Unlocking Warehouse Efficiency: Strategies For Optimizing Operations

The warehouse operations floor can be a goldmine. That’s a bit of a bold statement. Here are some facts to support that claim:

• A picker in a warehouse can spend as much as 70 percent of their time traveling to complete their work assignments.

• Reports show that warehouse workers can lose 15 minutes per day due to process inefficiencies.

• Shipping accuracy is reported to be 96 to 98 percent correct. Of course, your operational environment may be different, and these are generalizations. The point is that these are great places to focus on improving performance, engaging the team, and making those monthly performance autopsies a little less painful.

Before digging into some strategies to attack those areas for improvement, I’d suggest a couple of qualifiers.

If you are not tracking KPIs, you need to start. You can’t measure improvement without a baseline. The list of KPIs that a business can measure is long. A few KPIs that apply in this case:

• Picks Per Hour – How many picks were completed/how many hours worked?

• Fill Rate – The percentage of an order that has been picked complete. If you are increasing the focus on picking velocity, be careful that the team doesn’t start cutting lines to improve their rate.

• Shipping Accuracy – I’d suggest you measure this internally. It will cost some labor to audit the orders. Waiting for disappointed customers to complain is not a great strategy. Plus, customers may not complain at all. They may just go elsewhere.

• Non-standard Activities – This will be hard if you don’t have a labor tracking tool. One of the best sources of data is when your picking team is off the clock waiting for another activity to be completed. You may even want to have them report manually to get a directionally correct idea of the condition.

Before we review some suggestions for improving these three metrics, here is a word of caution. Order processing through a DC is a chain of events. Picking is in the middle. If you speed up picking, you need to speed up the prior processes tasks like replenishment and post processes tasks like shipping. Not being aware of those impacts and making changes to the entire material flow can create bottlenecks and may put the operation in a worse spot.

Let's dig a little into strategies to improve the three conditions that we have been discussing. We will not be reviewing any technology at this point. That is a different level of complication. For our purposes, we will discuss traditional strategies to improve performance.

Along those lines, I don't think leadership needs to solve these challenges in a silo. Get with the team closest to the work for their thoughts. In addition to observing the process, interview the teammates. Let them be part of the solution.

As mentioned at the beginning of this document, we want to improve the picking rates per hour. The most common area to address is travel time.

The first place to start in reducing travel time is inventory slotting. For slotting to be effective, you need to understand the outbound SKU velocity. Without an accurate understanding of your high-velocity SKUs, you cannot properly slot your inventory. In simple terms, you need to create density in your picking locations and, if possible, locate the fastest-moving inventory close to your shipping area. If we are using an A, B, or C categorization for the SKU velocity, the A-movers are nearest the pack-out/ shipping area, B items are further away, and C is the most remote. The logic is simple. The products that you touch the most should require the least effort.

Slotting can be more complicated, depending on your layout. The bottom line is to get your fast-moving items processed with the least amount of effort.

Similarly, zone picking can reduce travel by restricting the pickers to areas in the picking operation where they manage all of the picks in that area. Like batching picking, this process will require some type of consolidation or sortation process. That additional process step will need to be weighed against any savings from reducing travel for the initial pick.

Note that part of this evaluation is to look at the picking path that the operators are following. That can also drive some time savings as the picker's travel path minimizes the distance traveled to make a pick. Also, if you move into a batch or zone picking, you may get congestion that requires adjustment.

Shipping errors are the strongest example of non-value-added activities. The business invests the time to receive the product, inventory it, move it through the material flow process, ship it, and never get paid. Then, the business may get a penalty from the customer, may have to pay to ship it back, or, in some cases, have the customer scrap it and replace the product. On top of all that, you’ve disappointed the customer.

While it can be seen as a non-valueadded activity, auditing is a source of information that allows you to go back through your process for gaps that create errors. Waiting on customer feedback for shipping errors is much too late. You need to conduct an audit and take that data back to find the root cause of the issue. If the best answer is picker error or training needed, you need to look harder.

As you gather data, you will be able to move to the next level of auditing Process auditing. By gathering audit data on errors and driving back to the root cause of the error, you will see the gaps in the process. As you learn more, you will shift your audits into the process rather than at the end when service is at risk. Over time, you will have a robust process that drives a quality delivery from the start to the finish. Your endof- the-line process becomes a small statistical-based activity.

Before making major investments in technology to drive improvements, take a hard look at your process and the material flow through the building. Look at travel time and redundant steps. Map out your processes, look for non-valueadded activities, and see if there are ways around those steps. There may not be, but they should be challenged.

Finally, shipping errors are a loss to the business on multiple levels, but you cannot rely on end-of-the-line inspections other than to gather data. Take that data and go back to shore up the process and build quality into the material flow process.

One way to think about this is that great tech and systems are out there. Until you understand the opportunities in your current model, you cannot make a meaningful business case to justify the, at times, significant investment. Remember, adding technology to a bad process will not improve the process and will likely add complications to your business.