates the need for employees to fully unpack products off trucks, sort and store them in the warehouse, and then reload them again for delivery at a later time.
- Less handling also means fewer products may break or be stolen, which can eat into a business’s profitability.
- In addition, rolling inventory saves on warehouse space, cutting down on inventory stockpiling and storage costs. This opens space to store other goods or perhaps lets a company buy or lease a smaller facility.
Another potential benefit is customer satisfaction. Rolling inventory allows for the full or partial preparation of an order awaiting the green light to head out to its final destination. Shipments that arrive when customers expect them lead to a better experience and, likely, repeat business.
What Types of Businesses Use Rolling Inventory Management?
Rolling inventory management is typically used by warehouse-centric businesses that deliver goods to distributors, wholesalers or retailers. Some high-volume distributors may also be able make use of rolling inventory to augment or replace existing warehouse space.
Additionally, rolling inventory is well-suited for companies that use a perpetual inventory management system, in which stock is tracked continuously. After all, the whole point of rolling inventory is readiness: to be ready to tap into inventory as soon as it is needed.
Manage Rolling Inventory With NetSuite
Companies that employ rolling inventory and other inventory management strategies can benefit from NetSuite’s Inventory Management and Warehouse Management systems, which work collaboratively as part of the company’s comprehensive enterprise resource planning (ERP) system. NetSuite Inventory Management provides a single, real-time view of inventory across multiple locations. The software also automates inventory tracking, optimizes inventory levels and helps to reduce handling costs — the latter a hallmark of an effective rolling inventory deployment. In addition, this information helps warehouse managers better plan for incoming and outgoing shipments, including when to schedule workers and how to make the most efficient use of warehouse space.
It stands to reason: The easier it is to locate items, whether in a warehouse or in a nearby trailer, the faster it is to gather and prepare them for delivery — and the more satisfied customers will be when receiving their orders in a timely fashion.
Conclusion
Rolling inventory aims to reduce overall inventory and warehouse management costs by cutting down on the number of times products have to be unloaded and reloaded from trucks at the warehouse. Instead, some or all of their contents remain on the trailers, which are parked in the warehouse yard until they’re ready for delivery. This saves on warehouse space and reduces product handling, plus helps trucks be on their way faster because they’re at least somewhat, if not completely, filled with orders. Of course, rolling inventory comes with its own costs — namely, the price of keeping full or semi-full trailers in a warehouse yard — that must be weighed against the costs of handling and storage.
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Rolling Inventory FAQs
What are the 3 rolling inventory policies?
There are three variations, or policies, of rolling inventory: full-truck, ready-to-go and partial-truck. Under full-truck policy, a trailer is immediately stored in the warehouse yard with its original contents; unloading and reloading occur at the time of shipment. Under ready-to-go, workers unpack what’s not needed for the next order and add to it products that are on that same order; the trailer is then parked until its scheduled delivery. Under partial-truck, only some contents are offloaded into the warehouse; the partially filled truck then waits in the yard until the remaining items are ready to be loaded.
What is the best way to manage inventory?
The best way to manage inventory depends on the needs of the business. However, all inventory management best practices require a combination of the right technology, people and processes. For example, effective inventory management demands well-trained staff who follow consistent processes for receiving and managing raw materials and processing orders. Rolling inventory, which turns the role of warehouse from a storage facility to a point along the distribution path, is a good strategy for warehouse-centric businesses that deliver goods to distributors, wholesalers or retailers.
What are the types of inventory systems?
Inventory can be tracked using either the perpetual method or the periodic method. Perpetual inventory systems are managed in real time and are continuously calculated. Periodic inventory systems calculate their inventory at periodic intervals.
How to test your inventory?
Testing inventory transactions can be a key step in ensuring that a business or warehouse is running optimally. Here are five elements to test:
- Occurrence: Ensures transactions actually took place.
- Completeness: Ensures all received inventory was recorded.
- Authorization: Ensures transactions were proper authorized.
- Accuracy: Ensures transactions don’t contain errors.
- Cutoff: Ensures transactions appear in the proper financial reporting period.
