Materials Management Policies and Warehouse Requirements: A Case Study

For organizations facing warehouse capacity constraints, the cost of warehouse capacity expansion may be substantial. Through suitable materials management policies and practices, however, it may be possible to postpone or eliminate the need for expansion in many cases. A thorough review of materials and inventory management practices prior to finalizing a decision on capacity expansion can pay off handsomely. This article presents a case study of an engineering company to illustrate the interaction between warehouse space requirements and materials management practices. In this case, the need for warehouse capacity expansion was eliminated through the use of a standardization and simplification program, the removal of dead and slow moving stock, the efficient utilization of storage space, and selected changes in inventory control and stocking policies. The article concludes with recommendations for organizations considering the possibility of warehouse capacity expansion.