What’s in store

Nov 01, 2005 10:30 PM  By

Unlike fashion fads, trends in storage media are not cyclical. So while the current retro movement may mean that you can again wear all that polyester that’s been hanging in your closet, your facility will be totally out of style.

If walking into your warehouse feels like taking a trip back to another era, then it’s time to reevaluate your storage equipment. By periodically reviewing the latest trends in storage media and making appropriate updates, you can maintain or improve your facility’s efficiency even as your business climate changes.

For example, during a recent site visit I encountered a frustrated operations manager who was trying to figure out why shipping costs were increasing even though the number of orders and cases shipped held steady. After several audits, the manager found a dramatic increase in the number of exception picks that required additional shipments. This prompted him to spend a day picking orders to really get a handle on what was going on. He noted that several of his picks could not be completed because locations contained insufficient quantities, locations were blocked due to product sitting in aisles, or employees had moved the product to other locations. He was certain this was a problem that could be easily fixed; after all, he had the latest slotting software, had seen plenty of poorly used locations, and had the product on hand in every case.

But the answer may not be as easy as reslotting. Slotting works only when you have the correct mix of storage media.

Using the appropriate storage media allows you to improve your company’s bottom line by making the most of valuable facility space and improving productivity across nearly all of your facility’s operations, from put-away to replenishment/picking to shipping. It also enhances your ability to adjust to business changes, both expected and unexpected.

Observe the signs

See any of the following in your DC? If so, that’s your signal to begin a storage media mix review:

  • significant amounts of wasted storage space in the facility, particularly in racking

  • poor inventory visibility (long and inaccurate inventory counts)

  • high replenishment frequency and/or pick exceptions due to stock-outs in primary locations (orders-to-replenishment-quantity ratio should be greater than 5:1)

  • storage media in poor condition

  • changing inventory or throughput volumes

  • varying SKU mix because of facility consolidation or unprecedented growth

  • new products or packaging because of changes in customer taste

The first step in finding a solution is getting your hands on the right SKU-specific data, such as packaging specifications, inventory levels, and demand. This information should represent a minimum of six months (preferably at least one year) of operations prior to an analysis to capture all seasonal and other nuances of your business environment. Most of these data are probably already available in your enterprise system and financial or sales files. For information that is hard to find, operational surveys, field checks, and educated assumptions are more reliable than you may initially think.

To properly determine the mix of storage media for your facility, you need to determine a finish line or time frame for data projections. Build an interdisciplinary management team to reach a consensus on a time frame based on the quality of your data and the reliability of your projections. Don’t simply project your data based on expected sales and SKU growth. Take into account industry trends, customer service goals, and your company’s strategic plans and objectives. It is very important to suitably interpret and apply qualitative factors to your data. Don’t be afraid to use educated assumptions for unknowns, and cover your backside by being conservative in your projections.

Do you have a large number of SKUs that you receive and ship in pallet quantities? Maybe you should consider pallet flow racking or simply no racking at all (bulk floor storage) for these items. Have you noticed pallets in racking that always seem half-full? Buy some new crossbeams and double your locations by creating half-height pallet locations. What about those few cartons of slow-moving, specialty “C” items that have been in your facility for at least four presidential administrations? Let’s get that product off pallets and store it in denser and space-saving bin shelving. And why is it impossible to get those things discontinued? Well, that’s a question for another time and place.

Finding the most effective solution may seem daunting when you consider the wide range of storage options and combinations thereof. So first, examine major groups of SKUs with common traits; your calculations should quickly eliminate nonfeasible choices. Second, combine selections for SKU groups to build storage media mixes. Simulate warehouse throughput using different storage combinations — for example, bins vs. shelving, or pallets vs. a mix of shelving and bins. Finally, conduct apples-to-apples comparisons of storage media combinations, including a status quo alternative. Quantitative (space, labor, costs) and qualitative (work environment, flexibility, customer service) factors will help identify the option that will best serve your needs. If you need to reconfigure, the results of your comparison will clearly indicate the benefits and provide an adequate return on investment.

Finalize your plans

Of course, other steps and decisions are required to fully realize the benefits of installing the right storage media. The following strategies will enable you to derive maximum benefit from the equipment you select:

  1. Ensure that the placement of product storage equipment in your facility supports an efficient material flow and use of space. For example, store the slowest-moving products in the locations that are most difficult to reach. Conversely, if some items just fly out the door, there may no need to store them at all — simply keep them in a staging area.

  2. Determine what storage media to reuse; this is a key decision that directly affects your return on investment. The more you can recycle your equipment purchases, the healthier your distribution center’s bottom line will appear.

  3. Consider the impact your storage choices will have on warehouse appearance and safety. Will your equipment allow for frequent and easy cleaning of aisles and storage areas? Is it set up so that warehouse workers can read labels and carton markings quickly and easily? Pay close attention to security considerations as well. Make sure that storage equipment for valuables is secured in a cage or an inconspicuous part of the facility. Shelves and bins that contain dangerous items must be clearly marked and instantly recognizable.

  4. Prepare bid documents and evaluate vendor responses just as you would for more-expensive material handling systems. And don’t forget to check out used equipment; items such as totes and shelves can often be purchased in excellent condition for a fraction of their original cost. That said, it is critical that any storage media you buy comes from a reliable source.

  5. Complete a transition plan for operations. Describe the timing and coordination of product moves, racking reconfiguring, racking removal, racking installation, and employee training. Build a realistic transition plan based on the effort involved to carry out the transition while meeting the needs of your current operations. This transition plan is critical, so you should appoint a central figure to monitor and track progress against the plan.

  6. Draw up a realistic post-implementation plan that lists your expectations, taking into account the learning curves associated with new equipment, layouts, and processes. Minimize the potential negative impact on your operations by completing the equipment implementation well ahead of your peak season.

Realize the benefits

What benefits can you expect from this exercise? At a minimum you should be able to

  • provide better service to your customers by improving order fill rates.

  • reduce shipping costs by standardizing picking operations and decreasing the number of exception picks.

  • add flexibility by saving space. You can lease any extra space for additional revenue, modify your layout to improve the work environment (for instance, add two-way aisles where there are currently one-way aisles), perform a value-added process as a competitive advantage, or use the area to accommodate future growth.

  • improve your inventory accuracy by having locations that fit your product. The right storage equipment will make picking/replenishment and inventory counts easier and more accurate, with less clutter in locations and aisles.

  • heighten the morale of your warehouse employees. Providing them with the appropriate equipment will enable them to do their jobs as efficiently as possible.

Simply put, be a trendsetter: Analyze the effectiveness of your storage media combinations and make adjustments proactively. This forward-thinking move will provide noteworthy and tangible benefits that can be felt in virtually every area of your facility.


H. Howard Turner is a senior associate with ESYNC, a Toledo, OH-based supply chain consulting firm. He specializes in engineering logistics solutions and implementation management.