Revolutionising Operations: The Art of Streamlining Inventory Control and Storage Pick Positioning

Introduction

Inventory control and storage pick positioning are the heart of an operation. Business operators must adopt strategies combining technology with best inventory practices to optimize the supply chain and increase warehouse efficiency. These practices include inventory control, projection methods, product and position identification, storage pick location identification, put-away and withdrawal transaction verification methods, replenishment concepts, SKU space requirement calculations, and inventory tracking methods.

Introduction

Inventory control and storage pick positioning are the heart of an operation. Business operators must adopt strategies combining technology with best inventory practices to optimize supply chain and increase warehouse efficiency. These practices include inventory control, projection methods, product and position identification, storage pick location identification, put-away and withdrawal transaction verification methods, replenishment concepts, SKU space requirement calculations, and inventory tracking methods.

Inventory Control and Projection Methods

Inventory control balances demand and supply cost-effectively while ensuring that stock levels remain within specified limits. The key is to use a combination of accurate forecasting, safety stock, and reorder points.

Inventory projection methods such as Time Series Analysis, Causal Models, and Quantitative Methods are used to estimate future inventory needs. These methodologies consider historical sales data, seasonal fluctuations, industry trends, and economic indicators to provide an accurate forecast. With precise inventory projections, businesses can reduce stock-outs and excess inventory, improving overall profitability.

Product Identification and Position Identification Methods

Product identification is vital to prevent mix-ups and losses in the warehouse. Barcode systems and Radio Frequency Identification (RFID) tags are commonly used for accuracy and speed. These systems allow quick product identification and facilitate real-time inventory tracking and management.

For position identification, businesses often adopt a grid-based system. Every shelf and bin is coded, and these codes are recorded in the inventory management system. Integrating technology like Warehouse Management Systems (WMS) and Automated Storage and Retrieval Systems (AS/RS) makes locating products within large storage facilities easier, enhancing productivity and minimizing errors.

Storage Pick Location Identification

Storage pick location identification is all about strategically placing items to maximize warehouse efficiency. Using the ABC analysis, high-volume items (A-items) are placed near the dispatch area to reduce pick times, while the low-volume items (C-items) are stored farther away.

Moreover, slotting optimization software can regularly reevaluate pick locations based on changes in demand, ensuring that the pick paths are always optimized.

Put-Away and Withdrawal Transaction Verification Methods

Transactional verification methods, such as barcode scanning and RFID reading, are pivotal in maintaining inventory accuracy. During put-away and withdrawal, these methods help confirm that the right items are stored and picked, and automatically update the inventory data, thereby reducing discrepancies and improving warehouse efficiency.

Replenishment Concepts

Various replenishment concepts, like Just-In-Time (JIT) and Economic Order Quantity (EOQ), can help manage stock levels effectively. JIT aims to minimize inventory holding costs by replenishing stock just before it is needed, while EOQ calculates the ideal order quantity that minimizes total inventory costs.

Calculation of SKU Space Requirements

Calculating SKU (Stock Keeping Unit) space requirements is essential to optimize the storage space. The goal is to accurately determine the size and number of each SKU to allocate suitable storage locations. As a result, warehouse space is more efficiently utilized, and storage costs are reduced per unit.

Inventory Tracking Methods

Incorporating inventory tracking methods like perpetual inventory tracking and cycle counting can significantly improve inventory accuracy. Perpetual inventory systems provide real-time data on inventory levels, while cycle counting is a regular audit practice to verify inventory accuracy. Combined with a robust WMS, these practices allow quick detection and correction of inventory discrepancies.

Case Studies:

A global fashion retailer, which boosted its market share by more than 28% and doubled its operating profit in just three years by replacing consensus forecasts with a unified view of demand, moving away from a one-size-fits-all supply chain strategy to a segmented strategy, and creating a single plan to continually balance supply and demand and identify and respond to deviations or disruptions. This approach led to lower supply chain costs, higher revenue because of fewer stock-outs and improved service levels, and increased customer retention.

The article also mentions a large consumer packaged goods (CPG) manufacturer, a global appliance maker, and a high-tech company that produces PCs, tablets, and workstations. The operating and financial gains from the CPG company’s initiative paid for its cost in just two years. The high-tech firm saw a 10% to 30% improvement in service levels. And the appliance maker realized a 20% increase in revenue, raised the proportion of customers to whom it could provide one-day delivery from 70% to 90%, and cut its operating costs by 3% to 4%.

Reference: The Harvard Business Review titled “A Simpler Way to Modernize Your Supply Chain” by David Simchi-Levi and Kris Timmermans.

Conclusion

In conclusion, combining these best practices can create an optimized, efficient operation. Embracing technology and integrating it with tried-and-tested inventory control and storage pick positioning practices enhances warehouse productivity and significantly impacts the bottom line. It ensures a responsive and flexible supply chain that can adapt to changing market dynamics, helping businesses to maintain a competitive edge in today’s fast-paced business environment.