The Overlooked 80%: Why Your Slow-Moving SKUs Deserve More Attention

In warehouse management, the 80/20 rule, also known as the Pareto Principle is a widely accepted truth: Roughly 20% of SKUs drive 80% of throughput. These “A-movers” are the lifeblood of fulfillment operations and are typically given prime real estate in the facility. But what about the remaining 80% of SKUs? These “B- and C-movers” may not be fast-moving, but they’re often the largest contributors to warehouse complexity, cost, and inefficiency.

Understanding the cost of the forgotten 80%

While A-movers get optimized storage, automation support, and consistent attention, the slower-moving 80% of SKUs are frequently stored inefficiently, scattered across the facility, shelved in difficult-to-access areas, stashed in upper levels of pick modules, or simply left unmanaged in long-term storage zones. This can lead to a variety of challenges:

• High Cost Per Unit Stored: Slower-moving SKUs take up valuable space, often without proportional return. Poorly optimized storage increases your cost per square foot.
• High Cost Per Unit Picked: When these SKUs are needed, often in low quantities, they can be hard to find or require long travel distances, spiking labor costs.
• Shrinkage and Misplacement: Items that are infrequently touched are more prone to being misplaced or even stolen. Inconsistent cycle counts and poor visibility lead to stockouts, reordering of already-owned items, or customer dissatisfaction.
• Inefficient Inventory Turns: Inventory carrying costs are inflated when stock sits idle for long periods, especially if environmental controls or special handling are required.
• Risk of Obsolescence: Some SKUs, particularly in industries like electronics or apparel, may become obsolete before they’re picked, leading to write-offs or markdowns.

What industries are most affected by long-tail SKUs?

Certain industries are inherently prone to large slow-moving SKU catalogs due to the nature of their products and service models:

The growing challenge of SKU proliferation

In today’s economy, consumers expect personalization and choice. This trend, fueled by e-commerce, has led to explosive SKU proliferation. A brand may once have offered five options; now it’s 50, or even 500. Whether it’s a variety of finishes for cabinet hardware, colors of reusable water bottles, or trims for kitchen appliances, more choice equals more complexity.

As SKU counts balloon, the Pareto curve steepens: The top 10-20% of SKUs generate more and more of the throughput, while the rest clog up warehouse space.

How can AutoStore help address the long-tail SKU challenge?

When it comes to managing slow-moving SKUs, few solutions rival the efficiency and cost-effectiveness of AutoStore. Unlike traditional racking or even other automated storage and retrieval systems (AS/RS), AutoStore is uniquely designed to maximize space utilization while minimizing the cost of storing inventory that moves infrequently.

Here’s how AutoStore helps optimize the long tail:

1. Unmatched storage density

AutoStore’s cube-based design enables the highest storage density of any AS/RS on the market — up to 4x more Bins per square foot than traditional shelving or racking. This makes it the ideal solution for consolidating long-tail SKUs into a compact footprint, freeing up valuable warehouse space for faster-moving inventory or other operations.

2. Cost-effective inventory holding

Unlike most AS/RS platforms where each SKU stored comes with a proportional cost (due to shuttles, lifts, or fixed-position robotics), AutoStore's cost structure works in favor of long-tail SKU management:

• Robots drive most of the cost, not the storage infrastructure.
• Storage components (Bins and Grid), represent only 10% to 15% of total system cost. This means you can add hundreds or thousands of slow-movers into the Grid without significantly increasing capital expenditure. You're essentially adding storage capacity at a marginal cost.

3. Low cost per-unit stored

Most warehousing distributors don’t realize that they are spending the majority of their cost per square foot leasing space for inventory that barely moves. The A-movers, the 20% that drive 80% of revenue, typically take up far less space. It’s the long tail that eats up real estate. By consolidating these SKUs into a high-density AutoStore Grid, companies can drastically reduce their physical footprint, lower lease costs, and make every square foot work harder.

4. Flexible access to rarely picked items

Even if a SKU is only picked once every few months, AutoStore Robots can retrieve it just as easily as a high-velocity item. There’s no penalty in labor or time when accessing long-tail products. Every Bin is accessible, and Bin location doesn’t impact retrieval complexity, something traditional AS/RS systems and manual operations can’t say.

5. Scalable growth without overbuilding

As SKU proliferation continues, adding new Bins and expanding the Grid is simple and non-disruptive with AutoStore. You don’t need to overbuild or reconfigure entire systems. This flexibility is critical as long-tail inventory grows due to market expansion or consumer demand for customization.

Conclusion

By leveraging AutoStore for slow-moving SKUs, distribution operations can turn what was once a cost center into a model of efficiency. Rather than letting the long tail drag down warehouse performance, forward-thinking operators are using AutoStore to rein it in — densely, affordably, and smartly.

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FAQs

What does the ‘long tail’ refer to?

Long-tail inventory refers to a diverse range of products that cater to niche markets and specific customer needs but don't sell in high volumes. They are categorized as B- and C-movers in inventory management because they are less popular than best-selling, A-mover items. The long-tail items take up approximately 80% of warehouse space but account for 20% of revenue.

What industries are most affected by slow-moving inventory?

Due to the nature of their products and service models, the automotive, aerospace, industrial equipment/MRO, consumer electronics, and retail apparel/footwear industries are most affected by negative space impacts of large, slow-moving SKU assortments.

How does AutoStore help manage long-tail SKUs?

AutoStore enables the addition of hundreds or thousands of slow-moving items into the Grid without significantly increasing capital expenditure, thanks to its cost structure where storage capacity is added at a marginal cost.

What are the advantages of using AutoStore in terms of cost per unit stored?

AutoStore helps reduce warehousing costs by consolidating long-tail SKUs into a high-density Grid, thereby reducing physical footprint, lowering lease costs, and maximizing the efficiency of every square foot.

How does AutoStore handle rarely picked items?

AutoStore Robots can retrieve any SKU easily, regardless of how frequently it is picked. There is no penalty in labor or time for accessing long-tail products, making every bin accessible and retrieval straightforward.

What makes AutoStore scalable for growth?

AutoStore's system allows for simple, non-disruptive expansion by adding new Bins and expanding the Grid as SKU proliferation continues, without the need for overbuilding or reconfiguring entire systems.

How can AutoStore transform distribution operations?

By leveraging AutoStore for slow-moving SKUs, distribution operations can become more efficient, turning the long tail from a cost center into a model of efficiency. This system helps forward-thinking operators manage inventory densely, affordably, and smartly.

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