How to Properly Use Space in a Warehouse

A typical warehouse might handle a wide variety of inventory. Some items sell quickly and must be restocked regularly. Other items might take up space for a significant time before selling.

Every inch of your warehouse is valuable real estate. Optimizing how you use it could significantly impact your bottom line.

Consider whether one of the following strategies for maximizing your warehouse capacity works for you. By simply learning how to use space in a warehouse properly, your business could be more agile, responsive, and profitable.

Select an Optimal Timeframe

How long is a long time for merchandise to stay in a warehouse? It depends on what you sell.

Some companies deal in many seasonal products; if something does not sell out during its season, it could be a long time before it is shipped. Others might expect to turn over inventory within 14 or 30 days altogether.

Take some time to consider how long is a reasonable time for products to sit in your warehouse. For many companies, the range is likely between 14 and 90 days; even 180 days might be suitable for some products in specific industries. Once you have established a timeframe, you can evaluate your stock to identify the chronic slow movers.

Evaluate Your Forecasting Models

Efficient stocking requires accurate forecasting. If your buyers cannot predict when a product will likely sell and in what quantities, you could lose profit on inventory that does not move.

Many warehouse management systems provide your stock’s historical trendlines and include forecasting capabilities. If yours is not doing the job, you should consider an upgrade.

Demand planning systems now use sophisticated computer modeling of futures markets to predict trends. Using the optimum timeframe, your demand planning system could accurately predict which products will move within that timeframe and which are not likely to sell.

Consider Drop Shipping for Slow-Moving Items

When you have identified your slow-moving inventory, you can decide whether having an item on hand is worthwhile. Sometimes, giving shelf space to a slow-moving product might be reasonable. But in many cases, freeing warehouse space for items that sell quickly is a better strategy.

If your company still wants to sell slow-moving items, drop shipping could be a solution. In this situation, your company would contract with a supplier to provide the item when a customer orders it from your company. The shipper takes a portion of the profit for storing the item and fulfilling the order.

Drop shipping might not be viable if the slow-moving item’s profit margin is already thin. For many products, however, it could efficiently meet customer demand while using your warehouse space better.

Partnering With a Third-Party Logistics (3PL) Provider Could Optimize Warehouse Functions.

You may need more time, resources, or energy to rework how you forecast demand or handle slow-moving stock. You could still benefit from sophisticated inventory management procedures by working with a 3PL provider.

A 3PL provider has the tools and expertise to make your warehouse function more efficiently. With their help, you could focus on providing excellent customer service instead of worrying about properly using space in your warehouse. Reach out to chat with Brown West Logistics about your needs today.

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