Warehousing and Inventory optimisation
Warehousing and Inventory
Optimization Conference
Riyadh 25th-26th Oct.2016
Prepared by RBSBedi
Senior Supply Chain Manager-KSA
Baskin Robbins
Warehousing is a concern When………
• Containers at port put on hold by paying demurrages as
there is no space to receive
• Containers arrived at warehouse but there is no space and
aisle are used for storage
• Due to space constraint- FIFO of stocks was not possible
• How many seasons went for variable space and not
available this time
• Warehouse identified in haste but size was enough/Height
was less
• Seasonality factor not considered for peak storage
requirement
• Inventory norms made and stock levels requirement not
matched with space requirement
Significance of Linking Inventory Management
with Right kind of Warehousing Size
• Inventory norms calculated scientifically at Item level
considering
• last two years consumption/sales trend
• %Growth applied on next 5 years
• In case of no trends- consider similar products/items to make
feasibility
• Convert SKU into no. of pallets requirement month wise
• Look for Min/Average/Peak requirement
• Use Loose pallet factor on top of peak requirement
• Height of pallet is very important for racking in the warehouse
• Gross peak requirement to depict no. of pallets/shelves
storage required
Strategic Planning of Warehousing Capacity
to manage Inventory over longer horizon
Jan Feb Mar Apr May Jun Jul
Aug Sept Oct Nov Dec Max
No.of Pallets Required-% Loose Pallets
Factor- Pallet
Requirement- Pallet
Requirement
2018 Pallet
Requirement
Average
565
-
622
-
684
Strategic Planning of Warehousing Capacity
to manage Inventory over longer horizon
900
840
800
840
780
750
690
-
500
400
570
-
565
420
390
390
-
Jan
Feb
Mar
Apr
May
Jun
Jul
Aug
Sept
Oct
Nov
Dec
Max
Average
Decisions could be:
• To hire a space for up to 840 pallets throughout the year in absence of variable space
available during peak demand
• To Hire 565 pallets and additional variable space during peak season
Strategic Planning of Warehousing Capacity
to manage Inventory over longer horizon
Pallet Height 2.4 m which will require rack height adjustment to
prevent breaking pallets on receipt every time
Storage Temperature
Requirement
Dry
Ambient
Chilled
Frozen
+18deg C
0-5deg C
-24 to -26deg C
Strategic Planning of Warehousing Capacity
to manage Inventory over longer horizon
• ERP should link Inventory holding levels converted into Pallets
and warehouse utilization on weekly/Monthly basis and over
next 18 months horizon
• There should be a regular monitoring of getting warehouse
space free of obsolescence items with regular disposals
Strategic Planning of Warehousing Capacity
to manage Inventory over longer horizon
Next thing Progressive Organization do
• Set up S&OP Forums comprising
Sales/Marketing/Operations/Finance/HR
• Rolling weekly/Monthly plans up to 18 months forecast are
analyzed
• Along with other analytics, storage space requirement too get
analyzed
• It is a huge cost and e.g. 10 mio spent per annum on storage
becomes hot topic to own or go for long term 3PL
Thanks