Storage capacity management in a dynamic environment

Abstract

Buyers for a large international catalogue retailer visit European and Asian wholesale suppliers to order goods for the coming retail season. A single large warehouse stores all the goods purchased. The focus of this paper is on the interaction between the buyers' ordering system and warehouse operations. The paper presents a solution to the problem of integrating warehouse capacity management and buying policies. A capacity planning procedure defines the warehouse space allocated to each buyer over the approaching season. In addition, a second capacity planning exercise schedules actual and forecast deliveries for warehouse processing. Also, a capacity reserve to accommodate unexpected supplier variances is defined. The scheduling of warehouse operations allows higher warehouse capacity utilisation, and more efficient warehouse labour management. Implementation of the solution by the catalogue retailer resulted in a 10% increase in the volume of ordered goods and a correspondingly significant improvement in first time fulfilments.