All the talk today in terms of warehouse optimisation is about technology, automation and robotics. However, for some companies these advancements are not feasible. Company start ups may not be able to afford such technology whilst others may feel they are not ready to make that move just yet.
This doesn’t mean to say that these warehouses cannot be operated efficiently and cost effectively.
There are a number of ways in which warehouses can be organised to be efficient by utilising and implementing simple procedures, tools and processes.
These are seven tools which include elements of Five S methodology.
Five S methodology suggests that companies follow a certain regime within their warehouses:
• Set in order
With regard to the following tools – these look to improve both the efficiency and productivity within the warehouse.
The first tool I always suggest to clients is an ABC – DE analysis.
1) ABC – DE analysis (sort)
Firstly the current stock file needs to be analysed and each product line or stock keeping unit (SKU) needs to be categorised as follows:
A – these items are the most popular items and are constantly being ordered by customers. These are items that we classify as fast movers or runners. It isn’t the quantity of items ordered but the number of times they occur on a pick list necessitating a visit to the pick face.
B – these items are what we term medium movers and are also classified as repeaters
C – these items are our slow movers or strangers.
It is commonly agreed that A items tend to account for 20% of the stock items, producing 80% of the orders. The B items make up 35% of the stock lines producing 15% of the orders whilst the C, D and E items make up 45% of the stock lines and only 5% of the orders.
D – these items are better served by being sent direct from the supplier rather than being held in stock
E – these items are the non-movers and need to be removed or exited from the warehouse. Before the final act of removing the items, you need to ensure that there is no likelihood of future sales. Items can be heavily discounted, returned to suppliers, sold to jobbers, given to charity or to the staff, recycled or finally destroyed.
Note that an ABC analysis shows movement over a specific period. An item that has recently been introduced into the stock portfolio could be a new stock item and therefore has no stock movement history. This should not be removed from the warehouse until we build up its stock history.
This ABC – DE analysis should be undertaken on a regular basis, especially if the company has a significant amount of seasonality. Although there is a cost in rearranging stock positions within the warehouse this is more than compensated for by the reduction in overall movement whilst picking.
2) Placement. (set in order)
As with “set in order” the idea is to ensure that all fast-moving items are placed close to the despatch area in order to reduce the amount of travel within the warehouse. Placement also includes ensuring that products that frequently appear together on the same order are placed adjacent to each other in the pick locations irrespective of family groupings.
It’s not only products that should be put and kept in the right place – this also refers to equipment within the warehouse ensuring that trucks, scanners, voice units, cleaning equipment etc are given a specific location and when staff have completed their tasks the equipment is returned to the correct location.
The act of picking orders tends to be the most labour-intensive operation within a warehouse. Therefore, it is imperative that we choose the most efficient method of picking for our warehouse operation. There are three main types of manual order pick:
• Individual order pick or discrete order picking
Here the picker takes one order at a time into the warehouse and picks the whole order before returning to the despatch area with the completed order in readiness to collect the next order. This method of order picking can use paper pick lists, label picking, bar code scanners, voice and vision picking units. The individual order can also be split into smaller orders and picked on a zonal basis with a consolidation process at the end of the pick.
• Cluster pick
Cluster pick refers to an operation where the picker will go out into the warehouse with multiple orders. Without technology this can prove to be very difficult and time-consuming. The idea is to reduce the overall amount of travel through the warehouse. The introduction of picking carts with put to light technology or screens with a depiction of the tote or box to place the item into enhances the accuracy and speed of pick.
• Batch pick
Batch picking can be used for large numbers of orders for the same commodity(ies) as found with e-commerce orders and following sales promotions. Orders are consolidated together into one pick list and the operator picks the total number of items on the consolidated pick list. Once picked the operator returns to the despatch area and the total items are broken down into individual orders. There are two types of batch picking – pick to line and pick to zero. In the former the operator collects full carton or pallet quantities of the product line required and at the end of the order allocation, the remaining items are returned to the pick location. In pick to zero the initial picker picks the exact quantity required for the consolidated orders. Depending on quantities required products can be picked from the pick location or from reserve storage.
All the above can utilise zone picking where individual operators are allocated to specific zones within the warehouse and the orders travel not the operator. Automation results in a goods to person operation.
4) Refuse or rubbish (Shine)
Ensure that the warehouse is clean and tidy at all times. Employees tend to work better in a clean environment and there is less likelihood of accidents if debris, liquid spills etc are cleaned up as soon as possible. This includes regular daily cleaning and inspections. It is a good idea to make teams responsible for the cleanliness of their own areas.
This results in:
• keeping the work area clean throughout the shift.
• those cleaning being able to identify and properly store equipment
• those cleaning are able to inspect the equipment such as racking and spot problems.
• those cleaning knowing the safety hazards that exist in their work area
5) Inventory counts
In order to keep the integrity of the stock and ensure that pickers do not arrive at an empty pick location it is imperative that stock is counted on a regular basis. This can be undertaken through perpetual inventory counts or cycle counting. We can also utilise our ABC analysis to prioritise the products counted and the frequency of count. For example, 8% of A items can be counted weekly, 4% of B items and 2% of C items. This ensures that all C items have been counted at least once during the year. If items need to be counted more frequently you can increase the percentage for each category.
Furthermore, if you can agree with your auditors that this method is accurate and comprehensive then you might be able to forego the annual wall to wall count which is both time-consuming and disruptive to the operation as a whole.
SMART stands for Specific, Measurable, Achievable, Relevant and Timed. There is an old saying – “if you don’t measure you can’t manage”. This is very true and companies need to introduce both performance and productivity measures. A base position needs to be established based on existing productivities and standards and targets agreed to enable the warehouse operatives to increase productivity and improve customer service. Typical warehouse productivity and performance measures include:
• Dock to stock time (Time from vehicle arriving at the bay to time products available for sale)
• Pallet put-away rate (Number of pallets put-away into racking per hour)
• Lines picked per hour (Number of product lines picked per hour)
• Order accuracy (Number of orders despatched as per the customer order)
• Inventory accuracy (Correct number and type of products in correct locations)
• Labour and equipment utilisation (Percentage utilisation of operators and equipment)
• Damaged inventory (Items damaged in the warehouse as a % of throughput)
• On time in full despatch (Accurate and complete orders made for collection at designated time)
• Cost per unit despatched (Total cost of warehouse operation divided by the number of units despatched per annum)
• Time lost through injury (Labour days lost through injuries sustained in the warehouse)
These are just a few of the measures that can be undertaken in the warehouse. Note under SMART they need to be specific and measurable and also relevant to your business. Do not set targets that are far in excess of the capabilities of your staff. They need to be stretched not demotivated!
7) Employee Safety
Needless to say, this is the most important aspect within a warehouse. The safety of staff is paramount. Staff need to be trained to use the equipment provided and only trained staff should be permitted to use the forklift trucks. Specific walkways should be provided to ensure that pedestrians and vehicles are kept apart and all staff and visitors are required to wear personal protective equipment. Furthermore, staff need to report all potential at risk behaviours and near misses. Risk assessments and audits need to be carried out regularly.
Introducing these tools and procedures should not cost a great deal and will greatly enhance the warehouse operation.
These tools and processes can be found in the following books.
Warehouse Management (now in its third edition) www.koganpage.com/WM3
The logistics and supply chain toolkit (now in its second edition) http://howtologistics.com/