warehouse-optimization

What this skill does

# Warehouse & Inventory Optimization 🏭

Diagnose and optimize your warehouse operations: analyze inventory health, calculate safety stock, reduce costs, and improve efficiency. No API key required.

## Installation

```bash
npx skills add nexscope-ai/eCommerce-Skills --skill warehouse-optimization -g
```

## Supported Fulfillment Models

| Model | Platform | Optimization Focus |
|-------|----------|-------------------|
| **Self-Fulfillment** | Any | Warehouse layout, staffing, pick/pack efficiency, storage costs |
| **Amazon FBA** | Amazon | IPI score, storage fees, aged inventory, restock limits |
| **Amazon FBM** | Amazon | Shipping speed, Prime eligibility, cost vs FBA |
| **Walmart WFS** | Walmart | Fulfillment fees, storage limits, Pro Seller status |
| **3PL** | Multi-channel | Provider costs, SLAs, contract optimization, hidden fees |
| **Shopify Fulfillment Network** | Shopify | Distributed inventory, delivery speed, cost analysis |
| **TikTok Shop Fulfillment** | TikTok | TikTok-specific requirements, shipping SLAs |
| **Dropshipping** | Any | Supplier reliability, lead times, stockout prevention |
| **Hybrid** | Multi-channel | Inventory allocation, channel balancing, split strategy |

## Usage Examples

```
Audit my warehouse operations. I'm self-fulfilling from a 2,000 sq ft warehouse.
500 SKUs, 3,000 orders/month. Main issues: frequent stockouts on top sellers, 
high storage costs on slow movers. Help me optimize.
```

```
I use FBA for my Amazon store. IPI score dropped to 350. I have excess inventory 
warnings on 40 SKUs. How do I fix this before I get storage limits?
```

```
Running FBM for my oversized products and FBA for standard. 200 orders/day total.
Which SKUs should I move to FBA vs keep FBM? Help me optimize the split.
```

```
Using ShipBob as my 3PL. Monthly bill is $8,500 for 2,000 orders. Is this competitive?
What should I negotiate or consider switching?
```

---

## First Interaction

When user first asks about warehouse optimization, inventory management, or fulfillment efficiency, greet them with:

```
🏭 Warehouse Optimization ready!

I'll help you diagnose issues and optimize your inventory operations.

**Tell me about your setup:**
- Fulfillment model (FBA, FBM, 3PL, self-fulfill, hybrid?)
- Approximate SKU count
- Monthly order volume
- Main pain points (stockouts, high costs, slow shipping, IPI issues?)

Or just describe your situation and I'll guide you from there.
```

---

## Handling Incomplete Input

```
To optimize your warehouse operations, I need:

**Required:**
- Fulfillment model: Self / FBA / FBM / WFS / 3PL / Dropship / Hybrid
- Approximate SKU count
- Monthly order volume
- Main pain points (stockouts, high costs, slow shipping, etc.)

**Recommended (deeper analysis):**
- Top 10 SKUs by sales volume (or % of total sales)
- Current inventory turnover rate (if known)
- Average days of inventory on hand
- Monthly storage/fulfillment costs
- For FBA: Current IPI score, aged inventory alerts
- For 3PL: Current provider and monthly costs
```

---

## Audit Workflow

### Step 1: Collect Current State Data

| Data Point | Why It Matters |
|------------|----------------|
| Fulfillment model | Determines optimization approach |
| SKU count | Complexity indicator |
| Monthly orders | Scale of operations |
| Top SKUs (% of sales) | For ABC analysis |
| Current turnover rate | Inventory health indicator |
| Days of inventory | Over/understock signal |
| Stockout frequency | Lost sales indicator |
| Storage costs | Cost optimization potential |
| Pick/pack accuracy | Quality indicator |

### Step 2: Calculate Key Metrics

**Inventory Turnover Rate:**
```
Inventory Turnover = Cost of Goods Sold (COGS) / Average Inventory Value
```
- **Benchmark:** 4-6x/year for most e-commerce (higher = better)
- **Low turnover (<4):** Excess inventory, capital tied up
- **High turnover (>8):** Risk of stockouts, tight supply chain

**Days of Inventory (DOI):**
```
DOI = (Average Inventory / COGS) × 365
```
- **Target:** 30-60 days for most products
- **Too high (>90 days):** Overstock, storage cost drain
- **Too low (<14 days):** Stockout risk

**Stockout Rate:**
```
Stockout Rate = (Days Out of Stock / Total Days) × 100
```
- **Target:** <2%
- **Impact:** Each 1% stockout ≈ 1% lost revenue

**Perfect Order Rate:**
```
Perfect Order Rate = (Orders Shipped Complete, On-Time, Undamaged / Total Orders) × 100
```
- **Target:** >95%

### Step 3: Perform ABC Analysis

Classify SKUs by revenue contribution:

| Class | % of SKUs | % of Revenue | Inventory Strategy |
|-------|-----------|--------------|-------------------|
| **A** | ~20% | ~80% | High priority, never stockout, frequent replenishment |
| **B** | ~30% | ~15% | Moderate priority, standard replenishment |
| **C** | ~50% | ~5% | Low priority, review for discontinuation |

**Recommendations by class:**
- **A items:** Safety stock = 2-4 weeks, reorder frequently, prime warehouse locations
- **B items:** Safety stock = 2-3 weeks, standard locations
- **C items:** Minimal safety stock, consider dropship or discontinue slow movers

### Step 4: Calculate Safety Stock & Reorder Points

**Safety Stock Formula:**
```
Safety Stock = Z × σd × √L

Where:
- Z = Service level factor (1.65 for 95%, 2.33 for 99%)
- σd = Standard deviation of daily demand
- L = Lead time in days
```

**Simplified Safety Stock (if limited data):**
```
Safety Stock = (Max Daily Sales - Avg Daily Sales) × Lead Time
```

**Reorder Point Formula:**
```
Reorder Point = (Avg Daily Sales × Lead Time) + Safety Stock
```

**Example calculation:**
```
Product: Widget A
- Average daily sales: 10 units
- Max daily sales: 18 units
- Lead time: 14 days

Safety Stock = (18 - 10) × 14 = 112 units
Reorder Point = (10 × 14) + 112 = 252 units

→ Reorder when inventory hits 252 units
→ Keep 112 units as buffer
```

### Step 5: Analyze Costs

**Fulfillment Cost Benchmarks:**

| Cost Component | Self-Fulfill | 3PL | FBA |
|----------------|--------------|-----|-----|
| Storage | $0.30-0.50/cu ft | $0.45-0.75/cu ft | $0.87-2.40/cu ft |
| Pick & Pack | Labor-based | $1.50-3.00/order | Included in fee |
| Shipping | Carrier rates | Discounted rates | Prime rates |
| Returns | Labor + space | $3-8/return | Free for buyers |

**Cost Per Order (CPO):**
```
CPO = (Storage + Labor + Packaging + Shipping) / Total Orders
```

**Inventory Carrying Cost:**
```
Carrying Cost = Average Inventory Value × Carrying Rate (typically 20-30%/year)

Includes: Storage, insurance, obsolescence, opportunity cost
```

### Step 6: Platform-Specific Analysis

**Amazon FBA:**
- **IPI Score factors:** Excess inventory %, sell-through rate, stranded inventory, in-stock rate
- **Storage fee triggers:** Aged inventory (181+ days), low IPI (<400)
- **Restock limits:** Based on IPI and sales velocity

**Amazon FBM:**
- **Prime eligibility:** Seller Fulfilled Prime requirements
- **Shipping performance:** On-time delivery, valid tracking rate
- **Cost comparison:** When FBM beats FBA (oversized, slow movers)

**Walmart WFS:**
- **Pro Seller badge:** Fulfillment performance requirements
- **Storage fees:** Generally lower than FBA
- **Limitations:** Product restrictions, geographic coverage

**3PL Providers:**
- **Contract terms:** Minimum commitments, peak surcharges
- **Hidden costs:** Receiving fees, special handling, return processing
- **Performance SLAs:** Shipping accuracy, turnaround time

### Step 7: Generate Recommendations

Prioritize by impact and effort:

```
## Recommendations

### 🔴 Critical (Do Now)
| Issue | Impact | Action | Expected Result |
|-------|--------|--------|-----------------|

### 🟡 Important (This Month)
| Issue | Impact | Action | Expected Result |
|-------|--------|--------|-----------------|

### 🟢 Optimization (This Quarter)
| Issue | Impact | Action | Expected Result |
|-------|--------|--------|-----------------|
```

---

## FBA-Specific Optimization

### IPI Score Improvement

| Factor | Target | Actions |
|--------|--------