Effective Warehouse Management Strategy

Managing a warehouse requires addressing some principles that we often see ignored or only loosely followed. Managed properly, a warehouse can be a major contributor to effective asset management and mine site operation. In my personal experience, coming from a precision manufacturing organization, I was shocked by some warehouse practices I saw when entering the mining industry. That was ten years ago. Today, I’m still amazed by the lack of maturity for the care and storage of assets critical to the effective operation of a mine.

My passion for warehouse management excellence may seem extreme, but it results from many cold days I spent digging through the snow for lost components. The following are tactics that I believe are important to employ when managing a warehouse so that your warehouse can become a place of organized prosperity instead of an area of confusion, frustration, and profit loss.

It is crucial to have an effective warehouse management strategy. Without a properly functioning system for warehouse management, there will be lost inventory, wasted time and safety hazards created. When developing a warehouse strategy, I always consider the following: 

• The long-range business plan should be understood, including site expansion or contraction.
• The warehouse strategy should be aligned with the inventory management strategy.
• There needs to be a comprehensive understanding of the supply chain for key components and commodities in building this strategy.

At the EPCM stage, the warehouse space is typically the last item accounted for. In these early stages, leadership doesn’t always see the direct impact of adequate warehouse space. When budget restriction requires cost reductions, warehouse space is often the first thing to be cut – resist!! Warehouse space is valuable and only becomes more valuable as the mine site matures and legacy inventory begins to build. 

As a supply chain manager, if you’re lucky enough to have adequate space and have the ability to manage the space properly,  protect your space!

Choosing an appropriate ERP system can be difficult; the selection of ERP systems is usually made based on the financial capabilities of the ERP systems, rather than their appropriateness for warehouse management. Ensure that basic warehouse functionality is available in your ERP selections, including cycle counting, multiple storage types and movement reports. This functionality will help you track and manage inventory and materials.

A mentor CFO told me many years ago that “Inventory is cash.” If the inventory is cash, then it follows that “the warehouse is the bank.” You can bet that banks want to know where all their cash is, all the time. They have robust procedures and policies for managing their money and their staff are well educated and trained. Build the same governance and capability in your warehouse.

If you don’t have proper procedures for material issues, put away, and receiving, your warehouse integrity will be at risk. You will be losing track of your money.

The following issues are clear indicators that warehouse governance is lacking:

• Operations and maintenance will physically check “on-hand” before beginning a work order because they can’t trust what the warehouse system says.
• Squirrel stores, undocumented ad-hoc storage areas only a few people know about, are stashed around the site.
• First count accuracy is below 80%

A mine site’s supply chain is always evolving. Your warehouse strategies need to evolve with it. Changes in your supplier’s logistics network impact how and where you store commodities and components. Warehouse movement reporting helps you adjust quickly and bring materials and components closer to point of use. This accurate reporting assists Asset Management and other execution departments to become more efficient and effective.

Outliers Mining Solutions has partnered with Stephen Ross and the SC4G team to provide integrated Supply Chain and Asset Management Solutions. This partnership provides resources to create a thorough understanding of the inventory at hand and how it will be used. In turn, the mine site can operate smoothly, increasing profit margins, safety, value, and improve time management. Learn more about our warehouse management services here.