Is Your Closet Clean?

It’s a known fact that the bigger your closet, the more space you have for old clothes you haven’t worn in years. The warehouse is the closet of the operations and fulfillment professional, and even the biggest warehouse can fill up fast. I helped a company triple its warehouse space to meet five-year growth projections. At last, no more space problems, right? Wrong – It took only one year before issues of SKU capacity and bulk storage surfaced again.

No matter how much warehouse space your company has now, chances are that it’s almost full. Whether your warehouse is 10,000 square feet or 1 million square feet, the following principles can help you take control of your facility space and develop a plan to manage inventory better.

Maintain high housekeeping standards. I believe you can tell a lot about an operation by just walking around. Are the floors clean? Are the aisles clear? Are cartons stacked neatly? Do both management and workers pick up trash? No matter how full your warehouse is – never, never, never sacrifice safety or housekeeping because of space problems. Dirty or overcrowded warehouses are safety disasters waiting to happen.

Get rid of your junk. It’s hard to ask buyers and others to help manage space if you don’t have your “closet” in order. Now is the time to get rid of your junk. This might include broken pallets, old supplies, equipment, and racks not used. Don’t let your warehouse be the company’s junkyard.

Determine the capacity of your warehouse. This is the first step in space planning. Forget the “theoretical” capacity your consultants planned for. What is the “practical” capacity? Units? SKUs? Cases? Pallets? Hanging? Flat? Oversized or non-conveyable? High value? Do the math, use your best judgment, and set a realistic capacity for your warehouse.

Measure and track capacity weekly. Make sure you can get accurate and timely data and generate a weekly report. Keep it simple and distribute this inventory tracking data widely within your organization.

Identify slow movers and their impact on space. Good inventory control requires that you regularly review slow-moving items for possible markdowns or liquidation. Work closely with your inventory control group to identify a list of slow-moving SKUs or overstocks.

If your item master contains SKU cube data, simply sort the list by total cube (units on-hand x item cube). Or review the list looking for unusual product characteristics such as oversize, low units/case, or low capacity of active bins, and rank accordingly. The main point here is to represent warehouse space concerns.

Walk the warehouse with buyers. After you prepare your hit list, invite buyers to walk the warehouse with you to see the impact of overstocks and slow movers. This really works. I remember a walk with the head buyer at Nordstrom. From my perspective, one seasonal item in particular was high-cube and occupied disproportionate space. After seeing first-hand the impact on space, the buyer liquidated the overstock and kept only enough of the item to meet sale book demand. The result was a win-win solution for the company.

Set up regular review meetings with top management. Meet at least quarterly to review operational issues, including inventory planning and space requirements. Use your weekly inventory tracking report as a starting point. Review trends in capacity utilization and compare forecast inventory (units and SKUs ) with actual results. Raise flags where appropriate.

Your role should be to avoid surprises and plan for the future. Be proactive and keep your closet free of clutter.