Inventory management is a crucial component of running a successful warehouse.
The abundance of space, or lack of it, can have a real and obvious impact on business profitability. Having sufficient room is necessary to run a smooth and efficient operation, but moving warehouses is a large undertaking.
If you’ve found yourself trying to maximise your current warehouse space, and are still coming up short, these 7 symptoms might be the sign you need that it’s time to make a move.
1. Running out of space to store inventory
Excuse us for stating the obvious, but the first (and most visible) sign that you’re reaching max capacity in your warehouse is a distinct lack of storage space.
But first, it’s important to understand what has changed in your business that has led to this lack of capacity. For example:
If: You’ve carried out a demand forecasting exercise to determine how much stock to hold and assessed space dedicated to each sku.
But: You can’t find the room or keep finding yourself out of stock.
Or: You want to extend your range of products but don’t have the available room.
Then it might be time to acquire more inventory space.
2. Excessive overtime in order to make customer deliveries on time
If your overtime hours are rising then it may indicate that your warehouse is getting increasingly difficult to navigate.
This can generate additional time spent searching for products or locating the correct storage bays. Operational inefficiencies are most of the time very small, but with enough in a row they can compound to have drastic effects of handling time.
If products are stored incorrectly due to a lack of available space then a larger warehouse could be needed to reduce paid overtime hours and prevent costs from incorrectly homed and damaged products.
3. ‘Right first time’ levels of the warehouse fulfilment process are decreasing.
If dedicated sku locations are insufficient, and you have to find temporary storage, or if the stock is not in the right place to be picked, this will impede your ordering and inventory management and increase delivery time.
Picking product accurately the first time drives a more efficient process with less errors and reduces operating costs.
4. Extended time to unload
We all want a growing business. However, as the size and number of deliveries grow, they may become too large for your Goods-In area, or require an increased number of unloading doors.
Warehouse layouts can be redesigned, but to avoid supplier delays and back ups you may need to move to a warehouse space with additional Goods-in doors. For warehouse owners, this can open up opportunities for further ‘Direct Imports’ (DI), purchasing more lines direct from manufacturers at a reduced price.
5. Inefficiencies in packing orders
Limited space will not support a smooth packing operation, and might bring a higher instance of mis-packaged or damaged product.
Struggling to manage operations in an area that is too small could see business costs rise due to workplace accidents resulting from trips, falls, or drops, and an increase in employee absences.
6. Double or triple handling
If product is starting to pile up at any stage of the warehouse fulfilment process, then you are likely to be wasting time (and money). This can significantly add up when dealing with hundreds or thousands of customer orders and can have negative effects further down the line.
Unnecessary double or triple handling equates to lost man hours and carries a higher risk to the product.
7. Increased customer order times
If the number of orders you are successfully sending begins to decline then it’s likely that there are some significant bottlenecks within your warehouse.
Without a streamlined flow, order processes and warehouse activities will take much longer. As each stage in the process is delayed, it could mean warehouse staff are standing idle, as they wait for their part of the process to begin.
Is it time to move?
Moving warehouses can be daunting, but it can also bring a lot of new opportunities. With an analytical approach to warehouse upgrade and re-location, reduced logistics costs and improved next day or same day delivery can be achieved by being closer to customers.
Service improvements can be gained by relocating closer to courier distribution centres, and key suppliers. Even labour shortages can be addressed by moving to a different area of the country (or out of the country altogether).
If you’re finding yourself hampered by one or several of the above symptoms, speak to one of our warehouse consultants today – you may have a lot more options than you think.
About the authors
We are independent supply chain and warehouse consultants specialising in data analysis, leading strategy, and bringing a fresh perspective to your supply chain challenges.