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.
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.
