There are many reasons to keep a watchful eye on your distribution center. The biggest focus should be based around total cost, i.e., product cost, storage costs and processing costs. Movement on high-volume SKUs tends to get much of the attention, but the area that often gets overlooked is the slow-moving SKUs. That is where efficiency loss and costs are unnecessarily incurred. Slow-moving inventory (SMI) takes up valuable space and cost more to stock and pick than faster-selling items.
Applying Pareto’s Law
When you look at the SKU breakdown, 20% of bestselling SKUs statistically account for 80% of businesses’ revenues. Cubic velocity plays a major factor in determining the kind of storage medium that should be used and its location within the facility for maximum efficiency.
More than ever, companies need to reduce handling costs if they want to stay healthy and remain viable in today’s competitive market. Collecting, analyzing and reviewing inventory flow, demand patterns, storage information, pick positions, and other data is essential for operations to optimize their operation. A good place for any business to start is with a complete analysis of SKU movements. Proactively working with industry professionals to determine the best inventory management strategy can help improve your process, minimize space and positively affect your bottom line.
My experience analyzing customers’ facilities, optimally configuring their distribution centers and using best practices has helped one customer achieve bottom line savings of $150K per year. This practice requires taking the time to look at your warehouse operation from a different perspective and repeating the process to assure proper efficiency. Rather than letting SMI collect dust, picture your distribution center outfitted with a carousel system that stores slower-moving products. Not only will you gain additional space, improve efficiency and ergonomics, but you’ll also benefit from improved order accuracy and long-term profitability. That’s just one of many space-saving storage solutions available to help optimize your SMI.
Could you use some help moving your slo-mos?