Storage/Inventory types and technology

Different stocks are needed for different needs and different parts of the supply chain.

Classification by activity

Stocks and warehouses can be divided based on their function and need as following:

Basic/use/cycle/lot size inventory

Basic stock, use of stock, cycle stock or lot size inventory is called part of inventory, which changes according to consumption and supplement rhythm.

Basic stock is thus the warehouse, which meets average or anticipated demand in continuing supplement interval time.

Safety stock

Safety stock ensures the availability during demand fluctuations, when you want to avoid shortage situations. The need for safety stock depends on the size of demand fluctuations and on the service level target set for stock.

Safety stock is thus part of the stock, which secures inventory service when demand varies. Safety stock increases the average storage levels and thus increases the amount of capital tied up in the stock, so the need and amount of the safety stock should be calculated carefully and unnecessary safety stock should not to be kept.

Buffer stock

Buffer stock is a stock with to prepare for, for example, supplement delivery delays or problems with product/raw material supply. Buffer stock is, therefore, a stock which secures operation despite the uncertainty in supplement deliveries.

Sometimes, also in case of demand fluctuations safety stock is called a buffer stock.

Pipeline inventory/production intermediate storage

Pipeline inventory means, for example, a storage used in transport, production or distribution. A stock used in various stages of production is called intermediate stock/storage.

In industry, the number of pipeline inventories depends on production lead time as well as how many products are being manufactured in different phases of production awaiting for the next manufacturing phase. Pipeline inventories can be minimized by pull control (imuohjaus/JIT).

Seasonal stock

The reasons for seasonal stock are caused by seasonal fluctuations in demand. With the seasonal stock, production intended to be as steady as possible to manufacture product evenly although the demand is seasonal. With this, production lay-offs, over time work can be avoided and it ensures that the product can be manufactured, the amount equivalent to demand.

Storage/Warehouse type classification

Storages are classified according to the type of storage. Storage types include:

  • Outdoor storage
  • Unheated warehouse
  • Warm warehouse
  • Cold storage
  • Frozen storage
  • Special storage

Outdoor strorage

Outdoor storage can be a covered or uncovered area where goods that are not affected by humidity and temperature fluctuations caused by the weather are stored. The goods can be stored on shelves or on the ground.

Outdoor warehousing is the cheapest warehousing solution, as there is no need to invest in warehousing structures or maintaining conditions. Rain-protective covers make it easier to work, especially in winter, and at least some of the outdoor shelves are often covered.

The soil in the outdoor storage area must be able to withstand the stress applied to it and must not accumulate rainwater or meltwater. In practice, the storage area should be permanently covered.

Storage shelf in an outdoor warehouse.
Covered outdoor storage. Onninen, Tallinn.
Outdoor storage shelfs with pallets.
Uncovered outdoor storage. Onninen, Tallinn

Unheated warehouse

Items that can withstand temperature fluctuations can be stored in an unheated warehouse. The construction and maintenance costs of an unheated warehouse are lower than those of a heated warehouse, so it is a widely used solution.

Moisture can be a problem in unheated storage. When the relative humidity of the air rises high, the water begins to condense, condense, on the surfaces. Not all packaging, such as cardboard packaging, can withstand wetting, and in addition, water condensing on the ceiling drips onto the goods, causing abundant wetting.

The amount of water condensing on the ceiling is lower if the ceiling is made of a material with poor thermal conductivity, such as wood. Condensation of water on surfaces, in turn, is reduced by good ventilation. To prevent moisture problems, the warehouse can be equipped with mechanical ventilation or an air dryer.

Storage shelfs on the long wall of a warehouse.
Unheated warehouse. Onninen, Tallinn.

Warm warehouse

Some items cannot withstand low temperatures or temperature fluctuations, so they must be stored in a warm place. Moisture damage caused by condensation is avoided when the storage temperature is 6-10 degrees higher than the outdoor temperature in winter. Due to the pleasant working conditions, the temperature is generally considered to be higher than this.

A warm warehouse is an expensive storage solution, as construction costs as well as maintenance costs are high.

A large warehouse with pallet shelves.
Warm pallet warehouse, ETK Hulgi Tallinn.

Cold storage

Goods that do not stay warm nor can they withstand freezing require cold storage. Typical cold storage products are vegetables, roots and dairy products. Cold storage temperature is -8 to +2 degrees.

Frozen storage

Perishable, frost-resistant products stored for a long time are stored in frozen storage. Typical frozen food products include many foods and medicines. In the freezer storage, the storage temperature is -18 degrees and the freezing temperature is -25 to -30 degrees.

Frozen storage warehouse with cardboard boxes.
This frozen storage has some boxes waiting for transport. VRTranspoint, Kouvola.

Special storage

For different storage needs, standard condition stocks may be required where the temperature and humidity can be precisely controlled. Precisely regulated storage conditions are required for e.g. certain medicines, films and sensitive electronics.

Substances classified as hazardous are stored in a stockpile of dangerous goods when their storage volume exceeds a certain quantity specified in the regulations. Hazardous substances include flammable liquids, gases, toxins, chemicals, explosives, and hazardous waste.

The storage of dangerous goods requires official permission and requirements have been defined for the storage structures, storage technology and storage maintenance, the fulfillment of which is monitored.

Classification according to storage technology

Pallet warehouse

Pallets are stored either stacked on top of each other if the pallets can withstand stacking, or on pallet racks. The stacking height of a pallet warehouse in a conventional warehouse is 4.5–6 m.

A large warehouse with pallet shelves.
Warm pallet warehouse, ETK Hulgi Tallinn.

Small goods warehouse

Small goods warehouses can be built on several – usually in practice three – floors or the small goods warehouse can be, for example, “upstairs” of a pallet warehouse. The transfer of small goods to the second floor by a pallet lift is convenient and a staircase or pallet lift can be used for collection.

A gate that leads to an elevator.
Elevator gate in the second floor of a warehouse, ETK Hulgi,Tallinn.

Narrow aisle storage

In a narrow aisle warehouse, the area can be used efficiently when the need for aisle space is less than when using normal-width corridors. Narrow aisle warehouses use special narrow aisle trucks that can work in aisles 1.2 to 1.45 m wide and have a lifting height of up to 12 meters.

High warehouse

In a high warehouse, the shelf height exceeds 6 m and the maximum height of the warehouse is about 45 m. With high warehouse trucks, goods can be handled up to 12 m. At higher heights, goods are handled by manually or automatically controlled shelf lifts. Each shelf space can have its own shelf elevator or, using the gantry trolley technology, the shelf elevator can operate on several shelf spaces.

In high storage, the aim is to maximize the utilization of the storage area, but in terms of collection efficiency, the highest stocks may not be the most efficient.

Deep loading warehouse

The deep-loading warehouse may be shelf-free, in which case the pallet loads are stacked directly in stacks perpendicular to the floor corridor in parallel rows, or the warehouse may be equipped with deep-loading shelves. In deep loading shelves, the goods are handled with narrow trucks. Only one item is stored in one queue or shelf, so the method is mainly suitable for warehouses where the number of items is small and there are many of the same item at a time. Such stocks may be e.g. stocks of industrial products, and stocks of bulk goods handled in commercial warehouses. The goods are left and taken from the corridor end of the queue, so the LIFO principle is implemented in the warehouse.

Deep-loading storage is a space-saving storage solution, as the corridor space requirement of the deep-loading warehouse is small and up to 30% more goods can be stored on the same area than in a warehouse based on a standard shelving solution.

Automatic warehouses

Many functions can be automated in warehouses, but the actual Automatic Warehouses are computer-controlled warehouses where goods are transferred automatically. Automation is generally considered to include:

  • identification of the goods
  • sorting of goods
  • transfer of goods to storage
  • shelving of goods
  • collection of goods
  • aggregation of goods flows into outbound delivery
  • information processing

Receipt, packaging and loading of goods are not always included in automation. Inventory automation is a big investment, but with large volumes of goods and handling volumes, significant savings in operating costs can be achieved compared to manual work.

Choosing the right stock type

The choice of stock type is an important choice. The available surface area naturally affects the floor area of the warehouse. If you want to get more storage volume, increase the handling height.

Storage methods depend on, among other things, products, storage height, aisle widths, degrees of automation, and industry.

Things to consider when choosing a stock type

When choosing a storage system, general logistical service factors must be taken into account:

  • Delivery frequency, time and security
  • Reliability of deliveries
  • Supply flexibility
  • Informing in the event of a problem
  • Ease of ordering, speed, flexibility
  • Correctness of the goods (transport damage)
  • Packaging (protection, recycling)
  • Package size and its variations
  • Information on packaging (eg date, barcodes)

The design and selection of a storage system, in turn, is influenced by, among other things, the product range to be stored. It affects at least:

  • for warehouse storage solutions: indoor, outdoor, cold and warm warehouses
  • selectable shelving and other furniture
  • equipment used
  • corridor widths: for incoming and outgoing goods
  • the height of the goods and
  • address system.

Warehouse hotel

Storage is always the cost of the goods. Using the warehouse hotel services provided by the carrier, only the required amount of storage space is purchased.

Warehousing services are provided by, among others, warehousing hotels, which rent warehouse space to companies. Warehouse hotels often also offer value-added services such as shipment assembly, packaging and sorting services.

The overall package often includes repackaging the goods into end customer-specific items, producing packing lists, address tagging, ensuring pick-up readiness, onward delivery, complete inventory tracking, and reporting to the customer. Controlled implementation of the FiFo (First in – First out) principle, agreed alert thresholds for product depletion, stock replenishment, etc.