Alternative Strategies for the SKU Explosion

MHI-Q0116_L_Final-79As the number of SKUs continues to proliferate, many distribution centers are turning to alternative strategies to handle the massive explosion in volume.

Many companies are expanding their supply chains through such methods as direct-store delivery, direct-store drop ship and drop ships by third-party logistics providers, says David A. Schwebel, MHI manager, Solutions & Product Groups. That way, companies don’t have to move every SKU throughout their internal network.

Ross Halket, executive director, ASD sales at MHI member Schaefer Systems International Inc. says that warehouses that don’t have the space are private labeling, meaning that large companies are actually carrying the majority of the inventory on behalf of the smaller companies.

Distribution centers also have to manage mass customization and personalization of products, such as an order for jewelry with personalized engraving, Halket says. The jewelry needs to be picked to be sent elsewhere to be engraved, and then sent back to the distribution center to be shipped.

“These types of value-added orders have to be taken into account when designing a warehouse system,” he says.

With all of these challenges, supply chain managers may need to consider revamping how much visibility they should let customers have about available stock, Halket says. Typically, companies tell customers that the inventory is not available until it is received in its building.

By Katie Kuehner-Hebert

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