In 1906, the Italian economist Vilfredo Pareto developed a mathematical formula that described the distribution of wealth in his country, discovering that 80% of the wealth belonged to 20% of the population. In later years, many other specialists would observe a similar phenomenon in many other areas. In general, 20% of something is responsible for 80% of the results, and this phenomenon would be popularized as “the Pareto principle” or “the 80/20 rule”.
Currently, the 80/20 rule is applied to the most diverse areas, and it is used as a starting point in the management and optimization of warehouses.
In general terms, it is assumed that 20% of the product references occupy 80% of the warehouse space, and that 80% of the stock comes from 20% of the suppliers.
Similarly, it is estimated that 80% of revenue comes from 20% of customers.
The application of the rule is then focused on, once this proportion is assumed, efforts are focused on optimizing the factors that represent the most important 20%, since their impact will affect 80% of the results.
This can help to decide, for example, which product references to store in metal racks with systems of lower rotation levels, such as the paletización push-back or the compact or drive-in pallet racking, and how to distribute the references in metal shelves of conventional pallet racking, thinking about which products have a more frequent circulation.