Storage and Inventory Control Best Practices

Storage and inventory control processes include activities related to holding material and the processes of counting and transacting it as it moves through a fulfillment or distribution center.

The layout of a facility supporting an adjoining manufacturing operation will have different requirements than one supporting distribution to stores or consumers. Some operations place emphasis on replenishment, others on picking and order fulfillment.

Regardless, best-practice companies have designed storage systems to meet the needs of the current and planned mix of storage types. This includes optimization of storage locations and layouts to fit product without the need to restack or re-palletize once received. The warehouse management system (WMS) will track storage location profiles and properly assign items to the optimal storage location. As a result, top performers have excellent cube-fill rates.

In addition to optimizing the cubic fill of storage locations for better inventory control, another best practice is to minimize travel time. If a particular SKU is in high demand, it should be placed closer to its next point of use. In this case, demand is based on the number of times the SKU is required, not on the number of units sold. The difficulty of retrieval should also be considered in terms of travel time. Higher-demand product should be placed on the most easily accessed storage space in a “hot zone,” typically at 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 required, best-practice companies have integrated that capability into their DC or FC and and shipping processes, using the system of record to manage the lot and serial number data.

Most companies put a lot of effort into the initial facility layout. However, industry surveys will tell you that as many as half of companies don’t have an ongoing process to review their layouts. Reviewing how storage areas are configured and having processes in place to reconfigure them as product mix changes is considered a best practice and is critical to maintaining high levels of space utilization and efficiency. Making continuous small adjustments to racks, shelving or other storage equipment can greatly improve space utilization.

All warehouse software runs on data, so product and storage locations must be kept current and accurate. Best-practice companies maintain all information on a single system of record and keep it current and accurate. Product data should include all characteristics including cube, lot/serial number information and special requirements so it can be directed to special storage areas. Special storage areas may be used to segregate items with odor transfer or fire risk, or that require temperature control. High-value product might require caged or controlled-access storage.

Kate Vitasek is the founder of Supply Chain Visions

This article was originally published in 2007 and is frequently updated