Optimizing Storage Locations: How Picking Frequency and Goods Type Influence Warehouse Efficiency

(i) Location Optimization and Frequency of Pick

Generally, the frequency of picks determines where an item is best located for storage, or whether an item should be classified as suitable for short-, medium-, or long-term storage and located accordingly. The general rule is, frequently picked items are stored closest to the despatch area, i.e. where access is easiest based on the travel time/distance to pick zone.

Fast moving goods are stored as briefly as possible. Crossdocking or other minimal storage operations should be applied whenever practical. FMCGs lose value rapidly so must be kept in motion. High value FMCGs require extra handling precautions that may slow their processing, however.

Seasonal products are rotated for pick frequency. The rear of the warehouse is suitable for out-of-season products, and the front of the warehouse is generally the best location for the storage of products that are in-season or approaching their season of demand. Rotation is calendrically driven. Valuable items can be frequent or infrequent pics. If infrequent, their storage can be limited to a secure area, with the most rational factors in the storage location decision being security, restriction of access, and ease of monitoring. All of these considerations will trump accessibility for pickers, since picking is infrequent.

If the picking of valuable items is frequent, then a secure storage point and, ideally, a specially constructed secure location should be installed close to despatch and made accessible only to appointed staff. Packaging and despatch operations should be heavily monitored, with access granted to specific people only, using biometric and/or other robust identification methods. Such individuals may also constitute a specialist team of operatives assigned to the handling of only these goods, with general pickers excluded by both hard and soft means (locked doors and ID access, respectively). Access can however be given on a per-pick basis, whereby only an operative with a specific product code for a current item to be picked is provided temporary access and only that item can be removed from the secure area, with a sign-in/sign-out procedure enforced by security staff. Inside the secure area, normal frequency-based location of goods may be applied, with the most picked being the most accessible. However, extremely high value items may have to be further restricted from access and requested specifically, signed for, and their despatch performed under supervision by security, and the request authorised by management, who may, following despatch also check the receipt of that item by the specified receiving party. In short, extra layers of physical, i.e. passive security should be applied in conjunction with layers of operational security. In practice, this makes frequency-based storage location impossible, disadvantageous, or simply unrealistic.

(ii) The above points are explained in more detail through the following four examples:

a) Typical FMCG picks will be frequent and intense, hence “fast moving”. Location will ideally be as close to despatch zones as possible, and crossdocking would be ideal, since any very fast-moving product will depreciate in value in proportion to the time it spends waiting (a good example of a hyper fast-moving product would be a fast fashion item). FMCGs tend to be of high value and smallish footprint. They may also be fragile, and their demand pattern may be highly influenced by seasonality. These features of products are strong determinants of optimum storage location. FMCGs usually require easy access, so must be located in areas close to despatch, but the high value they often represent means that security and care will be required. Also, small-form fast-moving products, such as wearable items, may have to be repackaged and bulk broken prior to dispatch, whether that be to customer or a retail point further downstream. Hypothetically, a single facility could be servicing a single FMCG product to a downstream retailer and end consumers, and accommodating the very different requirements of each, with implications for storage location and pick patterning.

b) Valuable and attractive items will be security concerns, whether they are frequent or infrequent picks. Infrequently picked valuable and attractive items may be the most difficult to secure, especially if they are not stocked in high quantity. Infrequently picked items can often become invisible to the system and their absence may go largely unknown because they are not handled on a daily basis and do not constitute a major SKU. However, an infrequently picked item, because it is likely to be stocked in low quantity, can be stored in a fixed location – with that location chosen for its ease of monitoring or access restrictions. Its location should be fixed rather than IMS-selected so that security measures can be performed.

c) Christmas decorations, like other highly seasonal goods, will be moved to the front of warehouse ahead of the relevant season’s commencement. As the season passes, the product will be returned to a longer-term storage location, which will typically be in a less accessible area of the warehouse. Prior to the commencement of the relevant season however, quality control checks of the long stored, possibly forgotten about items should be performed, so that only items of saleable quality will be moved forward in the warehouse for optimum pick speeds.

d) Spare parts for old but essential machinery represent an interesting challenge. If we assume that old machine parts are likely to grow in value because they are declining in availability, the necessity to store them grows in proportion to the time in which the machines that use them remain operational. Therefore, old machine parts for which there is still demand become valuable and must be protected from accidental damage and any quality or security issues that accompany long-term storage. For these reasons, such parts must be treated as high value items and, depending on their quantity and criticality to the operation of the business, may merit a special fixed storage area that can be secured and whose environment is controlled in order to maximise the longevity of those items.

If the variety of such items is complex, they could be stored according to device or model number. If the items are picked infrequently, then they can be stored away from despatch areas, where they are less likely to be disturbed. If the item is picked frequently however, a more accessible area for their storage may be required, but with higher accessibility comes a higher risk of damage or even loss.