In the first part of this blog post, I wrote about setting up a storage facility that follows the locator storage principles. This second part is going to be about the requirements that make this type of warehouse organisation particularly lucrative and which advantages materialise in practise.
Which are the requirements of a Locator Storage System?
Or, in a different wording: Under which circumstances do the advantages of a locator storage system (LSS) have the greatest impact? Experience tells us that the LSS should be taken into consideration whenever a larger number of stockkeeping units need to be organised and the items differ greatly in shape, size, weight, etc. This is usually the case with spare parts in the automobile industry. The warehouse should comprise at least 1,000 stockkeeping units, otherwise a different form of storage would most likely be a smarter choice.
This also includes, that those units remain in the selection long enough to justify the time and work that needs to be put into data collection and classification. The example of a repair shop makes sense again: when a car producer rolls out a new model, the repair shops can be certain that spare parts for it will remain the same for years to come.
Furthermore, the range of articles should consist mainly of medium and slow-moving items. Warehouses storing basically fast-moving items will usually do better with other kinds of warehousing systems. This does of course require some data about the turnover of each article.
As mentioned in a previous post, the probability of mix-ups in chaotic storage is small, because similar items don’t get stored directly next to each other. This however, does happen quite frequently in a LSS. To make up for this fact, the warehouse staff needs to be more familiar with the stored goods. Small personnel turnover is therefore very helpful, which in turn is easier to achieve with little or no seasonal peaks in distribution.
The requirements mentioned throughout this blog post usually pose no challenge for companies such as car dealerships, repair shops and the like. Therefore, it’s basically these types of businesses that benefit the most from organising a warehouse as a LSS. And the advantages are indeed surprisingly large, considering that the system is based upon the well-established fixed location storage principle.
What are the advantages of a LSS?
The most significant difference compared to standard fixed location storage is the reduced need for space. A cutback to 50% is by no means exceptional, which also lowers operating costs correspondingly (HVAC, cleaning, etc.). In addition, the time needed to store and order pick items goes down by 50-70%. This means you could assign more important tasks to your staff. Certainly, that’s a big plus in times of high labour costs.
Because the computer keeps track of all the storage operations, there are fewer potential sources of error and your book inventory balance will be more accurate than ever before. This will simplify the actual stocktaking, the more so as it can be integrated into the staff’s daily routine.
You might have the idea in your mind that a smaller warehouse would perform worse and sooner or later become an obstacle to further growth of the business. But you would be surprised to learn that the opposite is actually true. Reducing the size of the warehouse leads to higher efficiency und thus facilitates the expansion of the company. In essence, the storage doesn’t really become smaller, it just gets compressed.
In case the LSS reaches it limits eventually, it can be expanded just like a standard fixed location warehouse, with more storage space and better technologies (handheld barcode scanner, Pick-by-Voice). So, the LSS is not a closed system, instead it grows along with the company’s requirements.
A LSS therefore offers a range of advantages, which might give a decisive competitive edge to smaller businesses such as car dealerships and repair shops. Would you like to know how the LSS protects our natural resources and benefits the economy as a whole? That is the topic of part 3.