About Larry Willett Expertise Specialist in 3rd Party Warehousing and eCommerce Fulfillment, Generalist in handling, storage and distribution of most products and commodities including Retail Goods, Food Products, and HazMat
Experience 25 years in retail distribution, both private and 3rd party. President of 3rd party logistics provider in Los Angeles for 10 years
Organizations Warehouse Education Research Council, Council of Logistics Management, International Warehouse Logistics Assn.
Expert: Larry Willett Date: 10/16/2006 Subject: Storage Capacity
Question Larry,
As a follow-up and just to make sure we are clear, if my customer has established that based on current sales (75 million) and available pallet positions (4,050) or 75M/4050 = $18,500 per position that if sales double to 150 million that essentially I now need 8,100 pallet positions? This is the basis of how they went from a 40,000 to an 80,000 sq ft building - based on their revenue doubling....and it has not solved the real problem. My point about the WMS is that; they should be focused on it and getting inventory turns (in general) increased and not planning for growth based on dollars. Its almost like wanting to know what the new wardrobe will look like 5 years from now but the person is already 100lbs over wieght. My angle is stop worrying about the future unless your willing to change (loose the weight) what got you in the mess to begin with.
I did see in one of the posts that someone developed a spreadsheet to help determine capacity, that is something I;d like to get a copy of, is that possible?
thanks.....
Dale
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Followup To
Question -
In trying to develop a 5 year plan for WH capacity, our customer wants to divide current sales (75Million) by total pallet positions (4050) to get a (dollars per pallet value). As sales growth continues to hit 25% annully they want to create a direct relationship with storage needs and sales growth by dividing the $value of a pallet (75million/4050) into the projected sales growth resulting in the required number of pallet positions. The problem is that we feel the key element is to focus on a WMS implementation and increasing inventory turns from 7.2 to 12 or more. Can they not just continue to improve turns while sales increase to maintain current buiding sixe (80K sq ft) this is an electronics DC.....Please help....
Dale
Answer -
Dale
What you are trying to accomplish is admirable but probably too idealistic. Installing a world class WMS will facilitate improvement of inventory turns but you still are at the mercy of product design, marketing, production and sales. All of the facets have to also drive down the inventory while increasing sales to achieve the turns you are seeking. I think you should look at the average turns for the type of product you are warehousing and utilize that as a guage as to your performance. I think for planning purposes that your customer's method is probably a pretty good measure for long term projection. You may want to look at warehousing that allows you to put more product per square foot of storage as a method to reduce space.
Larry
Answer Dale
As I understand your point, you believe that if the customer managed their inventory better through the use of a good WMS they would increase their inventory turns. This may very well be true but my experience is that a WMS basically provides information and that the user needs to apply the disciplines in all facets of their operation in order to reduce turns. The key word here is "customer". You have no control over how your customer will operate. You can provide tools, systems and expert advice but it will remain their decision on how to utilize them. I am sure that a WMS will have some impact on turns but I seriously doubt it will have the impact you are projecting.
Any software or programs I have are proprietary and not for sharing.
