RUNNING OUT OF WAREHOUSE CAPACITY?
The client operates a 500,000 square foot warehouse servicing a chain of furniture and appliance stores across eastern Canada.
Due to the rapid business growth, which exceeded 20% the previous year, the client had serious concerns about the ability of the facility to function in both the short and medium term. Symptoms of capacity problems that surfaced during the peak fall season included major backlogs in receiving goods from vendors, and lack of both rack space and floor space to house the required inventory.
The project deliverables included determining what immediate, practical steps should be taken to enable the client to meet customer requirements through the fall peak, as well as laying out the best long-term strategy. With just five months until the start of the peak season, there was little time to implement solutions.
The SCS team quickly identified that there were two different classes of inventory
- Products that could be stored in racking
- Products that were best bulk stacked
The latter included appliances, televisions and upholstered furniture (which are stored in nestable stack racks). These bulk stack items accounted for over 50% of the utilization. The experience through the previous fall season indicated that space for both types of products was severally limited. Because of this, productivity was depressed, as staff re-stacked product to gain space and RE-handled goods (leaving incoming inventory blocking access to existing inventory).
The solution lay in improving the bulk stack protocol. Items were stored only one or two facings, in rows that were often five or six positions deep. As inventory was drawn down, no new usable storage locations became available until the complete row was emptied.
The SCS approach was twofold:
- Use bulk storage only when the gain in density warranted the risk of being unable to place new items on top of the stack. Items below certain on hand quantity were switched to racking, recovering pallet slots as stock was depleted.
- Increase facings of bulk items while reducing row depth, enabling faster picking and put away, and ensuring that empty storage locations became available over 50 % faster. This change had a net impact of reducing total bulk storage space requirements by over 30%.
Once the bulk areas were optimized, there was enough space to expand rack capacity by 15%.
Medium term requirements could be satisfied in the existing building. No construction or additions were required.