Make managing “Brexcess inventory” as ‘easy as pie’
Anything could happen between now and 31st October, which might explain why food manufacturers like Greggs are stockpiling the key ingredients they will need in the event of a no deal Brexit. As well as ingredients like meat, the firm is also acquiring extra light equipment, reporting that this “could be affected by disruption to the flow of goods into the UK”.
Who knows what will eventually take place and according to research, many companies are still unprepared for Brexit in whatever form it ultimately takes. This is verified by new research published by the Chartered Institute for Procurement and Supply (CIPS), which reports that just 22% of companies have taken the essential planning actions recommended – completing the relevant paperwork, obtaining an EORI number and putting any extra provision with logistics providers and customs agents in place. Instead, many manufacturers and retailers - like Greggs - are holding onto extra inventory in case there are raw materials shortages. Christmas falls soon after the Brexit deadline, and alcohol importers are stockpiling wines for example.
UKWA’s Chief Executive Peter Ward verified this with reports that spare warehouse capacity has almost dried up in the UK now; with as little as 250,000 pallet locations available across the UK, which is roughly equivalent to a couple of days’ freight coming inbound through Dover That means warehouses must be piled sky high in anticipation of a no-deal Brexit. The 31st October deadline couldn’t have come at a worse time for businesses selling to consumers, with 4 peak trading periods of Halloween, Black Friday, Cyber Monday and then Christmas falling in quick succession.
Albeit currently unavoidable, holding excess inventory is an expensive planning strategy. Companies have to balance the additional costs of extra inventory management against the potential implications of being short of raw materials. The leaked “Yellowhammer” documents clearly outlined some very significant risks of shortages and this is looking a likely scenario at the moment. Manufacturers are having to forget about ‘just in time’ and practicing ‘just in case’ instead.
Using a WMS (warehouse management system) to control all aspects of warehouse operations – from the moment inventory arrives to when finished goods are shipped to customers – will help improve efficiency. Users can expect to reduce their peak period labour costs by up to 20% and will also see many other benefits, including reduced wastage and faster throughput.
Brexit warehouse management strategy
Here are 5 ways a warehouse management system (WMS) will ease the strain of ‘Brexcess stock’ in your warehouse
Putaway management and location assignments Invaluable for warehouses with excess inventory, an effective put-away process is an important stock management strategy to maximise space utilisation and ensure the physical movement of products can be kept to a minimum. There are multiple ways a WMS can automate putaway, by identifying the best place to store items based on available spaces, monitoring how frequently the items will be picked and where they should be placed in the warehouse and whether items need special storage considerations.
The different putaway options available within a WMS can be flexible and either suggested on an adhoc basis or structured around a set of rules. For instance, they could be set to raise an alert if the incoming stocks need special handling instructions, e.g. allergens must be stored well away from any contaminants in a food warehouse.
Pick route optimisation and planning As travelling can take up a large part of the time spent on warehouse picking processes, appropriate sequencing of picking tasks within an order is crucial to achieving high efficiency, especially when the warehouse is holding excess stock. After evaluating the day’s order pool and assigning tasks, a WMS automatically evaluates the routes available and will direct operatives to fulfil pick instructions using the most efficient travel path for their immediate location. Goods are picked more quickly, potentially using fewer resources.
Shelf life management and stock rotation There is huge value in using a warehouse management system to optimise stock rotation and ensure that items with a limited shelf life are carefully managed to avoid any wastage. This extends beyond the obvious perishable raw materials to also include packaging items, which can in turn also impair finished product quality if they are past their recommended use by date. A WMS makes this easy by automatically reminding operatives of which lots to pick first, based on first in first out principles.
**Perpetual inventory (PI) stock counting ** If your warehouse is holding excess inventory, how are you managing stock counts? By introducing a daily PI or cyclical counting process supported by a WMS, warehouse managers can eliminate the need to undertake stock counts on a monthly or yearly basis. Cyclical counting is the most effective way to maintain inventory. It also means it’s business as usual whilst counting is in progress and shrinkage can be minimised. All materials movements are accurately recorded with an electronic audit trail and discrepancies are immediately apparent.
Traceability management When product quality issues are raised, it is vital that all affected products can be quickly and accurately identified to minimise potential losses - both financially and to brand reputation. Using a WMS, it’s possible to create reports detailing lot/batch/expiry date information which confirms to compliance requirements and also allows for detailed trend analysis. At any point in time, a WMS will provide a full trail of what has happened to every element of stock during its entire lifecycle, providing extensive traceability management options. The audit trail covers the entire supply chain, right down to the source and provenance of the original raw ingredients at the SKU, UPC and lot level, limiting the impact of inventory wastage.
Author: Eric Carter, Solutions Architect, Indigo Software