Advice for the apparel industry: Dealing with excess inbound inventory

What’s classed as ‘essential’ now, amidst the COVID-19 lockdown, is very subjective. Just a few weeks ago, high fashion clothing would have fallen into this category for many people but today, with consumers in just about every country in the world required to stay at home, that’s all changed. Who needs make up, posh handbags and heels now? Ever quick to spot a commercial opportunity, even Kylie Jenner is posting about comfy jumpsuits as the latest in social isolation style – ideal for Zoom calls with the family and lounging at home.

Retailers don’t know what to do with all their spring summer 2020 stocks, which are now arriving by the container load. Some were hoping that the disruption in China would mean their original stock orders wouldn’t actually materialise – but they are. According to UKWA, garment warehouses in particular are literally bursting at the seams with inbound stock because demand has flatlined. Even among retailers with a strong e-commerce operation, discounting is rife as people have had to re-consider how they spend their discretionary income.

Ports across the UK are now doing a brisk trade in container storage for unwanted inbound stock, with many seeking additional locations for customers, who are paying around £120 a day in fees for the service. Experts are estimating the value of stocks, piling up unsold in warehouses during the Coronavirus lockdown, to be as much as £10bn.

Due to safety concerns, some retailers have decided to shut up altogether, Next being the most high profile example and the company has just launched a high profile sale and leaseback bid to generate the revenues to survive. Others might not have that choice and trying to find ways to cope with a never ending supply of new stock that’s staying put.  Marks & Spencer intends to reduce its supply pipeline by over £100 million, as it holds over stock due to the prolonged downturn in demand and focus on core clothing inventory.

What does this mean for warehouse operations? How do you manage a never-ending supply of stock that just isn’t selling at the usual rates? As Peter Ward, the Chief Executive of UKWA commented, “Inbound supply chains cannot simply be turned off, orders placed and dispatched before the lock down will continue towards their destinations, arriving at ports, requiring receipt, handling, onward distribution and storage.”

For warehouses using a warehouse management system (WMS), there are some key features that will enable a site to store 30% more inventory than usual, whilst still being able to operate efficiently. Here’s how a WMS (warehouse management system) can help improve efficiency when warehouses are holding excess inventory.

 

Review product categories and assign priority lines

Many retailers have conceded that a lot of stock is simply going to have to be discounted in clearance sales, because consumers won’t want it. But in almost every collection, there will be some ‘evergreen’ items, core lines that have a more enduring, year-round appeal – white t-shirts, underwear, sportswear and denim for instance. The warehouse needs to be able to access these items efficiently and re-organise location layouts to prioritise this inventory, perhaps leaving less sellable items in long term storage or re-purposing goods where possible. A WMS support this by automatically keeping an ongoing inventory of evergreen stocks and advising on how best to manage them.

 

Putaway management and location assignments

An effective put-away process helps to maximise space utilisation and minimise the physical movement of products. A WMS automates putaways, by identifying the best place to store items based on available spaces, monitoring how frequently the items will be picked and where they should be placed in the warehouse and whether some items need special storage considerations. The putaway options available within a WMS can be flexible and suggested on an adhoc basis, or structured around a set of rules, for instance alerting operators to separate evergreen and low priority lines.

 

Pick route optimisation and planning

As travelling can take up a large part of the time spent on warehouse picking processes, appropriate sequencing of picking tasks within an order is crucial to achieving high efficiency, especially when the warehouse is holding excess stock and where social distancing rules are in place. After evaluating the day’s order pool and assigning tasks, a WMS automatically evaluates the routes available and will direct operatives to fulfil pick instructions using the most efficient travel path for their immediate location and ensuring everyone is kept a safe distance away.

 

Shelf life management and stock rotation

Using a warehouse management system to optimise stock rotation will ensure that items with a limited shelf life are carefully managed to avoid any wastage. This extends beyond the obvious perishable raw materials to also include colour ranges and packaging items, which can in turn also impair finished product quality if they are past their recommended use by date. A WMS makes this easy by automatically reminding operatives of which lots to pick first, based on first in first out principles.

 

Perpetual inventory (PI) stock counting

By introducing a daily PI or cyclical counting process supported by a WMS, warehouse managers can eliminate routine stock counts to keep track of excess inventory.  It is the most effective way to maintain high inventory accuracy, minimise shrinkage and ensures business as usual whilst counting is in progress. Materials movements can be accurately recorded with an electronic audit trail and discrepancies are immediately apparent.

 

Traceability management

If product quality issues are raised, it is vital that all affected products can be quickly and accurately identified to minimise potential losses – both financially and to brand reputation. Using a WMS, it’s possible to create reports detailing lot/batch/expiry date information which confirms to compliance requirements and also allows for detailed trend analysis. At any point in time, a WMS will provide a full trail of what has happened to every element of stock during its entire lifecycle, providing extensive traceability and an audit trail spanning the entire supply chain.

 

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