Storage, as it relates to inventory management is exactly what the name suggests—the way goods, components, and materials are stored in a warehouse before moving to the next step in a manufacturing process or awaiting purchase.
How your inventory is stored will depend on several factors, such as budget, risk of spoilage, toxicity, weight, and dimensions. Not only this, but your method of inventory management will no doubt influence how your goods are stored in the warehouse.
Why Your Storage Method Is Important
It may go without saying that if you are a distributor of dairy products, it would be a good idea to store your inventory in a consistently cold environment. This will ensure your goods won’t spoil overnight.
Chemicals and other hazardous materials have their own set of storage requirements according to safety standards. Those might require the materials to be held in a specific container type, humidity level, behind locked entry or exit points, and various other safeguards.
These are examples you might consider to be generally obvious. However, how you store your inventory can impact your operations significantly.
Don’t want to tuck away completed orders in a far corner of your facility if they’re to be shipped out the next day. Don’t mix unlike items in racks or bins. And don’t store items in out-of-reach places if you don’t have the means to retrieve them later easily. There’s a reason most goods are kept at a height that staff can reach with both feet on the ground–Safety. For everything else, there’s a forklift.
What I’m getting at is the idea that there is good reasoning for storing items one way or another depending on size, frequency of access, and other unique factors.
Sound storage methodology also makes it easier on your staff when the annual full physical inventory needs to be carried out or more frequent cycle counting. You can save yourself a lot of hassle by considering these activities when planning your inventory storage system.
How Warehouse Layout And Design Impact Storage
Initially, a business interested in better storage techniques for inventory management needs to complete a few crucial processes to maximize efficiency. Namely, how the facility housing the inventory will be arranged and navigated.
First, it is important to have concrete objectives for your organization’s goals for warehousing. This will govern your overall design strategy and serve as the foundation for how efficient your organization’s warehouse management is or is not. For example, for a new facility design process, an organization may:
- Consult your local building codes to coincide with your design plans.
- Consult department heads, managers, and staff who will conduct activities in the facility.
- Consider investing in a Warehouse Management System (WMS)
- Build a blueprint or schematic of the physical layout
- Build a process map for day-to-day operations
- Use the two items above to determine potential bottlenecks or production impediments
- Consider additional schematics for future buildouts and expansions to accommodate future growth.
This, of course, is a rudimentary set of initial steps in the design process. There will be many more factors to consider and the steps will change from organization to organization as well as from new design to redesign of existing facilities. These steps serve to give a simple idea of where to begin.
Second, you need to know what moves. That is, your business needs to know exactly what inventory in your facility is utilized in production or sold most often. Using sales data, you can rank inventory based on volume and how often it is utilized. Use this information to work from the back to the front, with your most mobile inventory remaining at the forefront of your facility. Maintaining your most popular inventory in a position close to shipping and receiving minimizes time in retrieval.
Third, you should map your facility. By ensuring your staff knows where items reside and their current quantity at any given time, you minimize time wasted looking for lost, misplaced, or miscategorized inventory. This brings up another important topic, labeling. However, that inventory management concept is covered in-depth in our article on scanning, barcoding, lot tracking, and serial numbering.
How Businesses Use Storage To Manage Warehouse Inventory
We touched on a few obvious use cases for specific storage methods in the sections above, but there are many ways to control inventory so that it is neat, known, and nearby. Some of these concepts include:
Block Stacking – Block Stacking can be something as basic as pallets of inventory resting directly on the floor of your warehouse or other facilities. It’s a cheap method of storage as it doesn’t require any additional equipment to organize material, beyond perhaps a forklift. If you are stacking pallets on top of one another, you must be certain the items serving as the foundation can handle the weight of the goods to be placed above them.
One drawback of Block Stacking is that these pallets can expand into a sprawling maze of obstacles. If a forklift needs to retrieve or access a pallet at the center of the arrangement or bottom of a stack for one reason or another, it may take a significant amount of time to complete the task. The issues could be compounded if pallets contain mixed arrangements of goods or components. Your staff may have to sift through potentially hundreds of boxes to locate the correct parts for an assembly or customer order. This method of storage works best for any inventory that moves quickly, either through use or sales.
Racks – Racks serve as a storage method that delivers the support and convenience that Block Stacking lacks. You can arrange aisles in your warehouse that can be easily navigated by foot or forklift to retrieve items that are conveniently separated on rack shelves. Racks are part of complex and dynamic warehouse management methodologies like Last-In, First-Out, and First-In, First-Out.
Shelves and Bins – as their name implies, shelves and bins serve to be filled. They can be stationary, mobile, and modular depending on the use case. These inventory storage units can be placed on track systems that slide or act as carousels for easy access and eliminate the need to retrieve goods from multiple areas of a warehouse facility. That said, Shelf and Bin storage generally offers limited space to house items and works best with small quantities.
Central Storage – Central Storage refers to a fixed location for any inventory that operators and users can reliably reference and interact with when retrieving or storing inventory. It is a dedicated space, like a warehouse or facility partition reserved exclusively for inventory.
Point-of-Use Storage – Point-Of-Use Storage refers to storage practices utilized during repetitive production processes. Namely, those associated with Just-In-Time manufacturing. In this case, each operator’s or user’s station retains the inventory necessary to complete their specific operation or production activities. This storage method emerges when there is no need for dedicated, central storage.
Dry Storage – Dry Storage is a storage method used to maintain the environment around perishable or dry goods that would otherwise spoil when exposed to elevated temperatures, humidity, light, and generally unsanitary conditions. Beyond maintaining tight control on these environmental factors, it is important to label and secure goods in Dry Storage to prevent the effect of spoilage from spreading to other inventory or inviting rodents and other pests into the facility.
Cold Storage – Cold Storage, like dry storage, is generally reserved for inventory whose environment needs to be heavily controlled. These controls are in place both for safety and to preserve inventory quality. Examples include freezers, refrigerators, and coolers that house produce, dairy products, beverages, and dough products.
Hazardous Materials Storage – Hazardous materials storage is a unique storage category with multiple levels of requirements that go well beyond what the standard facility may be expected to meet. Such items need to be labeled and handled appropriately or the facility will face steep fines and potential legal recourse. This includes conforming to the appropriate initial containment, secondary containment, and defined exposure safeguards. Some storage requirements you may encounter when working with hazardous chemicals include:
- Storing like chemicals together and away from chemicals that might cause a reaction if mixed
- All chemicals should be labeled and dated.
- Flammable materials should be stored in an approved, dedicated, flammable materials storage cabinet.
- Liquids should be stored in unbreakable or double-contained packaging or a storage cabinet should have the capacity to hold the contents if the container breaks.
- No flames or hot work in or around inflammable/combustible storage area.
- Respirator and skin covering requirements.
Consult the OSHA guidelines for hazardous chemicals storage to ensure compliance.
This covers some of the more prevalent storage methods relating to inventory management. For more information on Warehouse Management and Inventory Management relating to storage concepts, contact us using the link below.
About Encompass Solutions
Encompass Solutions is a business and software consulting firm that specializes in ERP systems, EDI, and Managed Services support for Manufacturers and Distributors. Serving small and medium-sized businesses since 2001, Encompass modernizes operations and automates processes for hundreds of customers across the globe. Whether undertaking full-scale implementation, integration, and renovation of existing systems, Encompass provides a specialized approach to every client’s needs. By identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of the Industry.
