Case Study: Optimizing the Layout and Processes of a Storeroom

Background and Challenges

A leading steel manufacturer in the US was experiencing space constraints within their facility. The storeroom, which supplied the operation with PPE, maintenance parts, and other supplies, had lost a lot of space due to production growth. This resulted in much of their inventory being held outside of the storeroom area, leading to inventory management issues.

Besides the main storeroom, there were 5 other primary locations scattered throughout the facility where the storeroom personnel managed inventory. While it made sense for the storeroom to hold inventory in some of these other storage areas, the majority were composed of product overflow that could not fit in the existing storeroom. Between the storeroom and these other areas, there were several generic inventory locations that dramatically increased the time spent searching for product during picking and put away. The lack of access control in these locations frequently led to inventory discrepancies. Because of this, the operation was heavily reliant on time consuming processes like manual inventory counts and constant inventory adjustments to balance the inventory reflected in the system.

Establish’s goal was to consolidate as much inventory as possible into the storeroom space, increase picking and put away efficiency, and improve inventory control.

The Evaluation and Analysis

Establish spent two days on-site to identify the challenges in the operational processes as well as understand the storage criteria for the new storeroom’s design. A lot of time was also spent analyzing the inventory and transactional data from the storeroom. In addition to the complications from having multiple storage areas, Establish observed the following opportunities:

• Operators wasted a lot of time traveling and looking for items due to spread out inventory and generic inventory locations with multiple SKUs per location.

• Most of the small parts were stored on steel shelves that did not utilize the facility’s height.

• Large equipment and pallets were scattered across the floor making it difficult to maneuver.

• There was some vendor managed inventory but several of the top items issued were PPE or drinks, which could be moved to vendor managed inventory or to vending machines.

• Some items were heavy, resulting in ergonomic challenges.

• Some items (e.g. batteries) required temperature control during certain months of the year.

• 76% of items were considered D items as they were not used in over 12 months inventory and occupied prime storage space. 86% of these were critical maintenance parts that were required for emergencies.

• All transactions had to be put into the system manually and manual inventory adjustments were made every single day due to discrepancies. Some days had up to 100 adjustments made.

The Solution

The first step was to determine what items could be removed from the storeroom so that the space could be prioritized for the important items. First, all non-critical D items were removed from inventory as they were costing more money to store at the facility. The remaining D items that were deemed critical parts were then moved to a racking area outside of the storeroom. This allowed the storeroom to be prioritized for parts that were needed on a higher frequency. In addition, all PPE was to be shifted to vendor managed inventory that could be stored in vending machines. These vending machines could then be located outside of the storeroom since they are access controlled.

The next step was to optimize the storeroom space for the remaining items. It was determined that by implementing a vertical lift module (VLM) in the storeroom, almost all the shelving storage could be consolidated into a fraction of the footprint. The vertical lift module (VLM) would also provide more access control, generate more efficient picking and put away, and automatically track all transactions systematically. The VLM could also be temperature controlled so that all items could be handled.

The additional space in the storeroom allowed for more racking and room for staging inbound pallets. A WAV picker was also recommended to allow for more ergonomic picking out of the higher levels or racking.

All of these changes resulted a 56% increase to the small parts storage capacity and an 89% increase to the pallet storage capacity. This resulted in almost all inventory being access controlled and the storeroom material handling processes became much more efficient. In addition, production areas gained more space since storeroom storage was mostly consolidated within the storeroom.