Reallocation

In logistics, a reallocation refers to any process in which goods are transported from one storage location to another without leaving the company. It is therefore an internal flow of goods, but one that must be accurately documented to ensure inventory accuracy in the warehouse management system.

Why are goods relocated?

Relocation is rarely done for its own sake; rather, it is usually a response to changing demands in day-to-day warehouse operations. The main reasons for this are:

• Optimizing order picking: Fast-moving items (goods that are sold very frequently) are moved from remote locations closer to the shipping zone to shorten walking distances for employees.
• Space constraints and consolidation: If warehouse areas are unevenly filled, items are consolidated to make room for new deliveries or to bundle partially used pallets.
• Quality and safety: Goods may need to be moved to special storage areas (e.g., hazardous materials storage or refrigerated areas) if their status or legal requirements change.
• Avoiding slow-moving inventory: Rearranging stock according to the FIFO (First-In, First-Out) principle ensures that older inventory is used up first.

The Two Levels of Reallocation

This process is fundamentally distinguished based on physical distance:

• Intra-facility reallocation: The goods simply change their shelf location or warehouse within a single site. In this case, the system only updates the source and destination locations.
• Inter-company reallocation: In this case, inventory is moved between two different locations or plants of the same company. This process is similar to a shipping process. However, since the goods must be physically transported, they remain the property of the company for accounting purposes.

Documentation and IT Control

Every reallocation must be fully recorded in the system. In modern warehouses, this is typically done on-the-go via scanning. As soon as an employee removes the goods from their old location and places them at the new location, the data is updated in real time in the background. This is the only way to prevent goods from being physically present but “invisible” to the system or recorded in the wrong location. A well-defined reallocation strategy is therefore the foundation for a tidy and efficient warehouse.

Automatic Replenishment Control: Planning Ahead Instead of Reacting

In modern warehouses, reallocations are no longer initiated manually on an as-needed basis, but are proactively planned through automatic replenishment control in the warehouse management system. The system constantly monitors inventory levels in the picking zones—the areas where employees retrieve goods for shipping.

As soon as stock falls below a specified minimum level, the software automatically generates a reallocation order. For example, the system “knows” that many orders for a specific item are expected the next day and has the item moved in a timely manner from the higher-level reserve warehouse to the lower, easily accessible picking bins. This form of planned reallocation prevents downtime during packing and ensures that the flow of goods never stalls.