Where Oh Where Have Warehouses Gone? Creative uses of industrial storage space.

• Author: Rhode, Scott

Warehouses are easy to ignore. Almost by definition, they are places that the general public passes by but rarely visits.

"Most of the time you don't allow the public inside because of the safety requirements," says Rosita Johnson, business development manager for Advanced Supply Chain International (ASCI) in Anchorage. The company manages inventory contained inside buildings stacked to the roof with pallets, forklifts scooting to and fro.

A warehouse is defined less by its form than by function. "It doesn't have anything to do with what the building looks like; it is what the zoning allows you to do in that building," explains Elisha Martin, a real estate broker with Colliers International. While many warehouses have large roll-up doors, some don't. Most are designed around access for delivery trucks, and as a rule they are places where only people who work there ever see the inside.

Commercial property spans retail, office, and various industrial uses, of which warehousing is just one. A warehouse might contain a manufacturer or, as the name suggests, wares being stocked for retail distribution. They store materials and equipment.

"In the last year, we've worked with a company that does fittings and hoses, electrical parts, airplane parts, medical supplies, core samples," Martin says. "It always goes back to what's in the zoning and what's allowed in those buildings and what's not allowed in other areas."

Lately, users have had to accept less than suitable spaces. A relative scarcity of warehouses in Alaska demands some clever solutions.

Tricks of the Trade

Maximizing bare minimum warehouse space has been ASCI's specialty since 1999. The company provides full-service supply chain management support, overseeing more than $300 million worth of inventory annually. At any given time, the company tracks more than 100,000 individual SKUs (stock keeping units); Johnson says a typical warehouse holds about 14,000 SKUs.

End-to-end management allows for more flexibility, she says, by minimizing conflicts with multiple contractors. This efficiency enables ASCI to save clients money, which the company estimates at more than $606 million in reduced costs over the last five years.

One of the tricks, says Johnson, is consolidating inventory bound for the North Slope in Anchorage first. "Even though you'd think that's an extra step, slow down the shipments--in the end, if you have an inaccurate or damaged item that gets to the North Slope, it's a lot more expensive to handle it when it's on the North Slope. If you catch this in Anchorage, it becomes a cost avoidance," she explains.

ASCI also helps clients reduce the amount of inventory that must be warehoused in the first place. Johnson points to an analysis ASCI did for BP. "They had a lot of what we call 'dead inventory.' Some of them were critical spares--you have to be careful not to get rid of those--but some of those items were no longer functional, so when you optimize inventory levels, what happens is you free up warehouse space," she explains. As a result, ASCI shrank BP's storage...