In this presentation Sam Anderson, founder of Order Fulfillment Experts, introduces a "traffic light" inventory management framework designed to cut e‑commerce fulfillment costs dramatically. He defines three zones: Green (fast‑moving pick stock), Amber (replenishment stock placed on warehouse eaves or containers), and Red (long‑term bulk storage in high‑ceiling facilities). Anderson explains why D2C fulfillment requires low‑height mezzanine picking areas, while bulk storage benefits from very tall warehouses because costs are charged per square foot of footprint. He breaks down typical UK warehouse expenses (~£22.50 per sq ft including rent, rates, utilities) and shows how to calculate space needs. The talk highlights a segmented distribution model where a brand uses a fulfillment partner for its consumer‑facing orders while handling wholesale separately, illustrating a £20 M company that ships only five pallets weekly yet fulfills 500 orders. Finally, he stresses the strategic advantage of locating fulfillment centers near major ports and airports (e.g., Rochester in Kent near Felixstowe, Dover, Southampton, Heathrow) to minimise final‑mile costs and improve speed. The overall message is to keep only the picking‑ready inventory on‑site, store bulk stock elsewhere at cheap rates, and leverage geography and segmentation for a high ROI.
Chapters
The traffic light system that could save your e-commerce business hundreds of thousands of pounds over its lifetime. Hi, my name is Sam Anderson and I'm the founder of Order Fulfillment Experts, and I want to introduce to you a concept of the traffic light system with inventory management. It's something I've developed here for our warehouse, and it's something that actually can be applied in any situation. So very simply, green is where we will pick the stock from. So green basically is very fast-moving stock, so stock that is really, you know, turning quite quickly. Amber is what we would call replen, or replenishment of the pick faces for us to be able to pick the stock from, and we would use the eaves of the warehouse or containers to put those in on site. And then red would be bulk long-term storage. So long-term storage is going to be somewhere probably in an incredibly large warehouse so that you get the best price for what you're wanting to store. And the reason for that is there are two very different types of warehousing depending on its purpose. So because we are a D2C fulfillment house. We're sending out business-to-consumer or direct-to-consumer, so we obviously need— a person needs to be able to reach the stock, so it has to be person height as a maximum to be able to pick it and then take it to the packing stations to be packed. So we've got a mezzanine, as you can probably see from the video, and we don't need high height. It would be totally lost. We'd be completely wasted be honest. However, if you want to get the cheapest possible storage, long-term bulk storage rates, then you want a massively high ceiling. The reason for that is, of course, that, well, it's no secret warehousing costs are going through the roof. It's pistols at dawn to get warehousing space, and let's say in this area you're looking at about as much as £15 per £7 per square foot, and then you're looking at another £7 per square foot for rates, business rates on top of that, and maybe another £3.50 per square foot on top of that for your utilities. Obviously that's not including insurance and all the infrastructure that you need, so you're looking probably at around £22.50 per square foot. And therefore, you know, if you need, uh, 10,000 square foot, it's very easy to do the maths, and that quickly, quickly tracks up, if you forgive the pun. So therefore, what is a really good way of doing this is when you've got your long-term bulk storage, you find a storage facility that can go super high, because you're basically paying for the footprint in no matter what you do. It's the per square footage that you're actually paying for. So that is really, really helpful when you're planning your supply chain and your distribution. It's no secret that the really big companies right down to the little micro businesses are all now veering towards a very segmented distribution approach. So for example, I spoke to a customer this week, really large company turning over £20 million, but they're going to just send in 5 pallets to us on a very regular basis. And so what that means is that we'll be sending out 500 orders a week but without actually having to, you know, apply a huge amount of space for us to be able to do exactly that. And that's where you get the amazing return on investment, the lower overheads for running your e-commerce business. Now they obviously have premises of their own elsewhere where they're doing their wholesale distribution, and they're using us to do their business-to-consumer, direct-to-consumer e-commerce side of things. So that is a really great way of doing it. And obviously also bear in mind, depending on where your goods are coming in from, it might be a good idea to find a fulfillment house that's sort of like equidistant of all those ports that come into the country. So for example, we're based in Rochester in Kent, and that's reasonably equidistant between the port Felixstowe. So obviously you've got the, the shuttle in Folkestone and the ports of Dover, but you've also got Southampton, Portsmouth, and we've got Heathrow, Gatwick, the airports, and Luton really close by as well. So we're sort of like that final mile for getting it to its distribution point is really minimized for speed and, and cost. So lots of things to think about, but definitely, definitely only have in warehouse that's going to be doing your actual picking and packing the stock that you really need. Keep the actual bulk stock somewhere else where you can get, you know, a really cheap price because they can stack it really high for you, and you'll be able to then get the benefit of both worlds. I hope that's helpful, and I'll see you next time. Bye for now.
