Last month we began a discussion of how a warehouse management system (WMS) can help improve material handling operations. In this issue of the newsletter we will continue by looking how a good WMS system can help you effectively organize product storage in your warehouse(s).

One of the biggest unnecessary wastes of time involves warehouse personnel searching for lost material. An item located in the wrong location is also often forgotten and reaches its expiration date before it can be sold or used. A good WMS system helps warehouse management effectively control the space in the warehouse to minimize lost, damaged and expired material as well as minimize the cost of filling orders. A WMS system will identify and determine the space required for three types of storage bins:

Fixed Locations: These “pick” bin locations contain quantities of stocked items used to fill current orders. WMS systems will utilize forecast demand and product volume information to determine the best type of storage unit (e.g., shelf, pallet rack, etc.) and the space required in that storage unit to contain enough of each item to fill orders for a specific number of days.

Random Locations: Where each fixed location will hold one or more specific items, random locations can hold any item if space is available. Random locations are typically used to hold bulk and surplus quantities of products that cannot fit in an item’s assigned fixed location.

Holding Locations: Holding locations contain products that are owned by the distributor but are not currently available for sale or use. Material in holding locations includes items that need to be inspected, reworked or returned to a vendor. It is imperative that material in holding bins is not included the quantity displayed to salespeople and other users as being available for sale or use.

There are several ways in which effective bin location assignment reduces loss of material and time:

• Fixed bins can be restocked to capacity on a scheduled basis so that pickers do not have to waste time making repeated trips to random locations to retrieve material needed to fill orders
• Bin refilling personnel can be notified of the exact random storage location of surplus or bulk quantities of a product. This eliminates “treasure hunt” searching for material and minimizes the time necessary to replenish fixed bin locations as well as fill orders for large quantities of an item
• Material in holding bins can be closely monitored (i.e., the date the material was placed in the holding bin, the date the next action for this material should be taken, etc.). This allows management to be sure that material flows out of holding bins to be processed before it is too old and must be liquidated.