How can I calculate the cost of the stored pallet in the warehouse by category/SKU?

[Alan]

Hi,


Does anyone know the calculation of how much stored pallets cost me by
category of SKU?

What do I need to know to gather like this kind of information?
(Figures)

I don know, may be something like, getting the average age/time that
pallets stayed/stored in the warehouse by category..

Regards,

Alan

[Logistics Conduit]

Alan,

Let me try and assist you here with a simple way of approaching this:

(1) We start by first calculating what our total warehouse costs is.
This includes all fixed, fixed-variable and variable costs.

(2) We then divide this by the number of pallet positions in your
warehouse. This will give you the cost of each position by month, week
and even day.

The formula would be slightly different if you are a 3PL as you would
be looking at a breakeven of 60% - 70%.

(3) If you are looking at SKU level then it gets a little bit more
difficult. You need to calculate how many of 1 SKU makes up a pallet
and then you divide this by the number of SKU's in that pallet to get
the cost of storing 1 SKU per month, week or day.

This should get you started. ED

[Logistics Conduit]

Colleagues,

I was just looking at some stats on our forum and it looks like we
will end this month with more than 300 members.

Additionally, some of the profiles of our new members show that they
are quite active forumers and we hope that you will contribute on this
forum as well. One new member had more than 200 posts in one month.
That's impressive!

ED

[Alaa]

Thanks a lot for the straight & best explanation I ever had.

I need to clarify the 3rd point:

> (3) If you are looking at SKU level then it gets a little bit more
> difficult. You need to calculate how many of 1 SKU makes up a pallet
> and then you divide this by the number of SKU's in that pallet to get
> the cost of storing 1 SKU per month, week or day.

Let us say that when we receive (Inbound), each pallet will have 1
SKU, but when we pick (outbound), each pallet can have more than 1
SKU.

- What did you mean by "how many of 1 SKU makes up a pallet"?
- Can you give me an example?
- Do you recommend any tutorial or book that I can learn from it like
this kind of stuff and cost allocation...?

Regards,

Alan

[Guillermo_Lopez]

Technically, your outbound pallets are not Stored in the warehouse. Or
at least should'nt be. They are placed in the Docking area waiting to
be shipped out which usually takes less than a day. Which means you
dont need to estimate the pallet cost of the outbound pallets.

Estimating the cost by Category/SKU is something that is variable. I
suggest you use an Average of past historical data.

G. L.

> > > Alan- Hide quoted text -
>
> - Show quoted text -

[Alan]

Thank you Guillermo_Lopez,

We just started a feasibility study for special orders , and that is
why I need to know the pallet warehousing cost(formula) by
category[Meat,Daily...].

The items are categorized also as (Fast-Moving & Slow-Moving), where
the outbound process starts with picking a number of packs or
sometimes
a whole pallet from the rack/slot, according to store order.

---------------------------------------------------- What I am
Looking For
--------------------------------------------------------------------------
I've been asked to use the following formula(s) but I couldn't
understand them and I really need at least one example to be able to
start, where I am
a beginner in this field: (Can anyone explain to me how I can
calculate it and what the output should be, especially calculation
A ????)


Calculation A

• What is the percentage of pallet allocation per category.
( September 2007 to September 2008)
• How long the pallet was in the reserve location by category.
• Take an average number of days for each category.

Calculation B

• Take the warehouse cost (p&l) divided by the total number of pallets
spaces for the whole dc.
• Divide the answer by 365 days.
• Times the answer with your category average. ( number of days) =
bucket cost.
• X that answer by 7 for weekly cost……ect

That is the cost per pallet for that category.

Regards,

Alan

[Guillermo_Lopez]

I am guessing, Alan, that you wanted to reply on the discussion board
rather than replying to me alone.

======
End Alan quote.

> > - Show quoted text -- Hide quoted text -

[Logistics Conduit]

Alan,

There have been quite a few responses to and from our other members.

I hope you find this useful.

If there is still further assistance you need, please let us know and
we will try and respond promptly as I think you may still have some
questions that have not been answered.

ED

[Alan]

Hi,

Thank you ED,

Actually no body yet answered my last questions (in my last sent
comment). So, I am still hoping for someone to provide me a direct,
easier or clear way to calculate it, but it seems no one does know
how....


Regards,


Alan

[Guillermo_Lopez]

I though of some simple examples, This is based on what I understood
from your equations.

Calculation A

• What is the percentage of pallet allocation per category.
( September 2007 to September 2008)

This you get by doing the next two.

• How long the pallet was in the reserve location by category.

Just make a list of all the pallets in your warehouse. If
you know access, it will make it easier. Unless you have less than
50,000 pallets it, you wont be able to use Excel. So for instance you
have this data.

---- Ribeye, Pallet: 100051, Meat, 5 days.
---- Toothpicks, Pallet 100100, Daily, 2 days.
---- NY Steak, Pallet 200321, Meat, 3 days.
---- Cuttingboard, Pallet 100129, Accesorie, 15 days.
---- Ribeye, Pallet: 100052, Meat, 4 days.
---- Knife, Pallet: 150150, Accesorie, 13 days.

You do this for every pallet.

• Take an average number of days for each category.

Here you summarize the data by category. So you say based on the
sample data above: Meat category averages 4 days. Daily averages 2
days. Accesorie averages 14 days. This answers part 1.

Calculation B

• Take the warehouse cost (p&l) divided by the total number of
pallets
spaces for the whole dc.

Say your warehouse cost is about $100,000 a Year. Say your
warehouse can fit a maximum of 5,000 Pallets (count the spaces in the
racks and bulk). 100,000/5,000 = $20 per Pallet per Year.

• Divide the answer by 365 days.

$20/365 = $0.0548 per Pallet per Day.

• Times the answer with your category average. ( number of days)
=
bucket cost.

Meat: $0.0548 x 4 = $0.2192 per Pallet
Daily: $0.0548 x 2 = $0.1096 per Pallet
Meat: $0.0548 x 14 = $0.7672 per Pallet

• X that answer by 7 for weekly cost……ect

If you multiply that answer by 7 you get weekly cost per
Pallet.
Multiply by 365 and you get the Year cost per pallet.
Divide the year cost by 12 and you get the monthly cost per
pallet.

So if in your feasibility report you want to introduce an extra
100 pallets of Meat per week into your warehouse, the cost of
warehousing that is $0.2192 x 7 x 100 = $153.44.

Some categories cost more than others and that is the key. Your
warehouse has a fixed space available, and when you introduce 100
pallets each week, you wont be able to use that space. So the cost
reflects that. In my example the accesorie category is the most
costly, so bringing more of those will Cost you more and it makes
sense because they stay longer in the warehouse and thus prevent you
from using that space on faster moving SKUs.

BTW anything that you store for 1 day, seems flawed and you should
consider crossdocking those items.

I hope that helps, Feel free to ask if you need any more help.

G. L.

> > > - Show quoted text -- Hide quoted text -

[Logistics Conduit]

Alan,

Sorry for not responding to your questions.

Please ask them individually and I or one of our forum members will
try out best to answer them.

ED

[Alan]

Hi G.L.


Thanks a lot, that was exactly what I needed. Its very understandable
and easy to follow.

Your examples were perfect ..

thanks again.

Regards,

Alan

[Alan]

Hi G.L.

Sorry but I couldn't understand what you meant by

" the accesorie category is the most
costly, "

what did you mean by "the accesorie category"?

Regards,

Alan


On Oct 3, 6:42 pm, Guillermo_Lopez <g.lo...@iesdr.com> wrote:

[Nsen]

Hi,

I have 6+ year exp. in import, now i want shine my skill through some more logistic qualification. I have Bachelor degree in commerce.

 

Regards

Narveer

 

[anushas]

Can you let me know what you want to know? Sorry for interruption in the
middle way
----- Original Message -----
From: "Alan" <alaa.a...@gmail.com>
To: "Logistics & Supply Chain Discussion" <ls...@googlegroups.com>
Sent: Sunday, October 05, 2008 10:38 AM
Subject: [lscms] Re: How can I calculate the cost of the stored pallet in
the warehouse by category/SKU?


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[anushas]

Can you let me know what you want to know? Sorry for interruption in the
middle way
----- Original Message -----
From: "Alan" <alaa.a...@gmail.com>
To: "Logistics & Supply Chain Discussion" <ls...@googlegroups.com>
Sent: Sunday, October 05, 2008 10:38 AM
Subject: [lscms] Re: How can I calculate the cost of the stored pallet in
the warehouse by category/SKU?


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Your mail has been scanned by InterScan.
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[Nsen]

I want to know master degree in Logistic Management or any another studies which is more important in logistic field after B.COM.

 

 

Regards

Narveer Sen