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.

Is your Internal logistics helping your business grow, or holding it back?

Internal logistics is just as important as customer shipments

Variety is a great thing and can teach you a lot.  Over the last few weeks I have been helping

• a hospital
• an equipment company
• a mine
• a hotel

3 out 4 were concerned with internal logistics.  With all the focus that you see on commercial supply chains the criticality of internal logistics is often forgotten.  If your revenue engine is service delivery and not shipping products then you will not have a commercial oriented supply chain but your internal logistics are no less critical to the success of your business.  Unfortunately the internal support departments of an  organisation can end up being neglected until they start to impact the performance of the business.  Better, I think, to realise that internal logistics feeds and supports the service delivery and helps it to be profitable and grow.

The irony of the neglect is that internal logistics is usually pretty straightforward and (especially if it has been neglected) will not require a massive investment to significantly improve its performance.   A new layout of racking and stock that optimises stock storage and product flow can work wonders.  Small changes to the use of an existing system can work wonders in process efficiency.

If it is time for a major upgrade then you should know that Warehouse Management Systems are not just good for customer facing warehouses but also for internal logistics operations.  The simpler demands of internal logistics mean that simpler and cheaper WMS can be implemented, producing fantastic improvements in inventory accuracy and productivity. This will cut costs and let the front line people concerned with service delivery get on with their jobs, instead of worrying about whether they have the equipment and supplies they need to do the job.  

The big opportunity hiding in most internal logistics operations is that you need to spend a little more effort on the support processes to make big gains on the service delivery side.  Perhaps the classic example of this is in the retail sector where they have long ago realised that sending store display ready  stock to their retail outlets saves ton of money and time (and space) in the back of house retail store.  Clothes are shipped to the store on hangers, priced and ready to hang up; not in cartons requiring hours of sorting and preparation by retail staff before they hit the shelves.

So how could you change your internal logistics to better support your revenue engine?

If warehousing, logistics and supply chain are important to your business or your personal career then why not follow this blog by email or on Google+.  To tap in to the full benefits of business and career boosting ideas I suggest you join The Warehouse Performance Initiative.

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.

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 - #13

13.    Products not slotted according to pick frequency

Traditionally, before computerised stock systems people stored products in warehouses in logical groups so that they were easy to find.  For example if you were a hardware wholesaler you would keep all the hand tools together with hammers, chisels, screwdrivers etc. all grouped together.  Lots of small warehouses still do this, even if they have a location system.  This strategy soon starts to fall apart when the business grows and becomes more dynamic.  

Changes in product stocking levels and turnover of products will require constant rearranging of stock to maintain the logical stock arrangements in the warehouse.  Because this is too much work, the system breaks down and stock gets stored wherever it fits and stock gets randomised and increasingly hard to find.  Does this describe your warehouse?

The simple antidote to this problem is to store products according to pick frequency.  Picking is the highest labour activity in the warehouse and as such is the process to be optimised beyond all others, which is why so much attention is focussed on it.

Product slotting is the calculation of the best place to store a product to minimise subsequent travel associated with moving of that product through the warehouse during put-away, replenishment and picking operations.

At its most basic this is the casual observation by the warehouse staff that it makes sense to keep a particular product down low because they pick it all the time.  The next level of sophistication is perform a Pareto* analysis of your order history to determine the fastest moving products in your business and apply this information to where you store your products and what goes in the fast zone or the slow zone of your warehouse.  Over time your business and product profile change so this must be periodically revised to keep your slotting current.

*Pareto analysis is the application of the 80/20 rule where 80% of the picking is from only 20% of the items in the warehouse.  Keep this 20% in the fast zone and you make a huge gain in productivity.

A basic Pareto analysis can be done on a spreadsheet with minimal effort.  We will be publishing a how to guide and spreadsheet template for members of the Warehouse Performance Initiative in the future.

Awareness of promotions and new products with a rapidly growing demand, and items that are dying or obsolete is also helpful to maintain the warehouse efficiency.  A product slotting review should be done at least twice per year if your business changes only slowly and monthly to quarterly if changes are more rapid and you want to keep your warehouse movements optimised.

The ultimate sophistication is to use product slotting software.  Optislot is the only standalone product in this market at the moment and is now available in Australia through Synermatic.  With typical improvements in replenishment and picking productivity of 10-15% this is a must have investment for large DCs running on thin margins.

According to the website: 

“OptiSlot DC addresses the complexities of slotting by utilizing advanced mathematical algorithms which consider a product's dimensions like weight and velocity, physical characteristics of your environment including slot configurations, pick path and material handling equipment, and operational goals like pallet building, seasonality requirements and retail groupings.”

It's probably worth noting that this is only possible when you have the data.  If you don't have a modern WMS with an accurate data set of your warehouse and product dimensions then this tool will not be any use to you.

Synermatic are also developing a subscription service for organisations that need more than a basic Pareto analysis, but do not wish to invest in purchasing the software, contact them for more details.

Some Warehouse Management Systems also have a product slotting package available.  Most notably Manhattan which was designed by the same person who developed Optislot.

The big hurdle with slotting your warehouse is not getting the information; it is acting on it.  What do you do when you find out that 75% of your stock is in the wrong place?  This is a huge and seemingly wasteful task if all you do is move it from bin to bin.  The answer is to:

• Understand that the effort required to move the product to the right place will pay you back in productivity gains (reduced labour)
• Let natural turnover drive the process over time.
• Change the home bin or pick location or put-away zone etc. (depending on what systems you have available) so that as new products come in, they are put-away where they should be and the wrongly located items are picked out.
• After a month or two bite the bullet and move out anything left behind.
• If natural turnover hasn’t moved it then it is a slow item that may take too long or never pick out.  You do not want slow moving items in fast moving areas!!!!!  I cannot emphasize this enough.
• Perform a more regular slotting review so that you do not get yourself in such a mess in future.

Finally, some personal experience of what having a jumbled warehouse is like.  When I was Logistics Manager at Clifford Hallam I had to re-layout my warehouse to install a lot of new racking (more than doubling the storage by using the height of the building).  I did this whilst continuing to operate the business.  

This process took several months and the entire stock got jumbled due to all of the relocations required during the installation.  My overtime costs for normal operations went through the roof!  I finally sorted it out by re-slotting and working even more overtime (that went down well with my boss, as you can imagine!) to move product around to where it needed to be.  My excess labour fell back to even better than before the re-design and everyone was happy in the end.  So if your warehouse has never been slotted properly then imagine what productivity treasures are waiting to be revealed!

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 - #12

12.    Cluttered and badly organised operations benches

Quite frankly many operations benches that I see are a mess, cluttered and covered in stuck orders, returns, old paperwork, out of date work instructions and broken staplers and tapeguns.  There is no point having a highly efficient warehouse if you lose your hard won productivity gains with slow administration in receiving and order confirmation/packing freight. 

Here are my tips for best practice in operations workbench organisation

• The first aim of an operations bench should be to have nothing on it apart from work in progress.  Computers, printers, labels, pens, cartons, pending paperwork should be stored off the surface of the bench itself.  Either above or below.  This way nothing will get lost or mislaid.  Everything is easily to hand and never in the way.
• Custom make your workbench to suit your process.  Make sure everything is in arms reach from the operator.  This can be as simple as installing some shelves and Dexion bins to give everything a place.  If you work space is limited you can install monitor and keyboard stands to get the computers off the work top.  Printers can be installed under the bench or on a separate stand.
• Lay a padded anti-fatigue mat in front of the bench.
• The areas around the bench must be kept clear also with a standardised workflow of products and paperwork in and out.
• Sometimes the best bench is mobile.  Breaking down a mixed pallet of small items can be done on the dock with a multi-level trolley/bench that allows you to sort, check off, book in a delivery and then roll the trolley to the rack for put-away.
• Similarly on the outbound process, orders picked to a carton on a picking trolley can be checked, labelled and closed on the trolley and then rolled to the dock for staging ready for pick-up.
• Take advantage of wireless mobile terminals, and printers or even a laptop to allow transactions to be completed on the spot without the need for constant travel to/from a bench.  Installing a wireless network in your warehouse (even a cheap one) will free you up to perform warehouse transactions at the point of activity.  This is a key driver of efficiency and accuracy and is a good interim step if you have not yet invested in a WMS.

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 - #11

11.    Not separating fast pick areas and bulk storage

At the heart of all warehouse productivity improvement is the target of eliminating the waste of motion.  Simply moving something from one place to another in the warehouse does not add any value.  One of the most common mistakes we see in warehouses is the failure to optimise the placement of the most commonly picked items to reduce travel path when picking and replenishing.

What do you do when you have lots of stock of those fast moving products?  If you keep all your stock together it will take up so much space in your fast moving rack zone that your fast moving products will not be near each other.  

The solution to this problem is to create a pick location with just enough of each fast moving product to allow you to keep a lot of products in a restricted amount of space and keep the bulk quantities of the stock somewhere else in your warehouse.  This means you will need to periodically replenish the stock of each item in the fast from the bulk zone.  This process is known as pick area replenishment.

The configuration of your fast pick zone will depend upon your products and their physical size and order profile.  Ideally you want at least a day’s worth of stock in a pick face and more is better.  If the stock is batch controlled or expiry dated then you will want to have two pick faces to allow for different batches/dates.  You should avoid mixing batches/dates of product in the same location if batch control and traceability is important to your business (it may not be).

Replenishment of the pick face can be done on demand or to a schedule.  On demand means that you do not do any replenishment until you absolutely have to.  When you release a wave of orders the replenishment moves needed to fulfill them will also be generated.  The disadvantage of this is that it can slow down your order fulfillment as you cannot complete those orders waiting of the pick face to be replenished.

Scheduled replenishment means that you can use slower times of warehouse activity to perform replenishment so that your high activity times during order processing can be devoted to processing orders in the shortest possible time.  The best solution will depend on your particular cycles of activity for your business.

If you have a basic business system that only allows one location per item (there are still too many of these around) then how do you find the bulk stock if you have set the pick face to be the only location for the item?  There are two solutions to this problem:

1.    Keep the bulk stock nearby.  Usually on a level above or below that is not located on the system.

2.    In a manually recorded location with a paper trail to the pick face.  Keep a card in the pick face with a list of locations where the balance of the stock is held.  Cross off the locations when you empty each location during replenishment and write on new locations when you receive and put-away new stock.  Also note the quantity held by the pick face so that you can use these cards to drive the replenishment process when pick faces are empty.

Further productivity gains can also be made by making sure you store your bulk stock to minimise the travel required during replenishment.  Keep the bulk stock of the fastest moving products in the fastest to access bulk areas.  This is another example of product slotting technique which we will cover in more detail in #13.

This is post is taken from an ebook that will soon be available as a sign up bonus to members of the Warehouse Performance Initiative (WPI*).  Keep an eye on the home page or send an email to admin@logisticshelp.com.au if you would like to be join the WPI and get a copy of the report as soon as it is available.

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*WPI is our global initiative to raise world productivity by helping small to medium businesses develop amazingly brilliant warehouses. The WPI is essentially a place for learning how to improve your knowledge of warehouse operations improvement, sharing skills and ideas and helping other warehouse professionals  (coming soon!).