How Do You Organize Your Stock?

A warehouse can be organized by a fixed or floating bin system. I want to first differentiate that a warehouse bin is not necessarily a physical bin but a designated location (usually on a rack) in the warehouse (though it could have an actual bin to hold product). A fixed bin system is one that resembles a grocery store. The location of a particular good remains at the same place as they are taken and replenished (this is just an approximation as stores do change product location for various reasons). In a floating bin system, product does not have a fixed location in the warehouse, replenishment may be at the same or at another empty location. This system allows more efficient use of space because a bin does not remain reserved for a specific product when it is out of stock.

So why would one choose one over the other?

A floating bin system has higher space utilization as mentioned before. It minimizes underutilized areas and provides flexibility to accommodate more dynamic inventory levels (meaning you can increase or decrease inventory of any particular product easier) and avoid traffic congestion. This system also allows easier warehouse expansion because product are not dedicated and reorganization of product is not required to expand any locations. A disadvantage of this system is that it may increase complexity and disorganization.

A fixed bin system is more organized because product is always in the same location. You can plan and create a system that makes sense from a handling perceptive. Inventory tracking is easier, and workflows are more predictable thereby potentially reducing handling time. The disadvantages are opposite from the advantages of a floating bin system (inflexibility, space inefficiency, difficulty in scaling the warehouse, etc)

To choose the system that is best for you, you may want to consider the nature and volume of inventory, the frequency of required changes, and the availability or cost of storage space. You may also want to use a combination of both systems. You may fix certain bins and keep others floating. You may also temporarily fix bins for various reasons.