21 Mistakes adding cost and killing productivity in your warehouse #8

#8.  Mismatch of storage racking and product

The physical storage systems in your warehouse are equally important as the information systems.  In fact the two go hand in hand.  The simplest way to know if you have a mismatch between your stock and your storage system is to walk through your warehouse and look to see how much air you can see around your product.  If there is space around (usually above) every product then you have a mismatch.  The impact of this low storage density is to spread out your stock further than it needs to be.  This increases travel path, and warehouse efficiency is all about travel path because:

travel path = time = labour hours = CO$T.

The other impact of a low storage density is that your warehouse will fill up quicker than it otherwise would.  This can have you thinking about moving when all you need to do is buy some new racking.

There are abundant choices of racking in both the new and second hand market (if you are flexible about your spec. and less fussy about appearance).  The mainstay of storage systems are pallet racking and steel shelving, but there are also long span shelving, drawer systems, plastic bin systems, carton flow racking, pallet flow racking, combination shelving and mezzanine floor systems.  Depending on your start point it is possible to double the storage capacity of your warehouse and improve productivity at the same time simply by installing more appropriate racking in a revised layout.

Before buying anything you need at least the advice of a storage systems consultant to help you decide exactly what you need.  This advice is free (and can be very good if you go to a reputable re-seller) when you buy the racking; but it is a bit like the advice you get from a financial consultant who is paid by commission from the investment products he sells, i.e. time constrained, limited to the products they sell and biased towards their high margin products.  

Given that you will live with the purchase and its impact on your productivity for many years. Racking never wears out so it is there until you decide to change it.  Racking never forces you to change, you must decide.  When you decide to change it will be worthwhile choosing your storage systems as part of an overall warehouse re-engineering project to maximise your investment and gain an ongoing cost reduction in your warehouse.

There are a number of things to consider when buying storage systems:

• How much stock on hand you keep of each item,
• what you are likely to stock in future,
• the physical characteristics of your stock
• bulk cartons or pallets
• small parts, spare parts
• small boxes
• eaches or unit level
• any special storage conditions
• dangerous goods
• temperature control
• batch and expiry or use by dating
• high security storage
• how fast it turns over (its movement velocity)
• your order profile;
• many/few lines per order,
• bulky/ small order size,
• high/low order volume
• how you plan to pick
• the capabilities (or lack thereof) of your business system

Careful consideration of your storage systems in the context of the characteristics of your business and its future growth is an investment you must make if you are considering a major change to your warehouse.  Once you have installed the racking then you have locked in a productivity potential that will effectively become invisible to you (locked in means it cannot easily be changed and you cease to manage it).

Once you have decided that you need some new racking, you must also decide where to put it.  Indeed the size and shape of your space and how you layout your racks will have a big impact on your racking specification.  This layout must be at least done on an accurate two dimensional layout on either paper or suitable CAD software.  A racking re-seller will often draw up a layout for you if you are buying a substantial amount of racking.  

We use and recommend Trimble Sketch Up which is free to download and the basics can be learned in an afternoon.  See the Logistics Help website for some examples and models you can use in the Sketch Up 3D Warehouse online.  

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost and killing productivity in your warehouse #21: Failing to maintain and develop your operations as your business grows and changes

The seventh habit in Stephen Covey’s Seven Habits of Highly Effective People is Sharpen the Saw.  This is the recognition that even the best “saws” become blunt over time.  If the saw wasn’t that sharp to begin with, then a few years down the track the work of cutting through becomes really hard!  Does your warehouse feel like that?  Just plain hard work to get through every day?

The mistake of not changing your warehouse operations as your business evolves can cost you dearly.  Even traditional businesses are constantly changing now and the pace of change seems to keep increasing.  New, products, new customers, new services, maybe even completely new business models can get dumped onto the warehouse and the common response is a hasty rehash of existing systems and processes to “get by for now”.  This pattern accumulates inefficiencies over time and can end up with a very inefficient warehouse, staffed by a lot of frustrated people, with the whole operation in need of a major overhaul.

The antidote to “getting by for now” is a program of continuous improvement.  I see two distinct areas to focus on to drive an effective continuous improvement program to keep your warehouse operations up to date and running smoothly.

1. A periodic audit and redesign based on the application of Lean principles will introduce a step change in technology or infrastructure to allow your business to operate at a higher level of efficiency and output.
2. A Lean principle based continuous improvement program will help you to optimise your current processes and work methods.

These ideas are really two sides of the Lean coin: 

• firstly the strategic business side which must be driven by the management team based on how the business is supplying value to customers and 
• secondly the operational continuous improvement that hones the day to day execution of the strategy and it supporting infrastructure.

The need for a change in strategy or infrastructure is often driven by a crisis or repetitive failures by the business to deliver the value required by its customers at a sustainable cost.  Service failures, customer complaints, out of stocks, overstocks, high operational costs, overflow storage are all examples of the sort of pain that will prompt a change in strategy or highlight the need for new infrastructure in a business.

If the resources to answer these challenges are not available within the business then help from professional business advisors will be required to help formulate an appropriate response to the business challenges.  This is exactly where Logistics Help can advise a business that is facing issues such as:

• the relocation of a warehouse or
• the need to keep the current warehouse viable for a few more years,
• warehouse management systems implementations
• materials handling systems
• freight management issues
• or any other warehouse related issue.

A review of the business operations followed by a guided implementation program aimed at delivering business results and a solid return on investment is what we specialise in at Logistics Help.

Whilst major change programs are essential to long term business health, they are not by themselves sufficient.  The ongoing operation of the facilities and systems are critical to success.  This is where any systematic application of Lean principles must flow throughout the company to the operators that deliver the daily work.  Training and coaching your operational staff including managers, supervisors and warehouse operators in the attitudes and tool kit of Lean, will ensure that you get the best out of your investments in the technology and infrastructure of your business.

This is a bottom up approach that engages the hearts and minds of everyone in your business to ensure its success.  Our aim at Logistics Help is to provide resources and training for your staff in applying Lean principles and up to date knowledge and tools for warehousing and distribution so that your warehouse is vibrant and productive.

To this end we have launched the Warehouse Performance Initiative to foster a community of warehouse professionals to raise the standard of knowledge, expertise and effectiveness of people working in warehouses around the world.  You can get involved straight away by signing up here and receive the compete eBook of these posts of the 21 mistakes as a thank-you.  We will also keep you informed of new features and resources as we build them.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost and killing productivity in your warehouse #20: Failing to invest in staff development

The best systems and technology in the world are of no use if you do not develop your staff to get the best out of them.  I do not want to dive in to human resource management and labour relations techniques here; but I do think that if you have got the culture right in your organisation, then one of the best things you can do is invest in training and developing your staff in ways that are relevant to your business.

Many businesses (particularly small – medium sized businesses) make the mistake of thinking that people will just pick up what they need to know along the way.  This is true to a certain extent, but would you neglect other areas of your business the same way?  Would you not bother to do any marketing and just hope that your customers figured out what you did and offered all by themselves?

So what training or development activities should you do for your warehouse staff?  Where do you start if you have literally nothing?  The place to start is with the activities that most directly impact on your customer service.  This is usually the picking, packing and despatch processes.  I suggest that you write a step by step work instruction based on the what your most experienced and best operators do.  This includes the physical process and any system interactions that they need in the performance of their work.  The written instruction will be a guide to the operator on what to do, and for the instructor on what to teach.  Starting with picking work your way through all your core activities until you have a complete set of training documentation.

You can also make this fun by making a video instruction.  Sitting all new hires through half an hour or so of video showing them the basics is a great way for many people to learn.  This should not be a substitute for detailed instruction and coaching by a supervisor, but it can help lighten the load somewhat, particularly if you use casual labour to manage peak workloads.

There are three stages required to cement any learning and all should be documented in a training register to record where people are at in their training program.  The three steps are:

1. I have been shown what to do and received the work instruction to refer to.
2. I have done the task for the prescribed period and feel like I know what to do.
3. I have been tested or assessed to be competent by an experienced person

If you adopt this approach you put the responsibility on both the operator and the trainer to confirm their competence in performing a task.  Your staff will become more productive due to reduced errors and a common set of procedures for all warehouse activities.  You should see your KPIs improve as you roll out your training program.  

Not only do you need a good training program in place for your warehouse operators but your supervisors and managers must also be developed to improve their management skill and understanding of warehousing and performance improvement so that they can apply these skills to improve the processes and operations within the warehouse.

Many supervisors and managers in businesses are drawn from talented and motivated storespeople but have had no formal training or broader exposure to the range of ideas and technologies available to improve the performance of their warehouse.

Recognising this need, Logistics Help are developing the Warehouse Performance Initiative (WPI) to help develop the skills of all those responsible for managing warehouses.  The sign up for those who are interested in joining is available now

The aim of the WPI is to create a resource to develop superior performance in warehousing regardless of business size, resources or location.  Starting with an online (and eventually offline) space providing ideas and resources drawn from wide experience of what works in improving warehouse performance.  Members of the WPI will be able to join in a forum to discuss ideas and get answers to questions from other members and expert moderators.

WPI members will also get all of the Logistics Help templates and self-help resources developed over many years of consulting experience, for half the normal list price.  Membership is free and .
The WPI will also encourage offline Warehouse Performance Groups where members can organize meet ups and regular meetings to help each other improve their skills and share experiences about what they are finding out how to improve their warehouse performance.

Ultimately we hope to develop some core modules for a training program for warehouse supervisors and managers which can be delivered both in workshop seminar format and online.   The aim being to dramatically improve the quality of warehouse performance for small-medium businesses around the world.

The sign up page is here.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost and killing productivity in your warehouse #19: Failing to invest in equipment, systems and technology

Equipment, warehouse systems and technology can be expensive and is an optional expense in the sense that it is not required to operate your business.  For these reasons some businesses shy away from making capital purchases.  The same businesses that do this will also have no problem meeting a non-optional but high wages bill every week and pay overtime when required to meet customer demand.  In our experience, provided the correct equipment is bought for your requirements, the investment in warehouse technology, systems and materials handling equipment is always rapidly paid for in reduced labour costs, let alone increases in accuracy and quality, responsiveness and improved safety.

Once you have adjusted your attitude to technology from scary cost to business investment, you will never look back.  Look at every purchase as an investment in productivity and calculate the return and payback period.  If you lack the capital to invest then leasing or borrowing is usually a viable option if your business is strong.  The payback even for large investments will typically be less than one year, so if capital is tight, a loan or lease agreement can be structured to be cash flow positive to your business almost immediately.

Delaying an investment in productivity will usually only cost you money in lost cost reduction.  Although you don’t feel this the same way as a sudden jump in costs, the impact is the same.  Should you treat it as any less urgent?  It is for this reason that I think failing to invest in technology when the option is available to you is wasting money.
Let’s look at how you can do a basic return on investment calculation for an area of business need.  My number one technology investment recommendation for a warehouse is to implement a Warehouse Management System (WMS).

Let’s look at a return on investment calculation for the Rapid WMS that we will be making available soon for the small-medium business market.  For a modestly sized warehouse running a simple paper based ordering system and employing 12 people an investment of a little over $90k pays for itself in less than seven months and makes you $1.5M richer over ten years, that is an average interest rate of 170% p.a. (flat) over 10 years.  You can’t get that from a bank!

Item	Unit Cost	Units	Cost
Project cost			$            91,750
Current FTE (Labour cost)	$            55,000	12	$          660,000
Estimated Productivity Gain	25%
FTE reduction saving	$            55,000	3.00	$          165,000
Revised Labour Cost	$            55,000	9.00	$          495,000
Payback in Months			6.67
Net profit gain year	1		$        73,250
Net profit gain by year	2		$      238,250
Net profit gain by year	5		$      733,250
Net profit gain by year	10		$   1,558,250

Unfortunately not all investments in technology will have as high a payback as the first implementation of a WMS but you get the idea.  Find an area of need where labour can be saved and service quality increased, find a solution that you like, calculate the return,  implement it well and reap the rewards.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost and killing productivity in your warehouse #18: Choosing the wrong carrier

Your choice of carrier and freight service is an integral part of your product and service experience.  Your freight provider will likely have more regular contact with your customers than you do.  Choosing the wrong carrier can not only add cost to your business by paying too much for freight, it can cost your business through poor service delivery that may drive your customers to your competitors.

So how do you choose a freight provider?  Let me start with the do it yourself option.  Should you run a dedicated fleet?  i.e. vehicles that deliver only for you.  The answer is yes if you have sufficient volume of orders and a limited customer base so that you can ensure a high fleet utilisation.  The most likely candidates are B2B companies serving a particular market niche.  The next question is whether to outsource the management to someone else.  This is probably also a yes unless you are very big and can afford to invest in the vehicles and management staff and systems required run your own fleet efficiently.  The halfway option is to manage a fleet of subcontractors, where you provide the management and any vehicle fleet management technology but the subcontractors buy the vehicles.

Even if you have a dedicated fleet you will most likely still need to use general carriers to service the areas of your market you cannot deliver to directly.  The best advice I can give here is to shop around.  You can do this yourself or engage a freight broker or a consultant to give you advice.  The brokers advice will not be independent as it will be limited to the carrier relationships they have in place.  A broker will help you manage your freight and will take a margin for doing so.  This can still be a very good option as they will likely get better rates for you than you could get yourself (with their carriers) even though they take a margin.

A freight consultant can perform a carrier review for you.  The only way to accurately compare rates among different carriers is to apply the rates from each carrier to a standard set of historical data that represents your typical freight requirements.  To do this a consultant (or broker) will collect all your historical freight data and run a Request For Proposal (RFP) process to independently test the market to find the best price.  In this case you will pay a fee to the consultant but the advice will be truly independent and not hidden in ongoing fees.

As independent consultants Logistics Help can run a cost effective (and anonymous) freight review for you and repeat it on an annual or bi-annual basis to make sure you stay current.  The fees are not high and will be recovered in lower freight costs.  As your business grows and changes you will be able to negotiate better rates as rates generally reduce with higher freight volumes.

Sometimes a change in freight service or niche carrier can give you lower costs on part of your freight requirement.  For example you can send freight to the metropolitan area of your capital city with an overnight express service (such as Star Track) or you can send it with a twice daily parcel service such as Couriers Please or Fastway.  The parcel service is usually cheaper and gives you more time to process your orders because they pick up in the morning instead of the night before.  They also provide you the ability to do very cheap same day freight for early morning orders, or simply the advantage of clearing your outbound freight twice each day.

A niche carrier may specialise in delivery to  particular state or regional area that you have a lot of business in.  In this case you may well get a better rate and a better service that your customers love because the carrier is a local.

Knowing what is available and which carrier is worth pursuing is what you are paying the broker or consultant for, but there is no reason why you cannot do it yourself if you have the time to do the research and are a good negotiator.  If you have any doubts or want to find out the costs to have a carrier review done for you then contact us to find out more.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost & killing productivity in your warehouse #17: Non-integrated systems

There is no doubt that Information, Communication and Technology (ICT) systems have been the key driver of productivity in every aspect of human endeavour for many decades now. Many different systems exist that have benefits for the warehouse and the supply chain in general.  Whenever a new system is introduced there is always a choice about whether to use it as a standalone separate system or to interface it to the rest of the business systems.  It is my opinion that except in the most low volume transaction environment it is usually a mistake not to integrate systems.

By integration I mean the transmitting of data between the two systems.  In the context of warehouses and supply chain this data will usually be related to transactions or system updates about the movement of goods: into, around and out of the warehouse. 

The ideal integration is automated real time transaction by transaction.  Stepping down from this is periodic updates (anywhere from 5 minutes to once daily).  Batch updates with manual intervention (downloading a file from one system, transforming it into a suitable format and uploading it to another).  The lowest level of integration is a manual interface where outputs of one system are keyed into another.  This is only acceptable for very low transaction volumes or during a trial learning phase or proof of concept.

There is of course nothing wrong with starting off the use of a system without integration or with manual integration as a valuable way to start getting benefits early and learn more about the new system.  This learning will often inform the development of the interface and how the systems best work together.

Here are a few examples integration between systems in a warehouse.

·        Purchase order information is sent from a customer to the host system.

·        Order information is sent to a WMS and order confirmations returned.

·        A WMS send order information to a Pick To Light subsystem and order confirmations are returned.

·        Despatch information is sent to a freight system and con-note numbers and costs are returned.

·        A transport management system sends manifest information to a fleet management systems and receives proof of delivery information in return.

·        A WMS sends information to a check weight system and receives a confirmation in return.

·        A WMS sends an Advance Shipping Notice to a customer’s system.

Lack of integration adds cost and introduces the potential for errors in re-keying information.  It creates data gaps where data required by an operator must be sourced from two or more different systems.  It makes reporting of business information more difficult and more costly, and as mentioned in previous posts data and the ability to analyse it is one of the most important assets a business now has.

I sometimes see businesses with a non-integrated system such as a WMS and whilst I can understand that the lack of integration got them up and running quickly, there is no roadmap to integrate the systems and the expected costs of integration are too high.  It is far better to determine the roadmap to integration with full understanding of the cost before you embark on a project.  Sometimes the integration costs can blow out the cost of a project and reduce the ROI to unacceptable levels.  In this context then it may be better to look for an alternative system that has already been integrated to your host system where the integration costs are low.

Only in the context of a commitment to full automated integration of all warehouse related systems can you keep the productivity and service of your warehouse at world class levels.  Let this be your starting point and aim whenever considering the implementation of a new system in your warehouse.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 Mistakes adding cost & killing productivity in your warehouse #16: Use of multiple freight systems

Most if not all carriers today will want you to give them your freight despatch information electronically.  Whilst there are still plenty of circumstances where a hand written consignment note is unavoidable, the processing of manual con-notes is more expensive.  To make this easier for you and for them they have developed computerised freight management systems.  Unfortunately these systems are designed to work with one carrier (i.e. the carrier providing the system).  This means that when you inevitably need to use the services of a different carrier that is either cheaper or provides services that you cannot get from your other carrier you end up with another freight system.  This can end in multiple carrier specific freight systems.  This is a mistake, it is better to have a single (paid for) freight system.  Why should I pay for something that I can get for free, you ask?  Well I’ll tell you.

Carriers don’t want you to use anyone else for your freight, a single carrier system tends to lock you into that carrier.  Once you break this barrier and have multiple systems you now have a training load to learn an additional system.  It may also take different sized labels and so you have an additional critical supply to manage.  You have just added more points of potential failure.

You have now also split your data into multiple systems.  The 21^st century more than any other is the age of data and you should regard your data as a gold mine to be guarded and protected from loss and fragmentation.  What use is my old freight data apart from looking up old consignment notes for Proof of Delivery requests, you ask?

Freight will be one of your company’s largest costs and not being able to measure and report on its performance and costs as a whole package, is a significant deficiency in your reporting.  Freight cost reporting is significantly easier if you have all the data in one multi-carrier system.  A multi-carrier system lets you extract data from all of your services so that you can get it costed by alternative carriers when you perform a freight review; which you should do annually.  Call me if you have never done a carrier review, we do this quickly and cheaply for you, even if your data is fragmented.

In addition to managing your freight costs, if you tie back your freight data to your order management system you will now be able to do better Cost To Serve analysis of your customer base to determine relative profitability of different customer groups.  This is very useful to assess the underperforming areas of your business.

If you have a large number of shipments per day there is a significant productivity gain to be made from having your freight system integrated to your WMS or order management system to eliminate data entry.  Creating freight labels at order confirmation or before each order pick (see no.15 on speeding the packing process) is a huge productivity booster.  You only want to integrate one system not four or five so this means you need a multi-carrier system.  One of our clients integrated their freight system and saved one full FTE*.  At around $55,000 p.a. for a storeperson for a development cost of only $5000 this had a payback of less than a month!
*FTE=Full Time Equivalent, or the labour equivalent of one person working full time.

There are three major multi-carrier freight systems currently available:

1.    IFS Smart Freight

2.    Supply Master

3.    Moveitnet

All are good and capable of being integrated with a host system.  Their cost structures and functionality vary so look at all three and choose the best one for your circumstance.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 mistakes adding cost and killing productivity in your warehouse - #15

15.   Slow packing process

Do you have a business that requires you to pick and pack your small items into an outer carton for shipping?  These might be large B2B orders or small orders from an online B2C business.  Do you have separate picking and packing functions?  This is a common mistake as it is inefficient due to the double handling of each item.  It is handled once by the picker and then again by the packer who will usually also be responsible for performing a double check of each item as they pack it into a carton.  This is simply a waste of effort that adds no value.  According to the principles of Lean, re-packing is a waste of motion, and double checking is a waste of over-processing.

The solution is to pick to carton wherever possible so that each item is handled only once.  This is fine if your typical order size is large but will be slow if your orders are small and you have a large product range and a significant warehouse travel path to pick each small order.  To get around this problem you need to adopt multi-order picking so that you can pick many orders in each pass through the warehouse.  See mistake 14 on picking strategies for more information on how you can pick more efficiently.

Pick to carton will require you to know what size carton you need to contain the order.  A sophisticated WMS will give you this information based on the weights and measures for each item.  If you do not have this then you will need an experienced operator to assess the carton requirements or simply have a supply of different sized flat cartons on the picking trolley to select from once the operator can see the size of the items to be picked.  Another method is to pick to a plastic bag which can then be put into a suitable sized carton at the end of the pick.  Pick to bag is also useful if your items are really small and you want to pick a lot of small orders in one pass and put them into cartons later.  There is also no reason why you can’t pick directly to Post-packs or other freight bags.

The key is to be able to identify what order is in what plastic bag or carton so that at the end of the pick the order can be confirmed and shipped correctly.  This can be done by attaching the pick slip or a label with the order number to the carton or bag.  With a sophisticated WMS you would be able to know the correct carton size and print a shipping label for each carton so that at the end of the pick the order would be complete and ready for shipping, saving you even more time.

The assumption of this process is of course that the order has been picked accurately and no further checking is necessary.  If you have been picking on paper and packing separately for years then you will know that you have a certain percentage of picking errors.  However I will wager that your packers do not find all the errors and that you still have service failures as a result.  On a pragmatic level you can look at the relative costs of the excess labour in packing vs. the costs of service failures and make a decision, but a cheap process that damages your business through poor service is not really the answer either.  A better way is to make use of available technology to improve your productivity and build quality into your picking process.

A WMS with wireless terminals making use of barcode scanning or voice directed picking will usually have a payback of around six months depending on the size of your business.  This technology will allow you to provide improved service to your customers and reduce your costs at the same time.  I do want to stress however that in accordance with the principles of process design you design the process you need for your business first and pick the technology second.  So although a WMS is a highly desirable technology it is also possible to achieve the same result with a paper based system.

This is post is taken from an ebook that is now available as a bonus to members of the Warehouse Performance Initiative (WPI*).

The WPI is a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals.  Joining the WPI will give you access to a growing range of free and premium content which will have a direct impact on improving your warehouse performance when you apply it to your business.

You can also subscribe to this blog by email and get my future posts delivered to direct your inbox.

21 mistakes adding cost and killing productivity in your warehouse - #14

14.   Incorrect picking methodology

Picking is the highest labour activity in the warehouse and consequently gets a lot of focus on optimising it by both the Warehouse system developers and the materials handling equipment manufacturers.  Failing to select the best picking methodologies for your particular business needs will see you missing out on what can be relatively easily won productivity gains.

There are three basic picking methodologies and a nearly endless variety of variations depending on the technology, equipment and layout employed in your warehouse.  The three basic picking methods are:

1.    Discrete picking

a.    Picking one order in its entirety before moving onto the next order.  This is the standard picking method employed by all order processing systems.

b.    Most suited to intermediate to large sized orders comprising multiple pallets or cartons of stock (including large re-pack orders).

2.    Multi-order picking

a.    Picking several orders at once in one pass through the warehouse.  If you have ever grabbed pick slips for a dozen single line orders and sorted them into correct travel sequence then you have performed a multi-order pick.

b.    The key to multi-order picking is to create a batch of orders that can be picked by one person onto one trolley.  Each order is assigned a carton number.  The picks are sorted into travel path sequence regardless of the order number.  Each pick is taken from the shelf and placed into the carton number associated with each order.

c.    Multi-order picking functionality is normally only provided by a WMS, but provided you have a modern system with some flexibility in data access, it is quite possible to create a paper based multi-order pick. (Contact us for more details)

d.    Suited to small order sizes where the entire order will fit into one or two boxes.

3.    Batch pick and assembly (also called consolidated picking)

a.    Performing a single pick for the sum of the quantities required for each item in a batch of orders.  This allows a single pass through the warehouse to pick an entire wave of orders.  The stock is staged in an assembly area and needs a subsequent pick process to assemble the individual orders.

b.    Most suited to picking from slow to access areas where discrete picking would be very slow.  This can be used as an entire picking strategy but be wary of the fact that the assembly process is effectively double handling and the selection of items from a large batch pick can be slow.

c.    The slow assembly process can be facilitated by locating the items in the assembly area so that they can be found quickly.  This functionality is not common, but not difficult to code if required, and manual workarounds can also be devised to speed the selection process.

Some common variations and combinations are:

·        Discrete pick the fast zone batch pick the slow zone or bulk areas

o   In this method the majority of the order picks are done for a single order from the fast pick area and a second batch pick for the order wave collects the stock from the slow zone and stages it in an area of the fast pick zone. The order picker then collects what he needs from this staging area to complete the order and thus avoids the travel time through the slow zone.

·        Multi-order pick the fast zone and batch pick the slow zone

o   Similar to the above but more suited to small order picking.  As above but the picker completes multiple orders in one pass through the fast zone.

·        Zone picking (discrete or multi-order or batch)

o   For very large orders or where stock requires different storage conditions grouped into location zones (such as temperature control, security, dangerous goods, special racking).  The order is broken up into zones and picked separately in each zone (often by different operators).  The picks from each zone are usually then brought together on the dock for consolidation for shipping purposes.

Further adding to the options available are various technology and materials handling equipment assisted methods.  Here is a quick summary.

·        Goods to the man systems

o   These are a means to eliminate picker travel and speed up picking.  They can be used for discrete or multi-order picking depending on their level of sophistication.

o   Vertical or horizontal carousels keep the operator in position and move the shelves to present the goods required for picking.  These systems require their own control systems that interact with the WMS to manage the picking and put-away processes.

o   Kiva systems use mini AGVs that move shelves of product to present the goods to the picker.

·        Conveyor based zone picking

o   This methodology is the province of the large distribution centre.  A conveyor moves totes for orders through each zone of the warehouse so that a picker can be restricted to picking from a limited range of items into the tote.  The tote is directed to each zone where a pick is required and ends up at a despatch station for freight labelling and staging.

o   This method also works for carton picks but in this case the picker picks and labels cartons on to the conveyor which directs the cartons from each zone to sortation lanes where the cartons are palletised for each order.

o   Some of the picking may be automated picking systems such as the A Frame high speed picker or AS/RS systems picking pallets and delivering them directly to the dock with AGVs.

·        Wireless terminal assisted picking

o   Warehouse management systems provide the opportunity to manage the information normally presented on a paper pick slip with in any way you could possibly imagine.  An RF terminal can drive discrete, multi-order or batch picking and present the information to the picker via a screen or via voice and even vision based systems

o   Screen and barcode scanning is the most common.  All products and warehouse locations are barcoded to build accuracy into the pick process.  The RF terminal could be fixed to a trolley or forklift, or hand held.  There are also wearable units that allow the user constant use of both hands and eliminate the need to pick up and put down a scanner.

o   Voice directed picking has been implemented widely and is highly efficient because the picker does not have to stop to read a screen or scan a barcode.  Accuracy is built into the process with verbal confirmations of check digits and quantities picked.

·        Pick To Light systems (PTL)

o   Pick to light is a static racking based system usually built into carton live storage (roller racks) that uses a small electronic display at each pick face to indicate how many items to pick.  The operator presses a button to confirm the pick.  This is suited to high volume discrete picking (several hundred units per hour) of small items into repack cartons or totes.  PTL is often one of the zones in a large distribution centre but can also a be stand-alone installation.

What picking method should you use?  This is a very good question and it will depend on your business profile - what sort of inventory you carry and what your order size, quantity and frequency are.  Once this is known then it is a matter of costing the various options to find a suitable return on investment.  The important point to realise is that you may be missing out on increasing both your productivity, service level and accuracy by not taking advantage of what the best picking methods have to offer your business.

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