The project team sat in the conference room where the CEO sat with his back to the whiteboard. Ostensibly, we were there to kick off a WMS implementation project but we knew that we had to make some layout changes to get maximum leverage from the system. That wasn’t in the budget and the CEO’s initial reaction was, “I don’t see how our inventory issues can be solved with a few extra racks.”
Like many CEOs, this man spent a typical day wrestling with a wide spectrum of issues from human resources to marketing to taxation to calling home before catching a plane. Every business unit across the country was asking for precious capital and here’s a project just started already asking for more than what was already allotted. I had five minutes to change his mind.
“Let’s consider an extreme example. Imagine a warehouse with one location,” I said.
“That’s a small warehouse,” he replied.
“It doesn’t matter, it could be a million square feet, but it has only one location and all the inventory is in that location no matter where it sits physically in the warehouse.”
“You receive inventory into that location. You ship inventory from that location. But every inventory transaction between receiving and shipping would be meaningless because we’d be moving inventory from that location to that location.”
“You wouldn’t actually know where anything is.”
“Exactly, there’d be no point in having a WMS because it wouldn’t actually do anything for you. You could have a fully racked layout, if the WMS only had one location to work with, it wouldn’t work.”
“So that’s the extreme – give me something more realistic to chew on.”
“Realistic is messy, so let’s swing the other extreme. The perfect warehouse layout would have an appropriate inventory location for every type of inventory transaction where we never mix products or lots in that inventory location. Putaway locations would be perfectly sized for each putaway handling unit. Pick locations would be perfectly sized for the needs of each item on the pick line. Staging areas would be sized to build a load and nothing more.”
“And we are somewhere in between.”
“Yeah, but much closer to the bad extreme than the perfect one. You co-mingled inventory across the warehouse. Every location is a pallet location where only a handful of your SKUs need pallet locations. Your layout works against your WMS instead of with your WMS.”
“So I should buy some racking.”
“Basically, yeah. But it’s not so much buying racking as re-profiling the racking you have to fit the inventory it stores.”
“Sold – get what you need done to make the WMS fully effective.”