If lack of DC storage space overwhelms you, consider this: Are you measuring it the right way? The newsletter Distribution Digest gives us this example: A company that sells rugs was having storage difficulties. To measure the space that the rugs occupied, the company calculated cubic requirements by measuring the rugs’ length, width, and thickness. The firm then used that data to determine storage needs and putaway activity.
This solution didn’t work. Why? The rugs were measured flat, but they were rolled up to be stored! This procedure, of course, completely changed the amount of space needed. The invaluable lesson to be learned from this is to ensure that you calculate storage requirements based on how the item is actually stored, moved, and picked in your warehouse.
From Dr. James A. Tompkins of Tompkins Associates come these five great ideas for controlling inventory costs: (1) Rationalize your SKUs—remove inappropriate items from your product line; (2) don’t stock every SKU in every DC; (3) transfer inventory from one facility to another instead of purchasing new stock; (4) consider liquidation if the price is right; and (5) try a vendor-managed inventory (VMI) system, whereby your suppliers take on responsibility for replenishing your inventory. For more information, visit http://www.tompkinsinc.com.