The Supply Chain Trinity – Space, Labor, Capital.

If you are doing any work in a supply chain (or element of a supply chain) these are the three areas you must focus on.  These are the three building blocks of all functions within everything.

  • Want to put in automated sorting?  You are getting less space and labor at the trade-off of more capital.  If volumes and/or inventory costs are high enough this may make sense.
  • Want to floor pick everything?  You are taking more space and labor but will not have as much capital investment.  For small numbers of SKUs that move at the right speed this could be the best choice.
  • Want a building that makes use of 60′ clear ceilings?  Definitely going to need less space but you’ll be spending more in capital.
  • Thinking of a new WMS or Transportation system?  That’s a capital item meant to offset Labor.

Everything in your supply chain should focus on the impact to these three items.  Inventory is a capital and space driven topic.  Automation is labor, capital and space.  Clear height is space and capital.

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