High priority placed on stock level optimisation

Survey highlights space and stock as ‘financial frontier’

Almost 40 per cent of UK companies with stockholding operations rank stock level optimisation high on their priorities, being keenly felt mostly by larger companies and, surprisingly, by those firms not running a dedicated Warehouse Management System (WMS).

The survey of warehouse operators*, carried out for leading WMS provider Access Group by Redshift Research, and the accompanying whitepaper: ‘Space and stock: the financial frontier’ suggests many businesses without WMS are missing out on a relatively easy route to reduced cost and improved service because they are unable to optimise stock levels and space usage.

The key finding highlights that business maturity may have a large part to play. Larger, more established businesses tend to have established and robust processes from point of order to point of despatch: with these in place, stock level optimisation in relation to order and volume patterns is an obvious next step, with clear benefits for cash flow amongst other criteria. Smaller and newer businesses are often more focused on the need to grow the business and meet every customer demand, in the hope of repeat business and an enhanced service reputation.

The whitepaper highlights that small businesses are particularly vulnerable to short term cash-flow problems, and sub-optimal stocking levels, with insufficient stock in some lines leading to lost sales, while too much working capital is tied up in slow-moving lines – providing a very sound recipe for cooking up a cash flow crisis.

With stock levels optimised, it becomes possible to think rationally about optimising space utilisation. The survey finds that three quarters of respondents are not doing it very well or efficiently, demonstrating there is enormous room for improvement. Warehousing space is not cheap, and the apparent need to increase storage area can be a real brake on company growth.

Rob Hodgson, supply chain divisional sales manager for Access Group, commented: “Companies who optimise their stock levels often ‘discover’ significant volumes of stock that they didn’t know they had available. When this has been cleaned up they may find they no longer need to expand their warehousing space. And this can mean a serious cost saving.”

Rob continues: “The survey and respective whitepaper highlights that regardless of size, companies need to go far beyond their current thinking to discover the benefits of optimised stock and warehouse space. A WMS that can integrate financial visibility and other key functions across the operation will bring greater benefits both to cash flow and customer service.”

 *132 warehouse operators across manufacturers, wholesalers, and 3PL warehouse service providers were surveyed by Redshift Research for the whitepaper ‘Space and stock: the financial frontier’

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