Inside storage and inventory control

Distribution center storage and inventory control may not seem like the sexiest parts of a multichannel business. But unless you have the product in stock — and your warehouse workers can get to it quickly and easily — you're going to have a lot of unhappy customers. And you can't afford to disappoint today's consumers, who continue to demand more for less. That's why many operations professionals focus on benchmarking and best practices as a way to drive improvement.

In the final article in our series on fulfillment best practices, we'll look at key elements of the storage and inventory control process and how to improve them. Storage and inventory control processes include the activities related to holding material and the processes of counting and transacting the material as it moved through the warehouse. These are some of the common practices that best-in-class companies use to optimize storage and manage inventory.

LOCATION MANAGEMENT AND REVIEW

The layout requirements of a warehouse that supports a manufacturing operation will differ from those of a facility supporting product distribution or one that supports end-user fulfillment. Some operations place emphasis on replenishment of product to the point of use; others focus on product picking or order fulfillment. Regardless of the ultimate mission of the warehouse, best-practice companies have designed storage systems to meet the needs of the current and planned mix of storage types.

For instance, they have optimized storage locations and layouts to fit product without the need to restack or repalletize it once received. The warehouse management system will track storage location profiles and properly assign merchandise to the best storage location. As a result, leading companies have excellent cube fill rates.

In addition to optimizing the cubic fill of storage locations, best practice is to minimize worker travel time. If a product is in high demand, place it closer to its next point of use. In this case, demand should be based on the number of times the product is required, not on the number of units required. You should also consider the difficulty of retrieval in travel time; place higher-demand product on the most easily accessed storage space, typically floor level for racking and between waist and shoulder level in pick racks.

Not all companies need to track product by lot or serial number, but if that is required, integrate that capability into your warehouse and shipping processes and use the system of record to manage the lot and serial number data.

Most operations executives put much effort into the initial layout of the warehouse, but industry surveys will tell you that as many as half the companies do not have an ongoing process in place to review their layouts. You need to review how storage areas are configured and have processes in place to reconfigure storage areas as product mix changes.

This is critical to maintaining high levels of space utilization and efficiency. Making continuous small adjustments to racks, shelving or other storage equipment can have a huge impact on use of space.

PRODUCT DATA AND SPECIAL REQUIREMENTS

All warehousing software runs on data; therefore, you must keep product and storage location data current and accurate. To do this, savvy merchants maintain all information on a single system of record. Product data should include all item characteristics including cube data, lot/serial number information, and special requirements so that product can be directed to special storage areas.

Keep in mid that you may need to use special storage areas to segregate items with odor transfer or fire risk, or products that require temperature control. High-value product might need caged and/or controlled access storage.

INVENTORY CONTROL SYSTEM

Inventory is money, so you should have well documented and defined processes to maintain inventory accuracy. Processes detail specific tasks and requirements and direct how inventory is managed and transactions processed. Employees must be properly trained so that they have a complete understanding of procedures and expectations. They need to measure the accuracy of inventory activity and transactions to minimum standards and use measurements to drive process improvements.

Controlling and managing inventory is easier when you have a single system of record. Ensure that transactions flow seamlessly between order management, warehouse management, transportation management, and financial management systems. Inventory control benefits from good housekeeping and warehouse organization. Crowded, unorganized, and improperly or poorly marked storage areas subject product to damage and are prone to inventory transaction errors.

Just like customer service, safety, or quality, inventory accuracy should be important to every employee — it's not just the responsibility of those who perform inventory transactions. All levels of the organization should promote it and support it. Make certain that your systems support inventory accuracy as well.

In a warehouse that has product in multiple locations, establishing a process for location consolidation is important. By pulling a report from your WMS of all locations that are not full, you can consolidate product into a single location.

Product should be counted as it is consolidated. Many companies add this process to the duties of the cycle-count team. (More on cycle counting later.) It provides two main benefits: better space utilization and improved inventory control and accuracy.