The biggest challenge in relocating an ecommerce fulfillment center is the disruption to the business. If you’re fully invested in inventory at an existing 3PL or your own facility, how will you transfer it to start up the new facility without having to shut down for days or even weeks?
In our consulting experience when relocating ecommerce fulfillment centers, we often find the first few weeks or months of the new facility’s operation can be severely hampered by inventory problems including:
- Transferring rather than liquidating excessively aged inventory and overstocks
- Failure to purchase and receive reorders for the new facility rather than receiving at the old facility and transferring
- Inaccurate physical inventory creating availability issues in filling orders
- Slower than desired inventory put away slows order fulfillment.
- Inability to find stock which was in the existing facility
Everyone knows the importance of taking an accurate physical inventory. Here are 10 best practice steps that can help you bring inventory online quicker.
Estimate Space Required
For your own ecommerce fulfillment center, identify the number of bulk and forward picking positions based on the number of SKUs. How much space is required for growth and peak inventories?
In planning a move from a 3PL, it’s sometimes tough to estimate SKU quantities and as well as the number of bin/slot locations required. Use their average month and peak month invoices as starting points. Analyzing space used is handicapped by the inability to have non-company management tour the facility until the termination notice is given.
Determine Transportation Need
Early in the planning process, determine number of trailer trucks, time frame and the cost to transfer products. We suggest you review the required trucks periodically and adjust accordingly. If you have cubic data for items and cartons, take the total cube divided by the cubic dimensions of your ideal pallet size on the truck in order to estimate the number of pallets needed.
Create Slotting Plan for New Facility
Determining where products will go as soon as they come off the truck is one of the most critical tasks. Using data from your internal systems or from the 3PL’s WMS, analyze critical data such as unit sales velocity, rate of sale and units on hand. The warehouse inventory can be analyzed by product, quantity and the number of bulk and picking slots. Equally important is estimating how the peak season inventory affects space planning. The objective is to predetermine each SKU’s bin/slot location so the outbound pallets can have the existing warehouse location and the new warehouse location on each pallet ticket.
Reduce Excess, Overstock Inventory
Many warehouses are holding excessively old, slow-moving inventory which merchants are often reluctant to liquidate. Work with top management to pare down inventory so you don’t move the problem SKUs.
Clear Out Receiving, Staging, Returns
There can be a considerable quantity of product in these work spaces throughout your ecommerce fulfillment center, which needs to be cleared out.
When you have cleared the areas and considered bulk and forward picking, you may have partial pallets, cartons and single products in multiple areas. If a SKU is in multiple locations, consolidate and create full pallets for the least number of locations. Create as few mixed or multi-SKU pallets as possible.
This will allow you to simply put away shrink-wrapped pallets without having to stop, break product down, recount and relabel in the new building.
Dispose of Damaged Product
During the inventory count process and consolidation, you may find product you didn’t know you had in certain areas of your ecommerce fulfillment center. We have found product sometimes falls down between pallet sections, while others are damaged and set aside. Decide whether it’s saleable or not.
Clear Out Return-To-Vendor Inventory
Clear all RTVs so you’re not moving excess inventory.
Identify New Slot Locations
After counting, consolidating SKUs and shrink wrapping a pallet, write the SKU number, quantity, existing bin/slot location and the new bin/slot location on the pallet inventory ticket. If the pallet has mixed product, be sure to record this information on each individual carton.
Create a Quick Putaway Plan
Having a slotting plan for your new ecommerce fulfillment center and labeling each pallet with the new location will make it easier to put inventory away quickly without doing another detailed count.
Following these inventory relocation best practices will help get your new facility up and running quickly.
Brian Barry is President of F. Curtis Barry & Company