With sales volumes at their lowest levels in years, many businesses are dealing with excess inventory. One way to keep costs down is through better usage of warehouse space.
Although recent data offer encouragement that supply chains are finally starting to free themselves of excess inventories, many warehouse and distribution center (DC) managers are dealing with larger inventories due to the economic recession.
The cost of excess inventory is hitting businesses hard.
One way that warehouse managers can keep costs down is through better usage of warehouse space. Typically, the only option for storing inventory is in a distribution center (DC) or warehouse, often with very little space.
However, Logistics Management recently highlighted some solutions for creating more space without requiring capital costs, and some that involve minor layout reconfigurations and the purchase of low-cost storage and handling equipment.
"[After finding space], you will eventually take control of your inventory, increase your operational efficiency by handling fewer pallets, and reduce current outside storage costs," Carlos Bastos of Frazier Industrial Company told Logistics Management.
Examine process flow and storage methods to make sure that you're making full use of your warehouse space. To determine if warehouse space is being used wisely, the entire airspace must be examined. This includes space within racking and above the storage modules. There could be a lot of unused vertical and horizontal space throughout the facility.
Unused overhead space above operating areas could be used more efficiently. "This is particularly prevalent over receiving and shipping docks, value-added processing areas and packing stations," according to Larry Shemesh of OPSdesign Consulting. Each storage and media space has a specific range of use that will enable the most storage capacity.
Physical changes can be performed to store equipment, as well.
Taking control of inventory is the most important. Logistics Management recommends examining each stock-keeping unit's cubic velocity versus its cubic inventory to determine which products have little or no movement is invaluable.
Adopting distribution strategies for specific products that decrease inventory and increase turns also is helpful. "After receipt, move product 'across the dock' and load directly onto the tractor trailer," Logistics Management advises. "In other words: cross dock."
Additionally, ensure that the warehouse management system (WMS) is used properly. The WMS should streamline "receiving, picking, and shipping procedures to reduce dock space requirements and free up valuable space for storage," Logistics Management says.
Finding actual physical space at little or no cost is essential. Looking at docks and staging areas works well. Jack Kuchta, author of the book How to Save Warehouse Space: 153 Tested Techniques, suggests creating higher pallets on the top level of racked space. If you floor stack, Kuchta also proposes pyramid stacking, where the top pallet straddles two lower pallets.
Finally, warehouse managers should consider purchasing low-cost storage and handling equipment such as vertical storage devices to create space above areas.
Although maximizing storage is important, occasionally it can compromise productivity. If this happens, managers should briefly sacrifice efficiency in order to create more storage space.
Once orders pick back up and supply chains start to free themselves of excess inventories, an efficient warehouse including optimal use of its space will deliver the right product to the right place at the right time.
Resources5 Ways to Find Hidden Warehouse Space
by Maida Napolitano
Logistics Management, May 1, 2009
May 2009 Manufacturing Report on Business
Institute of Supply Management, June 1, 2009