Inventory storage is essential so businesses can keep a steady supply of goods on their shelves.
But it’s important to remember that storage costs include more than the cost of rental space.
Other expenses include shrinkage, depreciation on slow-moving goods, difficulties with procurement and, in some cases, pest control.
Fortunately, with the right strategies, inventory storage costs can be reduced.
1. Reduce shrinkage
Some shrinkage is inevitable, but make sure it’s kept to a minimum.
Limit the number of people who have access to the storage area.
Avoid breakages and spoilage by implementing procedures for how stock needs to be unpacked, shelved and stored.
2. Don’t store unnecessary stock
It’s tempting to buy extra stock when goods are on sale but this can cause inventory problems.
You might end up with too little space for your other goods.
If the extra stock doesn’t sell as expected, it could be stuck in storage for months or years.
3. Avoid long leases on storage space
Your storage needs might change seasonally or as your business grows.
Don’t get locked into a long lease that’s too large or too small.
Find a storage facility that allows you to take short a lease and change capacity as needed.
4. Move obsolete stock
If there’s stock in your storage space that isn’t moving, get rid of it so the space can be better utilised.
Put it on sale or see if it can be exchanged with the supplier.
5. Consider a just-in-time system
A just-in-time (JIT) system is great if you have limited space but don’t want to upgrade.
JIT means ordering stock only as you need it and keeping very little in storage.
This requires good relationships with suppliers and only works with products that are always in stock and don’t need to be manufactured or imported.
6. Know your reorder points and amounts
It can take a few months or years to get to know your stock on this level.
If you know exactly when you need to reorder stock and how much is the optimal amount, you can save storage space and plan ahead for reordering expenses.
Knowing your reorder amounts well will help you avoid over-ordering.
7. Do thorough quality checks
Do thorough quality checks on stock as it comes in from a supplier.
Don’t end up with faulty or damaged stock that you’re unable to return because it’s been sitting in your storage facility too long.
8. Organise your storage area for maximum efficiency
Make the most of the space you have.
Organise the stock in your storage space for good access and ease of packing and unpacking.
Incorporate shelves and stackable bins so that no space is wasted and you can manage stock in and stock out easily.
Inventory storage with XtraSpace
At XtraSpace, we have clean and secure storage units in a range of sizes.
You can choose the right amount of space for your inventory, which enables you to implement strategies for reducing inventory storage costs.
If you need more space, selected branches also offer warehousing space.
You can get storage space from us on a lease as short as one month and you can change to a bigger or smaller unit without any fees or penalties.
This gives you the ultimate flexibility for your inventory storage needs.