Manufacturing & Distribution, summer 2011

Make the Most of Your Space

Now that the recovery seems to be underway, many manufacturing and distribution companies are again facing space constraints. These businesses are anxious to make the most of their real estate but are understandably hesitant to consider major capital commitments.

If your company is in this position, consider these no- or low-cost solutions:

Move it out. Obsolete inventory? Try a virtual yard sale. Approach customers or prospects with an offer they can’t refuse — first-quality products at a substantially reduced price. If you have slow moving inventory or too much of a specific item, create demand via financial incentives.

Buy smarter. Monitor purchasing so you are buying just in time to maintain optimal supply levels. Or, if you are on the receiving end of a supplier’s attractive volume pricing incentives, do the math to see if the cost of temporary storage makes sense.

Drop ship. Would it be wise to have your supplier ship directly to your customer, thus avoiding a stop in your warehouse? Amazon.com does it — maybe you could, too.

Leverage your layout. Examine your warehouse layout. If it was designed years ago, you may benefit from a refreshed master plan. For example, pallets can only be stacked to a certain level before they become unstable, but modern racks provide safe storage even at substantial heights.

Also, many newer warehouses have mezzanine levels, which make use of otherwise wasted space near the ceiling. Mezzanines are especially useful for smaller, stackable inventory stored in boxes or bags. A look at your shipping docks may also uncover potential inefficiencies that could be corrected by moving walls or other relatively easy fixes.

Expansion may be in your future. But putting off a major real estate investment for a year or two may provide you financial relief for a sustained recovery.

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