You Might Have a Bad Warehouse If…There's Too Much Stock In Obsolete Stock

Obsolete, lost or misplaced stock is a recurring problem in the annals of bad warehouse practices but logistics and supply chain consultant Susan Rider, owner of Rider & Associates, adds a special twist this week, noting that obsolete stock can lead to even bigger problems and questionable decisions.

She recently wrote that she visited a warehouse with “several thousand square feet dedicated to pallets and pallets of obsolete stock that hadn’t been touched in over three years.” She was asked to help the warehouse management design a new 250,000 square-foot addition.

You probably know what happens next because the outcome is fairly obvious, says Susan. “After talking them into getting rid of that obsolete stock there was no need to invest in the capital expenditure of a new building.”

It's okay to chuckle, but this type of scenario occurs fairly often. “Many times the VP of Supply Chain can’t convince the VP of Merchandising to let go of this old stuff. A business case developed to show the bottom line impact of storing obsolete inventory can open eyes,” says Susan.

This sort of situation should never arise in a WERC best practices warehouse. For one thing how it that stock—obsolete or not—can sit around collecting dust for three years? It’s almost 2012! Warehousing inventory control software makes it easy to keep product and storage data current and accurate.

Further, instead of examining how to optimize the space and floor plan—which at that point would identify the obsolete stock—the owners decided it was time to expand the warehouse.

The WERC Best Practices Guide says: “Regardless of the mission of the warehouse, best practice companies have designed storage systems to meet the needs of the current and planned mix of storage types. They have optimized storage locations and layouts to fit product without the need to restack or re-palletize it once received.”  

While most companies initially put a lot of effort into the layout of the warehouse, “industry surveys will tell you that as many as half the companies do not have an ongoing process in place to review their layouts.”

The guide continues that regular reviews of how storage areas are configured and having processes in place to reconfigure storage areas as product mix changes “is critical to maintaining high levels of space utilization and efficiency.” Simply making “continuous small adjustments to racks, shelving or other storage equipment can have a great impact on space utilization.”

If you do all of the above first, the need to build a costly addition probably goes away.

I really love your feedback - and love your contributions to share those bad warehouse stories to help educate the profession on what NOT to do, and maybe what to do if you’re not doing it.

If you've got an example of a bad warehouse practice, send me your story and photo(s) to [email protected]. If I feature your example in one of my blogs, WERC will send you a free copy of the WERC Warehousing & Fulfillment Process Benchmark & Best Practices Guide (a $160 value).

Your submission can be anonymous if you like so you don't get your boss or company in trouble! I'll be collecting examples all year and the winner will receive a free WERC Warehouse Certification Assessment by Supply Chain Visions, a $10,000 value. The runner up will win a free conference registration to the WERC conference (a $1,375 value).”