Articles

Bill's Building Blocks - Moving Inventory - June 2022

Bill’s Building Blocks - June 2022
Moving Inventory

When StarTrak Information Technologies was purchased by Orbcomm, I had to move my Morris Plains office 26 miles north on Route 287 and east on Route 80 to Rochelle Park. The StarTrak physical space consisted of offices for marketing, finance, engineering, supply chain, plus an inventory warehouse. Orbcomm’s physical space in New Jersey consisted of just offices. The inventory warehouse was to be integrated into our contract manufacturer’s warehouse, also located in New Jersey. The good news was that the warehouse contained a manageable number of SKUs. The bad news was that the CM had insufficient warehouse space. This was both a challenge and an opportunity.

Where to Move: One key consideration in moving inventory is that the inventory must have a receiving space. This problem can be approached two ways. First from a receiving perspective, increasing the inventory turns and reorganizing the layout of existing inventory items opens more cubic volume. Second from a sending perspective, eliminating stranded inventory and excess inventory items sends less cubic volume.

How To Move: One advantage of moving inventory is that most items are already packaged. These items will need to be palletized and labeled as to their receiving locations. Will multiple vehicles be needed to make a single trip? Or will there be a steady stream of smaller lots? The transportation cost to move inventory, when moved by a common carrier, depending on freight classification and distance will be pay-by-weight. The transportation cost to move racking and office furniture, when moved by a moving company, will be pay-by-time. Not having an opportunity to backhaul freight can increase transportation costs.

When to Move: Another key consideration in moving inventory is ensuring continuity of supply. Supply chains must not be interrupted when relocating inventory. In some cases, buffer inventory must be built and delivered to the destination location before the main inventory move can be scheduled. Planning item move priorities based on real product demand and/or kitting items together to support specific, high-volume products to occur early within a move can help. A monitoring scheme must be in-place to track and trace every item’s ship date and location to the same item’s receive date and location.

Moving inventory requires careful planning and attention to detail. When done well, it should be invisible to the end customer.  When done poorly, expect service levels to drop.

©2022 William T. Walker, CFPIM, CSCP-F, CLTD-F, CIRM has 42 years practitioner experience, authored Supply Chain Construction and Supply Chain Architecture, and teaches Supply Chain Engineering at NYU Tandon plus Demand Planning at Rutgers Business School. He is a 40+year ASCM member and APICS E&R Foundation past president. email: [email protected]