Space - a Warehouse Manager's Worst Nightmare!!!

28 April 2022

There is never enough space.” | “As fast as I create space, somebody fills it.”

Warehouse design is all about flow.  Inventory should move continuously through your warehouse; it should not be left standing for extended periods on the warehouse floor.  In addition, you only want to hold the inventory your customers will consider purchasing. Obsolete, expired and damage stock takes up space that could be used for saleable stock.  Demand forecasting is key to your inventory management plan, as you need to know what customers are calling for to hold the correct inventory.

How do you as a Warehouse Manager free up space? What tools or techniques can you consider? 

Analyse Old Stock or Expired Stock

A quick win is to identify all expired or quarantined stock. This stock should be evaluated to determine a safe, environmentally friendly disposal process.  If stock is almost expired, but still safe for consumer consumption, the organisation could consider selling it at a discounted rate or donating the stock to a worth cause.  If the stock is not safe for human consumption, then options such as disposal, recycling or reworking the product could be considered.

Re-evaluate Safety Stock Levels

Safety Stock Levels are often set, but never re-evaluated.  Sometimes the levels are increased based on an immediate need and not revisited.  It is good practice to regularly re-calculate your Safety Stocks to make sure that they are not excessive (or too low).  Excess safety stock takes up much needed space within your warehouse.

Figure 1: Graph of 12 Month Inventory Levels vs Safety Stock

Consider Figure 1 below.  Total inventory of this product has never dipped below 800 Tons of inventory. Therefore, for the past 12 months the warehouse has stored 800 Tons of product that is effectively not moving.  There is an opportunity to reduce the Safety Stock Level by 50% to 500 Tons with limited risk to supply.  This would effectively free up space held by 300T of stock over the last 12 months.

12 Month inventory view
Figure 1: Graph of 12 Month Inventory Levels vs Safety Stock

Apply FIFO Stock Management Principles

A simple way to ensure your warehouse is not full of expired or outdated stock is to apply the FIFO (First In First Out) Principle.  Warehouses that apply this principle always despatch the oldest stock first to reduce the risk of obsolescence.

 

Initiate the Practice of 5S

To sustain the improvements introduced, consider introducing 5S.  5S is the Japanese technique of bringing discipline to the workplace and organising space effectively. 

 

Each S needs to be applied to the warehouse:

  • Sort – remove all the unnecessary items such as obsolete, contaminated, or damaged stock. Any other items not required to manage the warehouse.
  • Set in Order – organise the remaining stock in a structured way so that it easy to retrieve and apply the FIFO principles to.
  • Shine – keep the work area clean so that stock will not be contaminated or damaged.
  • Standardise – set standards using signage, demarcation, and labels to ensure storage locations are clearly defined.
  • Sustain – conduct regular Gemba walks to ensure new standards are maintained.

These four tools will make an impact on your warehouse space quickly and sustain the improvements in the longer term. 

 

Please share any comments, questions or thoughts in the comments below.

Written by Special Guest Writer, Chanti Wilson. Executive Leadership Coach |Business Consultant | SAPICS Director

A Supply Chain Consultant with over 20 years’ experience, Chanti Wilson has experience in a range of industries including FMCG, Automotive, Agricultural and Packaging, where she has implemented the practices of Supply, Demand, Sales & Operations Planning and Procurement. Chanti is currently a Director at SAPICS – The Professional Body for Supply Chain Management and chairs the SAPICS Small Business Hub sub-committee.   In addition, Chanti works as Client Support Manager for CCi and MBA Teaching Assistant at UJ for their Operations and Supply Chain Module. Her passion is developing skills that will grow the South African economy and actively does this through coaching and mentoring young Supply Chain Professionals.

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