How Do You Organise Your Stock?
I remember being asked this as a hypothetical question many years ago. I jumped to what I thought was an obvious answer;
“By frequency of use, the most frequently used items get the easiest picking positions in the warehouse, ideally closest to the shop floor”
As an answer I still see the merits in it now. At the time I was asked I’m remember the frown that must have been all too visible on my face as I was told that, in many cases, this was not the optimal arrangement.
I’m sure I expected some arcane and counter intuitive reasoning as to why having the most frequently used items stored closest to the point of use was not often the correct decision. I remember walking away from the meeting that day really not sure what I had heard or how to make sense of it, never mind how I might want to implement some of the principles in the future.
Now, 20 years on, and having mulled it over, I think I can explain the reasoning behind it and hopefully do a better job of unpicking the logic. Let’s see.
Consideration One. Most Frequently Used Items Should Not Be Stored In The Warehouse At All.
I understood this argument pretty quickly. Where to put line-side or shop front deliveries. Only, appropriate emergency or contingency stock of regularly used smaller items should be allocated warehouse space. If it is ever required then a process further in the logistics chain has not worked correctly. A supplier has let you down, quality issues have occurred or stock has been lost or destroyed.
In this case the emergency stock should not be ready to hand. There should be at least a process of informing company buyers or schedulers that a shortfall has occurred so that the matter can be addressed. Making it too easy to grab emergency stock can mean the risk of a true stock out increases as there is little or no awareness of the potential shortfall. Dipping into emergency stock should trigger an alarm (though not panic). If your system fails to trigger appropriate notifications and responses whenever emergency stock is required then something is wrong with it.
Consideration Two. Delivery Frequency
It might follow that the most commonly used components are delivered from suppliers more often. They might be picked more often and generate more transactions in the company inventory system.
Here is where the needs of the warehouse and the goods in process need to be balanced against the shop floor or output process.
To consider that the only important aspect of shop floor supply is the last one (be that “line feeders”, stock handlers or store expeditors) is to not understand the logistic process.
Here is where I got unstuck. I thought exactly in this fashion. The line supply team were the most important link in the chain. They were the ones who got the flak should component parts not be on hand. I was tempted to focus on whatever made life easier for this team even at the expense of making illogical decisions further up the supply chain.
A weak and emotionally driven response to what should have been a system and procedure driven problem.
After all, if the stock was not booked in, then the line feeders could not distribute it. It if it was quarantined, they could not distribute it, if it had not been through the required inspections they might distribute quality failed items to shop floor.
The right place for the frequently used stock is wherever is best for the whole goods in and distribution system is, and that is a question each company must answer for themselves. In practice however I have rarely found it to be warehouse location closest to the shop floor.
What challenges do stock movements present to you? How do you cope with varying needs of different departments to have access to inbound stock for booking in, quality and manufacturing/sale purposes? Comment blow and let us know.