Many businesses within the retail, manufacturing and logistics supply chains are increasingly looking to optimise their warehouse infrastructure and operations to meet increased demand.
Reducing the cost base, particularly the additional variable costs incurred through the use of off-site storage, should be a priority. It may seem to be the obvious choice for growing businesses that wish to retain a variable approach, but great care should be taken.
In our experience most warehouses have the opportunity to increase capacity by between 50 and 100 per cent, contributing to reduced overheads, increased productivity and improved customer service. In addition, reducing, avoiding offsite warehousing or making ‘smarter use’ of offsite warehousing can greatly reduce the number of employees involved in the handling activities.
Tips for Optimising Warehouse Operations
Whilst many facilities are under-utilised, the solution is not always as easy as making sure the shelves are full. In fact, an over full warehouse can cause throughput issues thereby having a disastrous effect on service levels.
TIP 1: Ask the people who matter
Don’t assume because your warehouse is providing good service levels that it is efficient. In many instances, a lack of operational data will mean this assumption can't be supported. The simplest way to test the relative efficiency of the operation is to talk to the warehouse staff. The warehouse operatives normally know what the issues are within their individual areas of responsibility, so bringing them together in a focussed discussion group or workshop can help create an immediate view of how the warehouse works, where it doesn’t and how it can be improved.
- Beware though, sorting the wheat for the chaff takes time, understanding and concentration, our advice is to listen to the warehouse operatives and then test their input against some isolated trial runs or simple performance measures before implementing wholesale change.
TIP 2: Create a process map
Use the working group and discussion sessions to document and formalise business processes. By creating a process map that outlines the end-to-end activities within the warehouse and highlights problem areas, it should be possible to work closely with your chosen warehouse consultant to identify quick gains that are lower cost and will give a faster return on investment.
- Of course, this should form part of a wider development project with short and longer-term objectives to best optimise the warehouse activities and utilise the available space.
TIP 3: Look around you
Mezzanine floors, multi-level picking and higher storage solutions offer an effective means of creating additional usable space. In most ground level picking operations there is an opportunity to expand and add additional levels. Under certain circumstances, it is possible to double the picking area without the need for planning permission.
Most modern warehouse units are 10m high or more throughout. Unless the racking is wall-to-wall, and floor-to-ceiling, it is highly likely that there will be usable space up above.
- Be aware, moving upwards requires careful thought about revised business processes, product flows through the warehouse and possible bottlenecks. Generally speaking the greater the density of the storage media, the more people you will need to complete the warehouse activities.
TIP 4: Match requirements to skill sets
In many instances, changes of order profiles caused by smaller, more frequent orders and the rise in internet shopping has meant that warehouse requirements have changed in recent years. This is where the multi-level approach - being ideal for single item, mixed carton-picking solutions - offers an opportunity for many operators.
The rise in internet shopping and direct ship operations has led to operational difficulties for traditional warehouse activities and highly automated environments, the quick fix was to outsource the fulfilment activities or transfer them to a separate facility at added cost. Outsourcing this high ‘value add’ activity to a 3rd party or your offsite storage supplier could be a real mistake.
- Review the activities, business profile and skills set available to you and your suppliers. Don’t assume your 3rd party can provide the customer experience you are looking to create. Match the services to the skills set and ensure you get the best out of your employees and suppliers.
TIP 5: Bring dead space to life
In our experience, there is often dead space around the work areas. Using the area above the loading docks to create additional marshalling space can often free up the loading areas from congestion and improve operating efficiency as well as storage efficiency.
For example, many operations pick on to pallets or cages during one shift for checking and loading later in the day. The pallets or cages are often situated near the loading and unloading areas for ease of movement later, but the area itself becomes congested and can not be efficiently used for other activities such as cross docking, returns processing or further order picking.
- Storing the picked orders elsewhere but nearby, such as above the marshalling areas, would help improve the overall effectiveness of the warehouse.
TIP 6: Make the most of the quiet times
During the working week there are often quiet times in key areas of the warehouse. Often goods-in and despatch areas are segregated, but why not consider dual use of the space - for example, receiving goods from key, large suppliers when despatch activity is generally low?
Dual use of the receipt and despatch areas can often lead to a more efficient operation all round.
On a similar theme, consider your shift patterns.
Are you operating 8, 10, 12, 16 or 24 hours? Extending the working hours can ensure peak shifts concentrate on the key activities.
- Does each shift have enough work? Often the late or overnight shifts are less productive than the daytime. Having adequate work and good management during these times is as important as during the daytime shifts.
TIP 7: Get what you need from your suppliers
Are your suppliers meeting the specification required? Have you specified a set of requirements that enable a lean operation upon receipt and during picking? Often the purchasing team has settled on a ‘good’ deal with suppliers that ensures a lower purchase price and good gross margin, but what is the total cost of supply? What is the net margin for these items?
For example, consider the order profile, the minimum order quantity and the inbound pack size from a supplier and compare to the minimum customer order or sales unit. Do you receive packs of 100 and sell in tens or singles?
- This type of mismatch is often hidden or assumed to be a ‘necessary evil’ but the warehouse has to deal with the mismatch and uses vital resources in non-value adding activities.
Optimise Your Warehouse With Davies & Robson
Davies & Robson is an established, independent consultancy that focuses on supply chain strategy, improvement, outsourcing and recruitment services providing pragmatic and deliverable supply chain solutions. Our consultancy service provision is based on deep knowledge of the strategies and systems that drive successful operations - giving us a clear competitive advantage when it comes to formulating proposals for our clients.
View Featured Warehouse Optimisation Case Studies: