Inventory Migration – Meaning, its need and importance

The need for Inventory Migration from one warehouse to another warehouse does not come about very often in Supply Chain Operations. However, sometimes the business demands necessitate a change of warehousing location, setting up a new location or even a change of business model.

The occasion and need for an inventory migration can come about due to many reasons:

• Non performance of a 3PL service provider
• A change in tax policy of the government
• A shift in market dynamics calling for a change of location
• Change of Business Model
• Product Mix and supply chain strategy or a simple case of an increase in business volume could make a case for shifting or setting up of a new warehouse and closing down a currently operating warehouse.

There could be many more reasons apart from the situations mentioned above warranting an inventory migration.

A successful migration will depend upon carefully planning, detailing of every activity, simulation and trials, combined with team training and briefing exercises. Such a project involves and affects all functions including marketing, IT, finance, operations, order fulfillment, inventory planners and controllers, procurement, 3PL service provider, transporters, legal and tax compliance teams and finally the management.

The project leader in charge of the project would have to have the knowledge to design operational processes for the entire project coupled with knowledge of the activities and functional departments involved in the entire exercise.

The first exercise involved would be to set up a cross functional project team, drawing leaders from all functional departments. If the proposed operations are being managed by a 3PL, then the team would have to include them as well. In fact, in such cases, the 3PL would need to form an internal project team with a project manager too. Effectively there would be two project teams managing the project and taking joint responsibility. The first team would be from the Principle Company and a second team from the 3PL. While the design, process, budgets, guidelines, project management would be driven from the company, the 3PL will manage to get the new facility ready, set up the team, training, getting ready to receive materials and start operations, besides planning for transportation and inventory movement.

The project being very critical in nature would need a Project Sponsor, who will review as Management and facilitate and coordinate to ensure timely decisions, resources are made available and manage communication with other departments and partners. The 3PL provider too will be required to setup a similar management structure to facilitate the project.

A very important aspect of managing a smooth inventory migration is to build a healthy dialogue and continuous communication with the existing 3PL service provider to ensure the ongoing operations at the project planning stage are not disrupted and the Service provider co-operates with the company and the new 3PL in working together to hand over the inventory and assets belonging to the company as per laid down process and comply. Periodic meetings and contract review discussions have to be held to iron out differences arising out of the situation and would have to be handled sensitively and intelligently with patience.