Intralogistics & warehouse optimization: Calculating average storage duration

Published on: July 2, 2021 / Updated on: September 14, 2021 – Author: Konrad Wolfenstein

Calculate average storage duration – Image: Xpert.Digital – Halfpoint|Shutterstock.com

The turnover time allows us to track how long goods typically remain in the warehouse. Average storage time is a key performance indicator (KPI) that helps us identify fast-moving items and thus better position them within the warehouse. Prioritizing fast-moving and slow-moving items helps us optimize inventory management.

Why optimize the warehouse?

Today's digitized workplace, thanks to innovative control software and automated, networked systems, offers ample potential for continuous optimization of warehouse operations. After all, what good is the best and most modern warehouse if the processes behind it don't function properly?

Suitable for:

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Another way to optimize warehouse operations is to establish and expand a buffer stock. Buffer stocks are designed to ensure supply in case of potential shortages, such as during the COVID-19 pandemic.

The advantages of efficient warehouse management, especially in e-commerce, are therefore as follows:

• Increased productivity in the warehouse leads to better competitiveness.
• Lower costs due to reduced staffing needs, higher utilization of existing space, and resource-efficient operation of the systems.
• High customer satisfaction through fast and precise delivery and shipping
• Optimal space utilization due to high-density storage
• Overview & security thanks to modern software control
• Scalability and flexibility through modularly expandable storage systems

By calculating the average storage duration, we can continually review our storage policy to see if there is still potential for improvement.

The known formulas

Average storage period = 360 days * Average inventory / Annual consumption

or

Average storage period = 360 days / Inventory turnover rate

They should help us to continuously improve (Kaizen).

KAIZEN for warehouse optimization

Kaizen comes from Japanese and means “change, change for the better, change for the better”.

Kaizen – Image: Xpert.Digital

Kaizen has its origins in the automotive industry. More specifically, it comes from Toyota. Japan was in economic decline after World War II. The overall economic problems also weighed on Toyota. The aim was to use a recurring method to work on the continuous improvement not only of the products, but also of the processes, structures and people. You invest in machines, they are written off and ultimately scrapped. Something new is coming. Processes and structures remain. Employees also stay. It therefore makes sense to continually improve the skills of workers and employees and to use their knowledge, experience and work performance.

Kaizen is also becoming increasingly popular in companies and organizations from other industries. For example, Kaizen is used in logistics, especially in intralogistics.

Kaizen pursues several goals. The main goal is higher customer satisfaction, since customer acquisition is more expensive than customer retention. To ensure customer satisfaction, four factors are in the foreground:

• Cost reduction
• quality assurance
• Speed ​​(time efficiency)
• flexibility

The proponents of the Kaizen method assume that the current situation can be improved and that one must continue to work on it in order to improve it.

Furthermore, changes (“change”) in the area of ​​employees are desired. Their commitment should be guaranteed through ongoing training, and internal hierarchies should be adjusted so that every employee can participate.

The Kaizen philosophy advocates a strong involvement of all areas of a company in a constant effort to create a better working environment for everyone involved through process improvements, which in turn should guarantee the best quality of the products. It is therefore important to carry continuous improvement into all areas.

Calculation of the average storage period

By calculating the average storage duration, we can:

• increase efficiency
• reduce storage times
• Keep capital commitment low

Use our Xpert.Plus service for your intralogistics and warehouse optimization

Xpert.Plus is a project from Xpert.Digital. We have many years of experience in supporting and advising on storage solutions and in logistics optimization, which we bundle in a large network Xpert.Plus

Konrad Wolfenstein

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