ASSIGNMENT OF BRL-007
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(A)Short Type Questions- (a) What is the importance of organization structure in retail? Explain the important tasks performed in retaiI.
- (a) Distinguish between strategic and resultant drivers.
(b) Evaluate the nature of decision making within retail organization pertaining to retail operations practrices.- (a) What are the advantages and disadvantages of having a centralized warehouse?
(b) ''ln store, design is proportionately related to profitability''. Discuss.- (a) How do you discriminate between conventional and contemporary retai1 formats.
(b) Discuss the advantages of using demographic and psychographic segmentation.
- (a) Explain the purpose and benefits of standard operating procedures.
(b) What are the way of preventing theft and frauds?
- (a) Which are the major sources of goods shrinkage in a store? Explain them briefly.
(b) ''Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives". Explain.
- (a) What is the importance of Product-Customer Matrix?
(b) What its the significance of depreciation on assets?
(b) Explain the challenges of space management and how you will maximize the profitability of your space.
- Which are the important segmentation methods? Explain each one of them briefly with examples?
- What are the different ways in which to optimization of space availability is achieved?
1. (a) What is the importance of organization structure in retail? Explain the important tasks performed in retail.
ANS: Having a proper structure is very important for an organization. A structure is an important factor when it comes to the company's success, growth and profit. It gives clear goals and makes sure that responsibilities are clearly defined.
Clear Communication If Structure Is Defined
If the structure is properly defined, it becomes very easy for the company employees to communicate. They would know who to report to and they would have clear lines of communication in mind.
Helps In Growing & Succeeding
If your human resources and talent is properly used, your company will get the success it deserves. A growing company should evolve it's org structure as well. It is necessary to have the correct person in the right position.
Goal Completion
If your organization is structured, you would have defined goals. A proper organizational structure is important for the completion of any project. It can help in identifying the talent available and the scope of that talent.
Company's Needs Are Met
The main goal for anyone would be meeting the goals defined by a company for that company's success. A company would want it's functioning to be smooth and this will only be achieved if structures are well defined.
important tasks performed in retail.:
The retail store is a place where customers take a decision to buy a commodity at the spot. The store also knows the customers' mentality and buying behavior. Therefore, store displays all the items under one roof where normally a customer needs not to walk here and there for a particular type of retailing. Customer is the king and queen. He needs not to ask do you have this soap. following five activities are carried out in a store.
These are:
1. Store Administration and Management of Retail Floor
2. Inventory Management
3. Managing Receipts
4. Customer Service
5. Sales Promotion
1. Store Administration and Management of Retail Floor:
Store administration deals with various aspects which are necessary to sell the goods to clients without any disruption. It includes cleanliness of the whole store particularly the main floor, maintenance the store facade and the displayed windows, etc. Besides this maintaining the record of each level of employees, using them efficiently and prudently, to keep the records of holidays and the shifts that the staff may be required to work for and the staff's pending leave record.
2. Inventory Management:
Devising an efficient system of receiving and displaying goods has long been a tough task for most of the retailers. Therefore, deep knowledge of inventory management is essential for retailers who want to maintain a stocking service for quick turnaround to help ensure total customer satisfaction.
3. Management of Receipts: Management of receipts involves the policies, procedures and practices retailers follow to receive the payments from their customers. Most of the retailers in India prefer cash payment to avoid any further complexities while some other stores would accept either of these forms of payment like credit cards, debit cards, payment on delivery at home or bank cheques.
4. Customer Service:
Managing a retail store is the toughest task these days. New and new stores are coming up not only in the urban regions but in the suburban regions also. Employees' attrition rate is very alarming. They are leaving the old stores and joining the new ones. Competition is also becoming tougher day by day. Profit margins are shrinking.
5. Sales Promotion: Retailers in recent years have become increasingly inclined toward the use of sales promotion techniques, often at the cost of advertising. Though these promotional efforts are concerned with the store's marketing efforts, ultimately it will have impact on the store's sales.
(b) Explain the challenges of space management and how you will maximize the profitability of your space.
ANS: It is the process of managing the floor space adequately to facilitate the customers and to increase the sale. Since store space is a limited resource, it needs to be used wisely.
Space management is very crucial in retail as the sales volume and gross profitability depends on the amount of space used to generate those sales.
CHALLENGES:
Retailers seek to meet local consumer needs by customizing assortments, store layouts, merchandisable and non-merchandisable space, and unique promotions. They must do so while also maximizing profit and ROI from every inch of each store's space. This requires appropriate planning of space allocationfrom the floor space assigned for each category to the shelf capacity for individual items. However, the lack of visibility into each individual store's actual fixture and space constraints means that prototype store layouts and one-size-fits-all planograms are developed. As each individual store strives to achieve localization, it can be difficult to ensure that what it executes meets headquarters' overall category goals and corporate objectives. Furthermore, because space planners at headquarters rarely have visibility into and an accurate understanding of the actual modifications performed at each individual store, future space planning becomes cumbersome. In addition, retailers often manage space planning in a silo, leading to significant disadvantages throughout the retail organization. For example, retailers that manage space with no regard for category-level roles, strategies, and objectives may find themselves having adjacencies that do not complement one another or not allocating enough space to high-demand categories. Further, space constraints such as fixture capacity must be communicated and understood throughout the supply chain. If constraints are not communicated downstream, there is a risk of inaccurate inventory planning, inadequate service levels, and out-of-stocks on the shelves.
how you will maximize the profitability of your space:- An ERP like system provides a solution to these common but difficult issues and enables retailers to achieve maximum profitability across every square foot of their stores. It provides a link between merchandising and store planning, construction, operations, and inventory management. An IT solution also allows for the creation and automation of detailed floor plan layouts-including fixture capacity, location, and merchandisable and non-merchandisable space.
2. (a) Distinguish between strategic and resultant drivers.
ANS: Strategic Drivers: These are very important drivers of a given retail business or showroom. As these needs to be well defined at the start of the business. The better defined and focused theme are the more effective they are in driving the desired traffic to the store. As each of these drivers is well explained in other sections of the course, hence, they are not defined over here.
Resultant drivers: We saw that walk-ins is the result of the strategic drivers like Brand Positioning, Store Positioning and Target Consumers which help in generating traffic to the store because of the target customers finding the brand meeting / accepting their requirement and fulfilling their needs both from the consumption point of view as well as aesthetic point, thus Walk-in is the Resultant Driver.
(b) Evaluate the nature of decision making within retail organization pertaining to retail operations practices.
ANS: No matter how similar consumers might appear to be, they are rarely the same. They do not move and act in uniform blocks. Instead, their needs, motivations, assumptions, beliefs, and biases are unique, informed by individual experiences and perspective. Thus, it's critical that marketers understand how to assess populations, identifying segments to target.
There are a number of different models that describe the process or steps consumers engage in as they prepare to make a purchase, often depicted as a sales funnel. In this section, we'll evaluate three: AIDA, path-to-purchase, and the consumer buying process.
AIDA describes the buying process largely from the marketer's perspective.
It stands for:
Attention
Interest
Desire
Action
That is, an advertiser grabs a consumer's attention, making them aware of the product or service that can satisfy that individual's identifiable need. Then, through the description of features & benefits, the consumer's interest is developed to the point of desire. At this point, the consumer becomes the actor and takes action to purchase the item.
The AIDA model is enduring, having been developed in the early nineteenth century. But, it certainly has limitations. Most notably, it regards the consumer as passive throughout the majority of the process. By comparison, marketers are the actors, sending messages to stimulate consumer demand.
In reality, consumers are driven by their individual wants and needs, not simply responding to the messages of advertisers. Advertisements can make consumers aware of offers or explain how products/ services satisfy an unmet need. But, they cannot create demand where a consumer want doesn't exist. More explicitly, no marketer, regardless of how insightful they are, can create an ad so compelling that it can force people to buy something they do not need.
Further, the AIDA model shows that the consumer experience ends at action, implying that on-going engagement either does not occur or is of minimal value for the consumer or firm. Of course, we understand this isn't true, given the value of service contracts, repeat purchases, and enduring customer loyalty. Thus, any model that describes the buying process should account for post-purchase activity.
Another model, the path-to-purchase model, refines the AIDA model to account for the influence of technology, specifically the rise of mobile access and e-commerce. The path-to-purchase model has come into use within the past decade,
identifying four stages:
Awareness
Consideration
Conversion
Evaluation
3. (a) What are the advantages and disadvantages of having a centralized warehouse?
Ans: Pros: Lower operation costs- By choosing to centralize warehousing and distribution, the need to pay rent or utility expenditures for different warehouses is reduced. In addition to paying more for rent, the need to spend more on new equipment and technologies for each warehouse is also eliminated. With these reductions in costs, retailers can now set pricing strategies with more ease due to the more stable nature of its inventory management. This will allow for higher margins or lower prices for customers.
Reduced Inbound Costs- A centralized warehouse would also decrease the cost of shipping and transportation because of the ability to bank larger inventories. The need to dispatch trucks to replenish the inventory will be less than a decentralized warehouse system. This in turn would protect retailers from having the constant concern of high chipping fees.
Better customer service- By choosing to limit the number of warehouses or distributors, a company can now focus its resources on fewer facilities. This means the facility will have the highly skilled workers, the latest technology and the best equipment. If all of these are in one facility, the highest quality of service could then be offered to customers.
Cons: Potential high cost of rush delivery- Everyone makes mistakes, even inventory control managers. However, those mistakes could potentially have a grave impact on a centralized warehouse system. If there is a miscalculation in how much product is needed or how long it should last, then the retailer would have to pay additional fees for rush deliveries to compensate for that mistake. If these mistake happen regularly, then the money saved from opting to use a centralized warehouse will balance out.
Lack of Preparation for Emergencies- Natural catastrophes are often unforeseen, and it can cripple a retailer. If most of the inventory is in one centralized warehouse, a retailer could lose millions of dollars if a fire were to break out and decimate the entire stock. In 2007 for instance, a fire at an Illinois warehouse, owned by the Kahle News Company, destroyed the entire inventory belonging to Jackson, Wyomingbased Alpinist, which was a quarterly high-end magazine dedicated to alpine style mountain climbing. The magazine's inventory included back issues and merchandise including hats, shirts, water bottles, stickers and coffee mugs. It was reported that the Magazine lost an estimated $4 Million worth of merchandise at a peak time. If the company had not utilized a centralized warehouse system, it could have saved millions of dollars.
Problems with Local Managers- By electing not to distribute warehouses, problems may arise with local managers. In general, local managers have a strong bias for high inventories being visually present. They would feel more secure because natural catastrophes or inventory mismanagement would not impact them as much.
(b) "In store, design is proportionately related to profitability". Discuss.
Ans: When you regard as some basic facts there are some things which require to be memorized in the design of the retail outlet. Most of the customers will have two hands and when they are standing usually, these hands will be situated just about 36 inches off the floor. This means that if you merchandise products below that height, your customers are going to have to bend over. If they bend over, is there sufficient room for people to pass without knocking them? The strategy rather a pedagogy behind the store design talks up to some extent about these issues If the customer is walking through the complete store and considering a wide variety of merchandise, a substantial amount of time is required. In some stores, buyers have been timed in spending four or five as much time as non-buyers. If you can acquire your shoppers to shop longer, then your average business will also increase, on the other hand, you have to be acquainted with how long your customers spend shopping in your store for you can design strategies to augment it. The science of shopping shows quite obviously that store design and profitability are linked very intimately. If your store has a good design, you will be more into money making.
4. (a) How do you discriminate between conventional and contemporary retail formats.
Ans:
| CONVENTIONAL RETAILERS | CONTEMPORARY FOOD RETAILER |
|---|---|
| Conventional supermarket- A format offering a full line of groceries | Supercenters- A large food-drug combination store and mass merchandiser under a single roof. Supercenters offer a wide variety of food. |
| Superstore- A larger version of the conventional supermarket with at least 40 | Wholesale club- A membership retail/wholesale hybrid with a limited variety of products presented in a warehouse-type enviornment. These 120. |
| Combination food/drug store- A combination of a superstore and drug store. | Mass merchandiser- A store that primarily sells household items. |
| Warehouse store- A low-margin grocery store offering reduced variety Super warehouse- A high-volume. |
Dollar store- A limited assortment store that sells a variety of general merchandise . |
| Limited-assortment foodstore- A low-priced grocery store that provides very limited services and carries fewer than 2 | |
| Specialty/Gourment retailers- Store that specialize in a specific food category. |
(b) Discuss the advantages of using demographic and psychographic segmentation.
ans: Advantages ofdemographic segmentation
Build long-lasting customer relationships
Reaching your customers on a more human level with demographic-based personalized marketing creates deeper customer loyalty.
Improve your products and services
Having loyal customer relationships encourages you to look at your products and services in a new way. When you have a deeper understanding of your target audience, you can put yourself in their shoes to better serve them.
Optimize your marketing strategies
Demographic segmentation allows you to get more specific with your marketing strategies. It helps clarify your vision, have more direction with future advertising plans, and optimize your resources, time, and budget.
Advantages of psycho graphic segmentation 1. Creates better understanding of the consumers
Psychographic segmentation helps to build a more holistic picture of consumers when used in conjunction with other forms of market segmentation.
2. Reveals hidden attitudes
It uncovers unseen motivations and attitudes behind buyer decisions.
3. Allows for more targeted messaging
Creating psychographic segments enables clearer, more targeted messaging as "fuller" insights into consumers' lives are uncovered.
To test consumer attitudes towards claims based on different segments, Conjoint.ly's Claims Test reporting can be displayed segment by segment.
4. Creates opportunity for product repositioning
Consumer profiles created through psychographic data can allow businesses to reposition the same product to various audiences.
5. (a) Explain the purpose and benefits of standard operating procedures.
Ans: Standard operating procedures (SOPs) are step-by-step instructions that act as guidelines for employee work processes. Whether written up in numbered steps or formatted as flow charts, effective SOPs are complete, clearly written, and based on input from the workers who do the job. When employees follow the SOP for a particular job, they produce a product that is consistent and predictable.
If creativity js key to your business functions, SOPs may not work for you. Strict adherence to standardized rules can restrict creative flow. However, if your goal is to produce the same product over the long term and increase your business productivity, the implementation of SOPs can have many benefits.
Readiness for Future Growth
If your long-term goals include expanding your business to branch offices, ready-made SOPs make your proven work processes portable. New employees at new locations can uphold your reputation by using the SOPs to replicate the products and services provided at your original place of business.
Standard Operating Procedures Simplify Perfonnance Management
Managers can use the SOP framework to develop target ranges and make assessments of individual performance. Employees who work in compliance with SOPs know exactly what is expected of them, and they plan their work schedules to meet their goals with efficiency.
When all employees follow the same processes, it's an easy matter to measure them against the same standards. Performance can be fairly appraised. This is especially important in cases where highperforming employees are rewarded, and low-performing employees are retrained or placed on probation.
Control the Quality and Consistency of Your Product
When your business generates a product that you're proud of, you want to maintain a high standard of quality. Standardized procedures guide workers and reduce the possibility of missed steps or other errors that impact the quality of the completed product. Meticulously followed SOPs ensure that your product or service is created in the same way from start to finish. Providing a blueprint for the line of production creates consistency and protects the integrity of your product.
Protect Yourself from Knowledge Loss
If the details of your business processes are stored in a key employee's head and not in a procedures manual, the loss of the employee can be disastrous. Documentation of job processes survives employee attrition due to retirement and resignation, and allow your company to carry on as usual. It's hard to replace experienced, skilled workers, but comprehensive well-written SOPs ensure that your valuable business processes stay with your business.
Save on Training Costs
Depending on the complexity of the task and the experience of employees, SOPs may not completely substitute for training. Documented procedures are a valuable component of the new-hire toolkit, and can reduce training time. They act as reference guides and allow new employees to work independently without excessive reliance on supervisors.
(b) What are the ways of preventing thefts and frauds?
ANS: 1. Know your employees. Be alert to key indicators of potential theft such as:
Sudden, apparent devotion to work and working late.
Lifestyles well above salary levels.
Strong objections to procedural changes related to financial, inventory or supply matters.
Drugs and alcohol abuse.
Moonlighting with materials available at the business.
Evidence of compulsive gambling, persistent borrowing or bad check writing.
2. Supervise employees closely. Not surprisingly, studies show that when supervision is lax, theft and fraud rates go up. This doesn't mean looking over their shoulder every minute. But it does mean checking what they do. It's also wise to have more than one person looking out for your money.
3. Use purchase orders. The payment, receipt and preparation of purchase orders should be separate functions and handled by different individuals. Use serially pre-numbered purchase orders and always verify incoming orders.
4. Control cash receipts. Use serially pre-numbered sales slips and conduct weekly audits. Balancing of sales slips and register receipts should be done by someone other than the sales clerk.
5. Use informal audits. Make unannounced internal audits and have a yearly audit performed by an outside firm.
6. Install computer security measures. Understand your computer systems and software, and how they might be used to divert money or inventory. Restrict access to computer tenninals and records. Periodically change entry codes and check regularly to ensure that security procedures are in effect.
7. Track your business checks. Always use pre-numbered checks, with amounts and payees typed or written in permanent ink. Producing all checks from financial software such as QuickBooks is highly recommended. Lock blank checks and a signature machine, if you have one, in a secure place.
8. Manage inventory and use security systems. Separate receiving, store keeping and shipping functions. Physical inventories should be done annually by individuals who are not responsible for inventory records. Some businesses also install security devices to monitor merchandise or inventory.
9. Beware of accounts receivable. Make mail-opening and posting separate functions. Record checks and cash in appropriate registers and stamp checks for deposit only.
10. Provide a way for employees to report theft or fraud by co-workers. This needs to be done carefully to avoid signaling you don't trust employees. But it can be highly effective.
6. (a) Which are the major sources of goods shrinkage in a store? Explain them briefly.
Ans: Administrative errors such as shipping errors, warehouse discrepancies, and misplaced goods Cashier or price-check errors in the customer's favour
Damage in transit or in the store
Paperwork errors
Perishable goods not sold within their shelf life
Vendor fraud
Recalled items
Returns and exchanges especially if the item returned or exchanged is not resellable
Shrinkage in retail that is caused by employee actions typically occurs at the point of sale (POS) terminal. There are different ways to manipulate a POS system, such as a cashier giving customers unauthorized discounts, creating fraudulent returns, or simply removing cash from the register. These transactions that differ from normal transactions are called POS exceptions. Traditionally, POS fraud is fought by surveillance staff monitoring a POS terminal or by manually searching in surveillance video recordings. Modern POS systems can have automatic alerts when specific exceptions are detected. Also exception reports and listings based on employees, refunds, price overrides, terminals etc. are possible to detect with modem systems. Modem networked based POS systems can also include network video to POS exception listings, giving quick access to detailed information of what has happened.
(b) "Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives". Explain.
Ans: Promotion is a form of corporate communication that uses various methods to reach a targeted audience with a certain message in order to achieve specific organizational objectives. Nearly all organizations, whether for-profit or not-for-profit, in all types of industries, must engage in some form of promotion. Such efforts may range from multinational firms spending large sums on securing high-profile celebrities to serve as corporate spokespersons to the owner of a one-person enterprise passing out business cards at a local businessperson's meeting. In addition to coordinating general promotion decisions with other business areas, individual promotions must also work together. Under the concept of Integrated Marketing Communication marketers attempt to develop a unified promotional strategy involving the coordination of many different types of promotional techniques. The key idea for the marketer who employs several promotional options (we'll discuss potential options later in this tutorial) to reach objectives for the product is to employ a consistent message across all options. For instance, salespeople will discuss the same benefits of a product as mentioned in television advertisements. In this way no matter how customers are exposed to a marketer's promotional efforts they all receive the same information.
7. (a) What is the importance of Product-Customer Matrix?
Ans: This is a matrix that helps in determining the line of action the business needs to take when it has to consider expansion of the current business. It provides different options the business has for expanding its existing line of business and thus, it acts as a basic guiding business model. Let us try to use this model in dealing with transaction factors for helping in increasing the Transaction Size.
(b) What is the significance of depreciation on assets?
Ans: D The process helps companies accurately state incurred expense from using the asset and compare that to the revenue that asset brings in. Lack of depreciation can lead to over or under stating total asset expenses, which can lead to misleading financial information.
- It also helps businesses reports the correct net book value of a given asset. Most businesses report the original purchase cost of the asset. But since assets experience wear and tear from daily use, the actual value declines over time. Companies can find an asset's net book value by subtracting the asset's overall depreciation expense from the cost when the asset was purchased.
- Depreciation allows for companies to recover the cost of an asset when it was purchased. The process allows for companies to cover the total cost of an asset over it's lifespan instead of immediately recovering the purchase cost. This allows companies to replace future assets using the appropriate amount of revenue.
- There are tax rules that make depreciation tax deductible. A greater depreciation expense lowers taxable income and increases tax savings.
8. Which are the important segmentation methods? Explain each one of them briefly with examples?
Ans: Demographic Segmentation:- Demographic characteristics are measurable statistics about any given population. These variables are used by the retailer to segment the market and select a target segment for business.
1) Age
One of the first variable of demographic segmentation is age. This 1s because consumer needs and wants change with their age
2) Life cycle stage of Demographic Segmentation
Closely connected to age, the life cycle stage of a consumer group defines what will be the need of that particular customer.
3) Gender
Men are from mars and women are from Venus. So naturally their preferences differ. Where men inight want the latest in technology, women inight desire the latest in Fashion (point is debatable nowadays)
4) Income
BMW, Mercedes, Ferrari, these cars have customers who are much more quality and luxury conscious then others.
5) Religion, Race, Nationality
Ever seen the advertising of a mass brand like Coca cola or Pepsi. Although these two brands have their own global advertising, but they also have specific advertising in each country which they enter.
Psychographic segmentation
Psychographic segmentation is defined as a market segmentation technique where groups are formed according to psychological traits that influence consumption habits drawn from people's lifestyle and preferences. It is mainly conducted on the basis of "how" people think and "what" do they aspire their life to be.
Any organization which intends to understand their consumers' thought process can divide their target market according to this segmentation method. Psychographic market segmentation is one of the most effective segmentation methods other than demographic segmentation, geographic segmentation, and behavioral segmentation.
Conducting psychographic market segmentation is a critical task for business development and thus, needs special attention. Every individual has varied demands and opinions. Brands must focus not only on dividing the market based on psychographics but also to connect with their target market on the basis of psychographics.
Geographic Segmentation
Geographic information deals with the physical location of the customer. Various retailers divide the retail market into separate geographic areas. The areas may consist of a state, a region, or a few small blocks in a neighborhood. The principle seeing that buyers in same geographic area behave similarly, geographic segmentation is use to decide the market mix. Customers typically shop in outlets located close to their homes or offices, at the same time individual retailer usually focus on the customer segment reasonably close to the outlet. For example, a maker of a very high end luxury car will like to have his showroom in a posh locality of the city where most of his customers (rich people) are located.
9. What are the different ways in which to optimization of space availability is achieved?
Ans: There's no denying it: running a large-scale warehouse can be a costly business. From your staff to the equipment, there's a lot to pay for, which is why it's critical for warehouses to run as efficiently as possible.
One of the most important responsibilities of warehouse managers is the optimization of the space to both increase the quantity of stock that can be stored and to ensure it can be located and moved safely and effectively. This requires innovative thinking, logistical knowledge and new technologies. Following are four ways to maximize your available warehouse space.
l. Optimize Aisle Width
Floor space in a warehouse is almost always defined by the aisles that house the stock. If your aisles aren't properly optimized, this could be costly to your operation. It's simple: removing wasted space from the equation allows you to increase the number of aisles and therefore the number of pallet racks, which means you can house more overall stock. Depending on the size of the racks and products you stock, reducing the aisle width from 12 to 6 feet could increase your storage space by up to 50 percent.
When determining the optimum aisle width, there are a few factors to consider. The forklifts you use can be the biggest hurdles to narrower aisles, as larger models may not fit comfortably into the reduced space or have enough room to carry out processes properly. You must also think about any floor staff who might be in the aisles. It's for this reason that the optimum aisle width will be different for each operation. Be sure to accurately measure the dimensions in your warehouse and think through the different aspects that need to fit into each aisle.
2. Consider Cross-docking
Cross-docking allows a warehouse tominimize its use of storage by receiving, sorting and scanning inbound stock in a cross-docking terminal, and then loading this stock onto outbound trucks and vehicles without storing it in between. This means that stock won't be stored unnecessarily between the legs of its journey and can instead be quickly sorted and put back into the distribution chain. While this logistical technique can be tricky to manage, it can save a lot of space if you are willing to invest in the necessary resources.
3. Make Full Use of Upward Potential
If floor space is tight, it's probably time to explore your upward options. Modem shelving systems offer vertical storage that can drastically improve your overall capacity, whether you extend up by 1 foot or 10 feet. Before you add more tiers, always consider how stock at higher levels will be transported. Ensuring you have the capability of delivering, locating and removing stock from all rack tiers before installing them will eliminate the risk of a last-minute surprise when you realize your forklifts don't reach that elevation.
4. Organize Offsite or Supplier Storage
Inventory management is critical, and if you're overstocking items that haven't been purchased, it can take up space that could be used for goods due to be shipped sooner. Instead, make use of offsite storage and reserve the primary warehouse for fulfilling orders already made. This will enable you to streamline your operation by separating your total stock into more manageable and locatable groups. Alternatively, many suppliers will offer warehouse space for overstock, especially when it comes to packaging materials. More often than not, they will be happy to store them at their site for you and deliver them in weekly shipments, which means you can avoid excess stock and materials sitting unused for extended periods. In addition, you may be able to increase or decrease your incoming orders from them, which gives you greater flexibility on a week-by-week basis.
Remember, no two warehouses are the same. With different requirements for different types of stock, logistical considerations for deliveries and a variety of shapes and sizes to consider, optimizing your warehouse space is no easy task, but it is an important one. Moving to a new space or purchasing additional storage can be expensive, which is why it's crucial to make the most of what you have available. Put these ideas into action today to get started.
