Warehouse space is one of those things that nearly all supply chains can’t live without. We talk a lot about getting our inventory targets correct, but how often are our targets driven by other constraints such as warehouse space at certain nodes in our network? 

Should such a commodity such as warehouse space drive our inventory decisions, and potentially put customer service at risk? These are big, philosophical supply chains questions which S&OP processes are in place to address – but we can help this process by providing the best information we can. 

Inventory Optimisation

When we generate our inventory targets in an optimisation tool such as SAP Integrated Business Planning (IBP), we are working somewhat to an unconstrained plan, which is great and the way it should be. After all, these targets need to reflect where our inventory should be in an ideal world – we can leave the supply planners to manage that side of things. But! We can supply information that makes their lives easier. 

Some constraints are pretty static – like the size of your warehouse(s).  Granted, we can erect tents in warehouse yards and create temporary space at peak times (e.g. brewers to cope with peak Christmas volumes), but generally a warehouse is only as big as it was built.  And the process of creating more storage is one that is very much one of a linear cost the nature – the sooner you want it, the more you will pay for it.

On the flip side, being able to identify opportunities for network rationalization is also an excellent way of reducing overheads. Nobody wants a big warehouse operating at <50% capacity, eating up cash every month.

SAP Integrated Business Planning

With the flexibility of SAP IBP powered by SAP HANA, Olivehorse have created a solution to be able to view how your inventory targets align to your warehouse capacity. This way, you can see that your ideal world inventory levels are actually feasible, or even demonstrate the opportunities that exist if you were to adhere to them!!

Fig 1: SAP IBP for inventory view showing pallet capacity – Excel UI

Fig 2: SAP IBP for inventory view showing pallet capacity – Fiori UI

To find out more, get in touch with myself or any member of the Olivehorse team for a free taster session to see more of IBP and the ingenious solutions the team have created to help drive more value from your supply chain planning solutions.

Matt Gilbey

Senior SCM Consultant, Olivehorse Consulting
matt.gilbey@olivehorse.com