Say in the case where a major competitor closes and your sales doubles but no SKU increase. Looking for everyone's thoughts on short term and long term strategies to deal with the new realities. My thoughts are first need to look at if we can free up some space or resources from existing operations ie. obsolete inventory taking up space or idle time in between tasks or absence of overnight shift. Short term wise, we can look those opportunity and free up resources to accommodate the volume increase. A few options include 1) opening up an overnight shift which can come with a significant cost, 2) increase warehouse staffing to speed up the process however that only works to a point before congestion becomes an issue and leads to productivity loss, 3) identify cross docking opportunity to minimize inventory therefore free up space to house the additional volume, 4) review inventory and remove any obsolete inventory to free up space 5) look at storage solution elsewhere to provide space relief. Long term, depends on how long you foresee that would take for the next major competitor to emerge or better yet, you can remain your market share and deter any competitors from becoming too big, you can expect the additional volume are here to stay. Then it probably makes more sense to start from scratch and re-design a warehouse solution that meets the new realities.
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Short term (immediate) strategies
1. Increase warehouse staffing.
2. Review inventory and remove obsolete inventory to free up space.
Mid term strategies (May need a few weeks to a few months to implement)
1. Create an overnight shift
2. Look for external storage
Long term strategies (probably a year to few years to implement)
1. Need to understand market dynamics
2. Need to understand competitors
Above are some of my thoughts. Short term strategies can be implemented almost immediately, to fully utilize existing site. Mid term strategies require some time to go live. Long term strategies need in-depth analysis to determine the direction of the company.
My first thought with the scenario you painted is that the company has become a monopoly of the market. That is good for the company because without a competitor, the sales volume will only increase and not drop.
The question here is how long will the situation remains? Is the barrier to entry so high that it will take a couple of years before another competitor pops up? Or will this scenario last for only a few months?
If the former, then it does make sense to evaluate the short term, mid term and long term strategies. However, it the scenario will only last for a couple of months, then maybe the operations will only execute the short term options.
While I agree with the above comments, in addition, I recommend product slot optimisation.
This is storing products in such a way as to reduce travel. This effectively increases available capacity.
By way of example, a warehouse I saw had not product slotted and had 50 SKU that were customer-specific products that were spread out across the warehouse. After grouping them together the picking time for that customer reduced from 1.5 hrs to 0.5 hrs.
While not all examples are this good, typically picking direct labour time reduction of between 15 to 25% are achievable. The return on this investment can be in the order of weeks.
Agreed with you, John. Product slot optimization is definitely a good strategy for the existing site.
More often than not, warehouse operations will neglect this aspect. This is because of the time, effort and manpower resources required to properly slot the inventory.
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