Few distribution center managers have the luxury of excess warehouse space that can be tapped whenever needed. Certainly the vast majority of DC personnel would claim they have a shortage rather than a surplus of space.
Yet product in inventory typically accounts for only 10%-20% of the total cubic space available in a DC. So it seems logical that we could squeeze a little bit more out of the space we have. But while this may be logical, it’s not necessarily simple. Even so, here are a few ideas to enhance both space utilization and product throughput capabilities. And for the purposes of this discussion, we will suspend the more-expensive ideas of raising roofs, adding mezzanines, or knocking down walls and expanding.
Evaluate storage fixtures and slot sizes.
First and foremost, make certain that your facility is using the correct types of storage fixtures. Mismatches between inventory and storage fixtures are an enemy of both space utilization and warehouse throughput. As an extreme example, a full pallet location should not be dedicated for an item that has a typical inventory of only one or two small cartons. This would cause not only space inefficiency, but it also forces your employees to travel past dead air.
Identify the optimal types and quantities of storage fixtures required for the operation–drive-in rack, selective rack, cantilever rack, static bin shelving, carton flow. This analysis is typically conducted by calculating cubic sales volume movement projections and cubic volume inventory holding requirements on a SKU-by-SKU basis. Your goal is to eliminate the fixture types and slot sizes you do not need, while creating or installing those that you do need.
Often you can gain significant improvements in storage fixture mix with only a modest material handling investment or even by simply adjusting existing shelf heights and beam increments. All locations rarely need to be sized to fit your largest pallet.
Combine job functions.
Combine sequential job tasks that are currently done by separate personnel. The intent is to reduce the total space required to complete the group of tasks, reduce the number of handoffs that take place, and speed up the cycle time for the job functions.
- In a split-case order processing area, consider allowing the picking associate to also be the packer. This potentially eliminates space needed for a dedicated pack area.
- Assign the picking associate to be responsible for loading product onto outbound trailers instead of staging outbound orders on the dock to be loaded later by another individual. This reduces the need for outbound staging space and reduces the number of product touches required. A high level of loading coordination is required, but it can be done in many operations.
- Use the same space for different functions. Maintain flexibility in the layout of a specific area so that it can be used for a variety of operations. For instance, the first-shift crew may conduct packing in a specific area, but the second shift might use the same space to perform value-add processing.
Reduce inbound dock staging space requirements.
Reduce the amount of dock space needed for inbound product checking by implementing or strengthening a vendor compliance program. Make sure the program has “teeth” and can be enforced. The intent here is to increase the accuracy of inbound shipments from vendors and suppliers, thus reducing space required to conduct detailed checking or sampling.
Make use of the clear height available.
Some simple and inexpensive ideas to make better use of the clear height in a building:
- Double-stack pallets on upper rack levels.
- Consider using splice kits to extend existing rack uprights.
- Consider placing selective rack above dock doors.
Aggressively target obsolete inventory.
In addition to asking how you can fit more product into the DC, you must also ask what inventory levels should be maintained for each SKU. Undoubtedly, customer service demands and fill-rate requirements will usually, and rightly so, dictate a higher rather than lower level of inventory. Even so, a DC should balance customer service demands with efforts to identify and remove inventory that is truly obsolete. On a regular basis, then, you should identify inventory that is dead or obsolete and has little to no chance of being sold. Consider one of the three Ds– discount, donate, dispose–as a means of reducing this inventory.
Pat Brown is director of engineering for Long Grove, IL-based TZA Consulting.