I'm sure one of those goals is to ensure that the warehouse is organized in such a manner to cultivate efficacy and the ever important goal of maximizing warehouse real-estate.
Most of us have those dreaded slow moving, or worse, non moving materials in our warehouses. You know, that pallet of material we label year after year "do not inventory". I call this material "freeloading material" because it adds no value to my warehouse. We know the story, the history, or in some case we simple don't know where this stuff came from because it was here before we were.
The situation may be that someone in the organization sees possible potential value or is just afraid to make the decision to get rid of this material. It is like having a tenant that does not pay rent, or having your lazy brother-in-law who lives in your spare room, drinks your milk, eats your last cookie, will not get a job, but your wife won't let you throw him out! So what do you do?
Well like all problems you need to evaluate the situation, so lets break it down to help create some possible solutions to rid yourself of this freeloader.
The first thing we need to realize is that space in your warehouse is valuable and could hold more worth than the freeloader. In my geographic location warehouse space cost between $5.00-$12.00 per square foot. That means a 40"x48" pallet of non moving material is costing my organization a minimum of $800.00 per year to store. That cost is compounded by whatever the fixed cost was to purchase said material, or even worse, what it cost to produce the non moving finished product if it was manufactured in house. After completion of a physical inventory is the perfect time to bring these numbers to whomever is having a hard time letting go of this freeloader if you are being forced to hold on to it.
Phase two of letting go of the free loader is exploring some options for its final destination. Just like your lazy brother-in-law you want to avoid just sitting it outside on the curb hoping it will go away. One simple way of removing freeloaders is contacting the vendor to ask about a return. Depending on the situation, you may even receive a full or partial credit for the material.
Another option is reminding other department heads that this material exist. You may know the material and inventory in your warehouse intimately but others may not be as familiar with what you are currently housing, especially if the freeloader is not in the WMS or ERP system. It could be worth mentioning in a production meeting, or sales meeting, that you still have this material in house and it is occupying valuable, limited, warehouse space. The freeloader could possibly be a viable option for substitution in a particular manufacturing process, or could be listed as an alternative on a bill of materials. Perhaps sales could use a boost and an incentive could be offered to the sales team to move this freeloader into the hands of customers. I have had this very situation in the past. I took over a warehouse that was a bit shambolic. After my first cycle count, I had discovered a skid of finished product that an organization was housing but did not appear on the cycle count list. No one currently working in a decision making position even knew about this product that had been sitting up in a rack for what looked like years. I talked to the sales manager about these products and they were quickly reintroduced to the company's sales catalog. Within just a few weeks an order was placed and, just like that, the skid of forgotten material was gone. It could not have worked out any better.
I know you will all do your diligence to unload the freeloader but, unfortunately, there are cases where the freeloader cannot be sold, cannot be returned, and cannot be used on a bill of materials as a substitute, but that does not mean you have to keep it.
In these situations you have to really evaluate what you are dealing with. Ask yourself and everyone in your department "who could use this stuff?". Have a quick brainstorming session about the material. Could you use it for something internal that may not have been it's intended purpose? Is there a trade school, or other institute of education nearby that could benefit from a donation of this material? Is there a children's museum or after school program of some sort who would take this as a donation? If so contact them, arrange for deliver, and then talk to your marketing department do a quick write up about what happened in the company news letter, turning the freeloader into a positive press release.
Whatever the case may be, we as professional warehouse managers, have an obligation to reduce waste. That obligation sometimes extends past the walls of our warehouse. We want to be responsible with our materials and ensure we do all that we can to keep things from ending up in a landfill. Anyone can just throw something in a dumpster to free up space. A creative, progressive, professional warehouse manager can turn a freeloader into some sort of value for his organization.
Like what you read? Take a look some of my other post here:
http://thepallet-jack.blogspot.com/2015/11/the-most-valuable-asset-in-warehouse.html
Feedback is always welcomed!
My name is Matt Austin. I am a Professional Warehouse Manager. I greatly enjoy all areas of warehouse process improvement, and sharing ideas. Please feel free to contact me with any warehouse situations you may be experiencing for some outside perspective. Thank you for reading!
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