The fact that Michael usually doesn’t shower over most weekends isn’t really important. The fact that the backseat of Michael’s ’01 Camry still has left over food since ’01 isn’t important. The fact that Michael hasn’t bought a new shirt for himself for over five years isn’t important either. People are one way at home, and another way at work. And this penny pincher’s no different. how to organize small warehouse
It’s because these things aren’t so important to Mike. He likes how he smells. He’s not bothered by the state of his car. He doesn’t need new shirts. This is ironic. Ironic because if you visited Michael’s place of business, where he distributes parts used for three major lines of farm equipment, you’d notice something really unusual. No, his own office is a complete pigsty. But it’s his warehouse. That place is neat as a pin. Organized, efficient and clean.
Michael may not be a big believer in personal hygiene. But he’s a major believer in warehouse efficiency. “I don’t care what we’re selling, the more organized our warehouse is, the more money we’ll make,” he says to his employees.
“Hey. Mike,” one employee once jokingly said. “How about plowing some of those profits into a new wardrobe for yourself?” Poor guy’s been out of work since that comment.
A key to Michael’s warehouse management: his vendors. “I put a lot of pressure on them to help me stay organized,” he said.
Mike’s business seems simple, but it’s not. He carries thousands of parts for three main manufacturers of popular farm equipment. When someone needs a spare or replacement item they call him and he ships it out. His business survives on availability and the ability to get stuff out the door quickly. His major customers have repeat orders and special requests. His warehouse has 10 employees, and they’re constantly running around. Lost time finding, packing and shipping stuff means lost money. Many penny pinchers who carry inventory suffer the same challenges.
As does Mike. But he suffers them differently. He suffers them along with his suppliers. In tough times, suppliers will go to extreme lengths to make their good customers, like Mike, happy. Even if he wears the same shirt to work every day.
For example, Mike’s big on scheduling. He keeps a window open for deliveries and works with his suppliers, and their carriers, to only make deliveries during that time. This way his people aren’t being interrupted throughout the day as stuff arrives at the warehouse. He’s had to be tough about this, even refusing to accept deliveries that arrived outside of an agreed time. But now he’s got a system down. And his suppliers, having learned the system, can better plan their shipments.
You’d think because Michael’s office is such a mess he wouldn’t like to have people around. But it’s the opposite.
“I love having my suppliers visit,” he said. In fact, he has them come by regularly, at least every quarter. There are ups and downs to this approach. The downside to this is that his suppliers get to really look over the products that he has – both from them and their competitors. Some people might justifiably feel uncomfortable having outsiders take such a close look at their inventory.
But to Mike, there’s a bigger upside. His suppliers advise him better ways to store their products. They give him hints of products to come. And they buy stuff back. Frequently, Mike winds up doing deals with them to buy back slow moving products. Usually this is at a deep discount. But the loss is still less than carrying dead stock. Michael’s relationship with his suppliers has improved because of this.
Mike’s big into bar coding. He makes his suppliers big into it too. His rule is that every item that comes in the door has to be pre-bar coded. That saves him time. Each item is scanned into his inventory system. He’s talking more and more about implementing an RFID (Radio Frequency Identification) system, too – and this will also involve a coordinated effort with his vendors. Mike’s not the kind of guy who will do stuff like this alone.
Mike’s in the business of inventory. But that doesn’t mean he has to store everything himself. He’s big into maximizing every square inch of his warehouse. He loathes renting more space. So he turns back to his suppliers and pushes them to keep as much inventory as they can. He’s cut deals to pay them a warehousing charge if they store parts on his behalf – and then he can take the charge as a credit on future purchases if made within an agreed timeline. This works out for both parties – the suppliers get a confirmed sale and Mike gets them to take on the warehousing.
And when the items do come in the door, Mike’s worked out how they’re palletized too. Instead of just receiving a truckload of stuff, he’s arranged in advance how the items are to be organized. This way his warehouse guys don’t have to waste time re-sorting the products. They can pull pallets off the truck and take them directly to the right place in his warehouse. Some of the pallets may have already been designated for specific customers and Mike has worked out those technicalities in advance with his suppliers too.