Too many companies treat a full warehouse as a badge of honor. It’s not. It’s a warning sign! Consider this: Two companies. Same growth. VERY different responses.
Company A saw rising sales and immediately started scouting for more warehouse space. They signed a lease and proceeded to fill up their allotted space. Customer service didn’t increase. The only things that increased were warehousing costs and inventory investments.
Company B saw the same growth and took racking out. We calculated the correct safety stocks they needed. (Pro Tip: Use the correct organ – your brain, not your gut.) We implemented a pull system with suppliers to improve material flow, redesigned their layout, and trained their team on standard work.
Result?
Company A increased overhead and hurt their bottom line.
Company B increased throughput and velocity and and improved their bottom line.
Before you assume you need more space, ask:
- Could we do more with better flow?
- Do we really need more space, or do we have too much stuff?
Growth doesn’t require more square feet. It requires more flow. And better thinking.
So tell me…what company do you work for? If you are an owner, what company do you own? Company A or Company B?