2012 Trends and Challenges in Distribution Center Management

Jan. 4, 2012 - PRLog -- Sluggish sales, tight budgets and rising oil costs are among the top concerns for distribution center and warehouse management in 2012.

But, according to the industry experts interviewed in the January issue of Distribution Center Management newsletter, there are plenty of strategies that managers can adopt to overcome these challenges and position the DC for success.

One particularly persistent challenge is too much inventory. In the article, Fred Kimball a principal of Distribution Design notes that "outright space mismanagement" has grown rampant in warehouses. "Over the past couple of years, I have seen a dramatic increase
in operations with multiple SKUs per physical location in the warehouse. This means multiple SKUs on one pallet, usually due to consolidating slow-moving inventory onto one pallet to save space."

In one instance, Kimball saw a DC where the warehouse management system considered a particular bay one location, even though there were eight pallets and 70 SKUs at this location. That meant a picker visiting the location had to navigate 70 different products to find the one he needed.

"I doubt any warehouse manager would want a storage environment like this, but they are backed into a corner because of too much inventory and the company's unwillingness to purge excess and obsolete inventory," Kimball says.

If you're saddled with this sort of inefficient use of space, Kimball says, then make it your mission to tell your bosses about how much this clutter costs in terms of space, labor, and equipment.

Among the steps Kimball recommends: Document the operational costs of excess inventory, report the number of SKUs with more than six or 12 months supply on hand and what percentage of total inventory the slow-moving SKUs represent.

Calculate the space you'd create by moving the excess inventory out of the building. Use outside storage or rented trailers in the yard. Conduct a productivity test to measure the time wasted by pickers rummaging through a location with eight pallets and dozens of SKUs.

The bottom line, says Kimball, is to make yourself the catalyst for change. Maybe the most cost-effective solution is to write off the slow-selling inventory and toss it in a dumpster.
You may read the full trends article online at: http://www.DistributionGroup.com/dcmtrends.php

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About the Distribution Group

For more than 40 years, Distribution Group publications have helped distribution center and warehouse managers increase productivity, cut costs, and meet increasing customer demands. Distribution Group publishes "Distribution Center Management" newsletter, books and reports, and a free e-newsletter.

Website: http://www.DistributionGroup.com