“Our Warehouse Storage Facilities Are Maxed Out, We Don’t Have Any Room For Expansion” (Lesson 5)

Companies are constantly trying to squeeze more into the current facilities than they could afford at the beginning, due to: more raw ingredients to take advantage of bulk purchasing opportunities; more raw ingredients and packaging as your product range expands, and more finished goods as your monthly sales grow or your range of products expand.

And don’t forget—as your sales grow, minimum stock coverage requirements will grow to reduce the risk of out-of-stock complaints and a short supply of orders.  The inverse impact of maintaining minimum stock coverage across all your product range is, of course, the undesirable result of developing slow-moving stock. This leaves you with stock that runs short of remaining shelf life and no longer complies with a customer’s minimum shelf-life specification at the time of delivery.

This stock can just sit on your warehouse shelf right through its expiration date until it becomes obsolete stock.

There’s also the possible holding of partially completed product, either in the production area or stored in the warehouse.  This could stem from a natural cycle of daily production requirements or a product that can’t be completed due to lack of packaging or a quality issue, such as lack of cartons or case shippers or a product batch with incorrect dates that has to be stored for reworking.

These undesirable storage factors frequently place pressure on both small companies with modest premises and large companies with multimillion-dollar facilities.


Take A Good Look Around Your Warehouse

When you look at your warehouse storage, be on the lookout for the following potential storage-depleting “parasites”:

  • storing old machine parts or other items that possibly would be better stored elsewhere or disposed of
  • keeping obsolete stock or slow-moving stock
  • blending raw ingredient and packaging storage with finished goods storage in the same racking
  • storing incoming ingredients or packaging pallets in aisles or driveways—anywhere other than your usual storage racking
  • transferring and storing finished goods pallets in the truck-loading area, even when they’re not due for next collection, and
  • sizing and positioning pallet racking inappropriately, which minimises your pallet utilisation.

These are all high-level, symptomatic signs that confirm significant improvements could be made in your storage facilities.

Also, don’t forget: If you are creating regular quantities of WIP, then this can exert a significant burden on your warehousing facility. It can be hugely beneficial to eliminate or reduce WIP wherever possible.