Warehouse / Inventory Advice?

[K1LLswitch]

Hey all,

My dad and sister are starting up a business (or rather, have purchased the rights to open a Canadian branch of an existing US company).

From what I've looked at, the sales / marketing plan seems good, but they have no experience in the warehousing, shipping and inventory management.

The business involves a number of small products (creams, lotions etc.) and will be doing sales from internet orders and parties (tupperware style parties).

The point they are at now, they are in need of a warehouse, but have no idea what size / location, and really what sort of things to be asking or looking for?

They'll also need some software (accounting system and inventory mgmt), ideally something that can use handheld scanners and print bar codes to assign to boxes, as well as input orders and print the shipping information.

Any comments you have on any part of the process would be greatly appreciated.

Also, if anyone have any experience with in a consulting role, they might be interested in retaining your services in setting the whole thing up.

Thanks!

K1LLswitch

[transplant99]

Often with these things its best to rent a storage space in a well secured facility before jumping in and leasing a warehouse that may be far more than you need.

[GreatWhiteEbola]

You can discuss the hardware required with myself, I work for a Motorola/ Symbol channel partner, as for inventory software I will research what is best. If you like I can meet with your dad or sister to discuss the options available and the specifications of their business.

Let me know what works best for you, I will be in Calgary on Thursday and available in the afternoon.

PM sent.

-Patrick

[K1LLswitch]

Originally Posted by transplant99

Often with these things its best to rent a storage space in a well secured facility before jumping in and leasing a warehouse that may be far more than you need.

I was thinking the same thing, but was they need a somewhat permanent address to put on the stuff as it's being labeled, and while they could probably go 2-3 months operating out of a house, they'd rather get started.

Originally Posted by GreatWhiteEbola

You can discuss the hardware required with myself, I work for a Motorola/ Symbol channel partner, as for inventory software I will research what is best. If you like I can meet with your dad or sister to discuss the options available and the specifications of their business.

Let me know what works best for you, I will be in Calgary on Thursday and available in the afternoon.

PM sent.

-Patrick

Great - thanks, that would be great!

Appreciate the help CP - you are outstanding!

[DOK]

They should do a sales projection plan to see how much product they will go through. It'll back up how much they need and when. The easiest way to start is to find out what minimum orders are from the manufacturer / provider. That could give a huge step to finding out how much stuff they will need to house.

Be careful about biting off too much at once. Small financial steps are smart. Grow the facility as the business grows. Don't lock up too much money out of the gates with huge storage fees, when they could end up locked into a lease with a whack load of dead product on their hand if they go under. While it may be easier now to look at a warehouse thinking a few months in advance, but once reality hits a lot of other things could come into play as well. If they want a permanent address, go PO box, which most internet companies do, that way their storage facilities don't need to be disclosed.

[Julio]

Good ideas all around here...
As far as storage I'd suggest (at least one the basement is too small) is to look at self storage as a solution at least as the business grows. My g'friend runs a self storage facility, and she has a lot of small businesses who use her site both for temp storage and for long term storage. One nice thing about that is that there doesn't have to be any long term leases involved, and that you can contract and expand with relative ease compared to a warehouse. Feel free to PM me and I can pass on my g'friend's work contact info.

[BlackArcher101]

Have they started even selling items before wanting to complicate things further with an elaborate inventory system?

If there's one thing I've learned, it's not to over-stock immediately unless you are 100% you can move that product. I've seen a lot of people that do the online or party ordering thing (ie, candles, lotions and other items) who decide to buy and stock tons of product, only to have trouble actually moving it after the fact. The problem was that they listened to the marketing info given to them by the company who don't really analyze the market. Pardon me if it's not one of those companies, but just a word of warning to them maybe. I guess what you say doesn't make a lot of sense, because you said they just bought the rights to open a branch, and then you say they are at the point of needing a warehouse, but if they haven't started the business yet, how do they know?

As for an inventory system, it entirely depends on the amount they move through and how fast it moves through the system. Bar coding might be overkill, but it also might be needed. It all depends.

[K1LLswitch]

Thanks for the advice thus far.

I've looked at the sales figures, and they don't seem unreasonable, and the partner they have running the sales side is very experienced with the industry (from a sales perspective). Based on the US operations and the market research done to date here, it seems like it will do fine.

It's the total lack of experience in inventory management that's got them stuck at the moment, and is in the most need of an answer.

They are expecting to be shipping ~50-100 orders per day by the end of the 1st year (retail, wholesale and internet).

[BlackArcher101]

How many items per order and how many different/unique items?

[Rathji]

My advice is stay as small and flexible as possible. Just because you need a 'permanent' address does not mean that you need to rent out warehouse space. The best plan is running out of the home as long as possible, then if you do need to upgrade later on, you will still have the option of receiving mail etc at the old address.

At that point, get a 2 room office with a flexible lease that you can get out of if things go south. Run your shipping from there for as long as possible, expanding storage using self storage options. An office can hold a heck of a lot of candles etc.

My dad ran a business selling books, gift baskets etc in office buildings downtown for a while when I was younger. He sold many hundreds of these large items every week and was more than covered in terms of space by renting an old garage bay in Inglewood. With smaller items the space required goes down even more, so the self storage option (which would be alot more secure IMHO) becomes alot more economically viable.

Remember most small businesses fail in the first 2 years (See this gov Can site). This is just my opinion, but most fail due to trying to grow too fast and creating larger overhead than is required. If you work the business into your current expenses, and start it from home you have a much larger chance of it becoming and remaining a profitable business venture.

Good Luck.

[DementedReality]

use a 3rd party provider ... there are a number in town that provide the warehouse space, staff, technology and expertise. you will pay for storage, picking of the product and shipping, but it will be scalable to your enterprise and wont require locking into contracts, leases or capital investments.

do a google search for 3pl + calgary.

there is no reason to take on all that overhead and more importantly oversight. all your efforts should be focused on selling your goods, not learning how to manage a warehouse and inventory.

just my two cents as someone who has been in the 3pl/logistics business for almost 20 years.

[DOK]

Originally Posted by K1LLswitch

Based on the US operations and the market research done to date here, it seems like it will do fine.

Be very very careful with the information coming from the States. Lots of people are misguided when crossing the boarder. Remember we are the population of New York spread out across the entire country. Totally different situations than in the states. Not saying your information isn't right or helpful, it's just not possible to compare the two countries in this way. If the market research was done in Canada for Canadian sales, then that should be more helpful, but if it's based on American sales, then that could throw a curve ball when your up and rolling.

[K1LLswitch]

Originally Posted by BlackArcher101

How many items per order and how many different/unique items?

Say 3-6 items per order.

2 product lines, roughly 10-15 in each line (there are some that they haven't decided whether to import I think)

Thanks for the advice all - this is great!