For now we have many stacks (8 bins in each stack) of these plastic containers from The Container Store. This way we can usually fit one style with all sizes in one stack. They stack well, are durable and can hold a decent amount of items. The only problem is they do get costly and to go buy them you can only fit about 8 in a decent size car at a time since they don’t nest.

http://www.containerstore.com/browse/Product.jhtml?CATID=71232&PRODID=67288

Pam

Mike, I’m wondering about the process. Did you guys come up with the shallow finished inventory/unfinished parts model over time, was it borrowed from another comapany or did you work everything out in advance?

We started out with the philosophy of offering as much choice as possible to customers.

Some of our production processes was planned out and implemented and some of it has grown organically. We getting closer to what we would consider “decent” each season though.

Mike, I’m wondering about the process. Did you guys come up with the shallow finished inventory/unfinished parts model over time, was it borrowed from another comapany or did you work everything out in advance?

Thank you for the analogy between the grocery store and the car dealer. I like that you have found a way to keep your business model nimble and completely, consumer-facing. That insight is helpful for several of us. You’ve illustrated that your product has been designed keeping a strong eye toward operations and turn-around-time.

And, how do you manage this space, Mike? What best practices would you suggest for manufacturers who need to balance space constraints at the early stage of their business’s development?

About like you would expect. We use cardboard boxes that contain a single style #/size combination. Each style number can have up to five separate colorways. Individual items are housed inside sealed, clear, polybags. At least, that’s how we do it for pieces that are manufactured to a finished form.

Some pieces are only partially manufactured, finished only when orders arrive, and those are handled a bit differently in another area of the shop.

We’ll be investing a fair amount of money in software to help oversee our inventory and order management in 2007.

Do you double-stack inventory? In other words, is your storage area organized by style where the depth of the stack represents the various colorways?

If you think of a row of shelving as a two dimensional grid, the X axis represents increasing style number and the Y axis represents increasing size. Colorways are not specifically represented, you have to look in the box and find the color you want. In 2007, we’ll probably switch the definitions of the X & Y axis to squeeze a few more box slots out.

Have you costed out the alternative of outsourcing the warehousing and fulfillment? Is there a break-even point that would work for the scale of your business?

Outsourcing the warehouse and fulfillment is not possible for us. A lot of our product flexibility is possible because we store very shallow finished inventory in some pieces. For example, take a pair of yoga pants that comes in black with 4 sizes, 5 different colors of waistband, and 3 different inseams. That’s 60 SKUs for a single style. To get any reasonable depth of inventory per SKU for that style, you’re looking at 500+ pieces. Even that leaves you wide open to SKU holes developing in odd places which make inventory refresh a nightmare. So, what we do is cut and sew partially finished shells of that style by size and store them. We also cut a small inventory of color waistbands and finish them. First thing each morning, our cutter is given a list of SKUs that he needs to assemble from partially finished components. On that particular pant, he’ll pull an appropriately sized unfinished shell from inventory, use a template to trim the inseam to correct length (if needed) and put a waistband with it. The shell, waistband, and finished goods hangtag go into a small basket and is then routing to the sewing room.

As sales volumes in a certain style grow, we may trade off some inventory growth for manufacturing efficieny. (For example, we may start storing unfinished pieces with waistbands already attached). But, our desire is to be more like a grocery store with its relatively shallow inventory and quick turnover than a car dealership with thousands of cars and millions in carrying costs.

Do you double-stack inventory? In other words, is your storage area organized by style where the depth of the stack represents the various colorways?

Have you costed out the alternative of outsourcing the warehousing and fulfillment? Is there a break-even point that would work for the scale of your business?

We’ve got 750+ SKUs that have to fit into about 300 square feet.