Has your boss come up to you and said “You know that new product line we were talking about last month, well, the initial shipment will be here next Friday”. While this may be a slight exageration, it is not unheard of, especially in todays business world that has companies merging or expanding their offerings, at rapid rates, just to maintain market share. As part of our mission as materials handling professionals, we need to insure that our organizations are prepared to handle these curve balls. In the following we will discuss our options and how best to evaluate what our next step should and will be.

Purchasing/Product Management/Inventory Management
Whoever has responsibility for acquisition of product needs to be your best friend. Information is the main ingredient to your sucess in planning for the future. In most organizations this department (Purchasing, Product Management, Inventory Management, etc.) is your primary source for information. Their relationship with the supplier hopefully provides an open conduit that you can tap into to obtain the data elements essential in providing you with the planning factors that are necessary to meet the design requirements of this product line expansion. Even though they are the point of contact it is your responsibility that they ask the right questions, so that you have the right answers.

Database
From those questions will come answers. Those answers are the lifeblood of your database. A database needs to be all inclusive, as no detail is too small. It also needs to be quantitativly oriented. While info such as bigger than a bread box is adequate for guessing games, it does not help when you are trying to rank or categorize items. Additionally, data that is definitive can support downstream activities, such as having your order processing systems select the shipping overpack carton, or calculate the freight charges. The key elements of a database are:

• What is the product and how is it identified?
• Does it require special handling (Haz Mat, repack, marking)?
• What are its physical attributes (quantity, size, weight, packaging)?
• What is the activity level, both receiving and shipping (how many, how often, typical lot size)?

Simply put a database is nothing more than a spreadsheet containing each of these data elements. With this information in hand you can rank or sum or filter the data so that you now know what you are being asked to store and handle.

Storage Assignment
Now that you know what you need to store you need to go about the business of making the warehouse storage assignments. This is an activity that many operations don’t think is important, and in fact relegate it to a second class status. By doing this you are flushing money right down the Euphretes. This is in fact one of the most important tasks in all of warehousing. When you pay attention to stock location, you impact productivity, safety, and even morale. The best way to assign product in your warehouse is to use a decision tree. Most simply stated, a decision tree is a series of yes/no questions that lead to a final location assignment. The following example is that of a simple decision tree:

While the above is a simplistic example of a decision tree it gives you an idea of the type of questions that you need to ask in assigning products within the warehouse. The most important point to be stressed here is that for the best results, “let the numbers do the talking”. For each question there should be a specific numeric ranges for one or more of the data elements that would lead to a yes or no decision. When the numbers do the talking the results are verifiable and consistent.

After you have identified the storage area, the next step is to assign the product to a specific shelf location within that storage area. Before making that assignment a number of factors should be considered. Is it important to have to families stocked together or is product picked in waves of equal activity size? If order volume is low (low demand operation or limited number of customers) and they are handled order by order then grouping products within a storage type by family that the customer typically buys, may be a reasonably productive layout.

If the order volume is high and the number of different customers is great, you are probably handling the orders in a batch mode. Batch picking has proven to be very sucessful in getting orders processed and through an operation. When you pick by batch you take many orders from dissimilar customers and batch them together so that the travel distance of the order filler is dramatically reduced. With batch picking you want a certain randomness or even distribution of the product throughout the storage area. The reason for this is that you do not want everyone going to the same location at the same time.

This does not mean to say that you do not want the high activity items in a Golden Zone location, for you do. What you do not want, is the top 10% activity items on the same shelf. To avoid this you need to stratify the items in each storage type and randomly distribute each stratification against certain some parameters. You still want the higher movers on shelves that are easily acessable (2’ to 5’ above the floor - Golden Zone), but you also want the fastest moving items within this Golden Zone group to be at the ends of aisles or down the main aisle of the facility.

This layout improves the likelihood that your stockkeepers and pickers won’t have to traverse the entire aisle or storage area to put up stock or to pick their orders. All this pre-planning adds up to actual manpower savings, that may mean the difference between profit and loss.

Epilogue
No matter what type or size operation you are involved in, having a good sound storage assignment plan in place is extremely important. More important however, is to consistently maintain both the database and assignment elements of the plan. As part of your normal operations a comprehensive review of item locations should be undertaken at least every 18 to 24 months, or when the new product additions exceed 15% of the product offering since the last time a review was conducted.
One last bit of advice is to plan for the future. Within each stratification plan for expansion. For each item make sure that you leave room for additional inventory, and within each storage fixture or aisle allow room for additional new items. By providing for the future you will be giving yourself a chance at handling that next curveball.