I can still hear the words my very first mentor said to me on the day I was promoted to “General Manager” of a million dollar branch in the late ’70s. I was just 32 years old but those words are still crystal clear in my mind. He said: “Rick, you’ve got a pretty good handle on what it takes to succeed in sales, but sales is different from running the warehouse. There are two key principles you must always keep in mind if you want to establish and maintain a smooth running warehouse. If you do these two things, everything else will fall into place from an operational standpoint.” “First -- Make sure you always get a days work done in a day.” “Second -- Make sure you always maintain a high level of accuracy to minimize errors.” I was still in my very early 30s and it took me a little while to figure out what he meant by those comments. Let’s take them one at a time.
Get a day’s work done in a day.
Most warehousing costs are fixed, material throughput (picking, packing, receiving, put-a-way and shipping) is variable and this variability changes by season and even by the time of day or days of the week depending on the type of business you are in. If the warehouse cannot consistently pick, pack and ship all orders, store all receipts, manage inventory and do these things efficiently and with a high level of accuracy, you will constantly be operating in “fire fighting” mode. Continuously operating in this mode leads to uncontrolled chaos makes it virtually impossible to provide high and improving levels of customer service, and makes it impossible to get a days work done in a day.
Maintain high level of accuracy to minimize errors.
Every error that occurs in the warehouse represents a large unnecessary cost and the potential for disappointing a customer. Most industries stock the type of products that should allow you to set a goal of at least 98 percent physical inventory accuracy and a 98 percent shipping accuracy, regardless of the size or degree of automation employed (In the late ’70s we had very little warehouse automation).
So why is it that many warehouse operations struggle to achieve their objectives? The answer to that question, simply put, is that most warehouses are outbound constrained. The primary focus is to consistently and accurately complete customer shipments on time. That challenge is more difficult and more important than the internal challenge of receiving and put-a-way operations. Therefore, these challenges are often subordinated to maximize the efficiency and accuracy of order picking and customer service. However, the decisions made and accuracy achieved during receiving and put-a-way is extremely important and it has a dramatic impact on customer service — a receiving error will almost inevitably cause a shipping error. It can become a viscous circle.
The following discussion on stocking strategy may help you break this circle and achieve all your operational objectives:
Stocking Strategies – The determination of how you stock your inventory within your warehouse (sometimes referred to as “slotting”) has a major impact on your outbound efficiency and accuracy. Stocking and storing options should be based on product velocity, co-location of common products and replenishment exploitation from prime locations. Options selected should not be based on what is convenient for your receiving warehouseman. Don’t forget to talk to your employees about this challenge. There is no substitute for real experience from the people that live within the experience on a daily basis.
1. Prime Stocking Locations – Segregate by Product Velocity
Prime stocking locations are precious and valuable. They should not be wasted. There are only a few “prime” locations in your warehouse. Prime locations are those locations that are the easiest to pick from with the least effort and shortest time. Depending on the set-up, they could be floor locations, lower levels of storage racks, shelves or just the areas closest to your shipping dock. You can significantly improve efficiencies by locating your fastest (highest velocity) stock item in your prime locations. Additionally, accuracy will increase and cycle counting also becomes easier. To make this effective, you will have to separate slow moving inventory in receiving before you stock the inbound shipment. And of course, tracking pick velocity (the number of times an order is picked-not the dollar volume) becomes mandatory.
2. Co-locate Common Products
Tracking pick velocity and analyzing orders will allow you to determine products that are common to specific types of orders. If different stock items are ordered together on a regular basis, it only makes sense to try to stock them close together in common locations if their physical dimensions allow for it. This information will also be helpful to the sales team. Products ordered together more than 25 percent of the time should be given consideration for co-locations.
3. Replenishment
Replenishment is a method of exploiting prime locations. It often makes sense to sub-divide prime stocking locations rather than having an entire pallet of a slow moving product sitting in that prime picking location. By sub dividing the prime stocking location, additional items can be stored there. This means breaking pallets and having a reserve location for the items that are slotted in the prime location. You then replenish the prime location based on predetermined minimum quantities from the reserve location. This does require additional work but more items are stocked in the prime location under this concept. This increase in picking efficiencies reduces fork lift movement and typically the extra costs incurred are more than covered by the efficiencies gained.
These three suggestions will help improve accuracy and minimize errors. Now it’s up to you to get a days work done in a day.
No comments:
Post a Comment