By Ron Coan, national account manager, Abel Womack Inc., an authorized Raymond Sales & Service Center
There are many reasons to keep a watchful eye on distribution center costs. Movement on high-volume SKUs tends to get much of the attention when it comes to cost considerations, and slow-moving SKUs are often overlooked. These slow-moving SKUs, however, also contribute to total costs — such as product costs, storage costs and processing costs — and therefore they must remain a focus in the distribution center. Slow-moving inventory (SMI) takes up valuable space and costs more to stock and pick than faster-selling items. The following steps can be taken to better understand SMI and how to optimize it.
Apply Pareto’s Law
When you look at overall SKU breakdown, 20% of best-selling SKUs statistically account for 80% of business revenue. Cubic velocity plays a major factor in determining the kind of storage medium that should be used and its location within the facility for maximum efficiency.
Reduce handling costs
Companies need to reduce handling costs if they want to stay healthy and remain viable in today’s competitive market. Collecting, analyzing, and reviewing inventory flow, demand patterns, storage information, pick positions, and other data is essential for companies to optimize their operation.
A good place for any business to start is with a complete analysis of SKU movements. Proactively working with industry professionals to determine the best inventory management strategy can help improve your process, minimize space, and positively affect your bottom line.
Optimize the distribution center
Analyzing facilities and optimally configuring distribution centers can help achieve bottom-line savings. This practice requires looking at the warehouse operation from a different perspective and repeating the process to ensure proper efficiency.
Rather than letting SMI collect dust, add a carousel system that stores slower-moving products in your distribution center. Not only will you gain additional space and improve efficiency and ergonomics, but also you’ll benefit from improved order accuracy and long-term profitability.
If you are experiencing losses because of SMI, consider taking the steps listed above to improve your warehouse operations and reduce extra costs.
About the Author
Alexis GajewskiAlexis Gajewski
Senior Content Strategist
Alexis Gajewski is a manufacturing writer and editor with nearly 20 years of experience covering the people, practices, and technologies that keep industrial facilities running. For more than a decade, she served as Senior Content Strategist for Plant Services, creating content for plant managers, engineers, and maintenance professionals on a variety of industrial topics.
During her tenure, Alexis worked to develop the brand’s digital strategy and helped launch and produce Great Question: A Manufacturing Podcast. She also created The Lighter Side of Manufacturing, a weekly blog that explored the inventive and sometimes humorous side of the industry.
Alexis co-founded Influential Women in Manufacturing, a recognition program that honored 49 women in its first two years, earned an industry award for Best Product Launch, and received a proclamation from Illinois Governor JB Pritzker and a commendation from U.S. Senator Tammy Duckworth.
She also led newsroom operations and development at a large media company where she set editorial standards, developed training curriculum, and helped support AI adoption for more than 150 editors across 80+ brands spanning manufacturing, industrial processing, automation, and more.
Additionally, Alexis works as a freelance writer and editor, and her areas of interest include continuous improvement, the skilled workforce, and the role of emerging technology on the plant floor.
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