Efficient SKU Placement – a key to unlocking warehouse efficiency

Well laid-out product placement in your warehouse can unlock significant efficiency and service gains for your organisation. In this article we talk about how the you can use critical keys to unlock your operation's potential to give you a solution that fits your needs.

Many organisations that we have worked with have encountered long struggles in attempting to gain efficiency by having their products placed in the right locations within their warehouse operations. Quite often we come across solutions where products that need to be in a large easily accessible location are shoved away at the back of the warehouse, and small slow moving product is occupying prime warehouse real estate instead.

The impact of having product in the wrong place in your warehouse can hit many aspects of your productivity, which subsequently has a knock on effect to cost, service and quality of operation.

Typically where product is stored in the wrong place in the warehouse you will find the following issues within your operations:

  • Congested zones where operatives and equipment are all trying to do too much in too confined a space;
  • Regular in-pick stock outs as you struggle to keep up with replenishment tasks and keeping your pick faces stocked for customer order picking;
  • Elongated pick-walks and travel times through your warehouse for your operatives having to navigate all of your shop floor to get to the products they need for a given customer order;
  • Product damage where you are over handling the product and moving it too many times;
  • Service failure where orders that could and should be satisfied are not because getting stock to the pickers in time to meet the order requirements is regularly failed;
  • Lack of consistency in frequently picked products being co-located stretching out the pick tasks for your operatives.

Any one of these elements or a combination of them all can have a serious knock-on effect to the efficiency and service fulfilment of your company.

We often see this situation in organisations where a once-efficient solution has drifted over time as different products have moved through their life cycle. This can particularly be the case when businesses have a heavy seasonal product influence or their products are non-continuity and therefore regularly subject to new products needing placed within the warehouse.

There are other factors that can sometimes sway the location of product such as the weight and dimension of the product or other specific handling characteristics that may mean it is better to have that product picked earlier in a pick walk or later.

Sometimes product placement can be influenced by the IT systems that you are using. This can pose limitations to site operators who may be forced because of systemic constraints to put product into areas that may not otherwise be suitable for that product.

There can also be challenges in locating items where product categorisation impacts the requirements to co-locate product together.

Poor, or out of date warehouse layout and design can have a strong influence in this area as well as use of sub-optimal storage media and equipment. We can often find that storage and product presentation methods that might have been appropriate some time ago are still in place when the product set and mix have changed considerably over a period of time.

There are of course many other reasons why your product location allocations may be out of kilter but the above generally capture the main points.

Warehouse OptimisationThere is a solution however. It is possible to align your inventory and product placement to optimise your picking solutions for your operatives. To do this you need the right information and the right analysis methods to get to the heart of the problem.

The first thing that we often come across when trying to work out the best possible mix of product location is a lack of data. To optimise your product location strategy it is important that you have a handle on product throughput at each of the handling unit levels for a given product (i.e. unit, inner. Outer, pallet etc). Normally this is created through a combination of well organised and controlled product volumetric data where you have captured all the weights and dimensions of each of your products, and good data management and analysis of your sales and throughput levels for each product.

A mistake often made is to simply look at the rate of throughput of your products at either cubic volume or unit level. This is too narrow a set of categorisations of your product base. Our team prefer to look at your products in ‘3D’ enabling us to establish a much broader set of product characteristics and categorisations to enable the right size and type of locations to be established that can then be overlaid on the physical warehouse design to give you the right amount of product space.

The often-overlooked elements when considering warehouse layout is not about how much of a product you use, it is how often you access the item. It is regularly found that warehouse layouts are setup based purely on volume throughput, yet there may be small or key products within your business set that are ordered with much higher frequency and regularity. Products overlooked like this can often lead to significant sub-optimality in warehouse performance.

It is also easy to overestimate the importance of cube or unit throughput from the other perspective. When considering product throughput we must consider its regularity of demand. In one review conducted recently it was found that a particular client had a number of what they deemed high-volume fast-moving products that they kept in their most prime locations within their warehouse. Indeed these products did move in significant volume, however this was because when they were ordered, they were ordered in very large quantities on single orders. There would then be prolonged periods of no orders at all for that product. In this case we were able to identify a much more streamlined way to hold and pick the product that enabled the freeing up of warehouse prime real estate for other products.

Organising your product layout is a real challenge for any business, but one that can be overcome.

Please get in touch with the warehouse optimisation team at ASCALi to talk to us about how we can help you get the most efficient warehouse solution possible for your products.

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