General Business Consultants, Inc. www.GenBusCon.com
MAKING "SYSTEMS"-USE and OPERATIONS MORE-PROFITABLE
For Distributors, WHOLESALERS, Manufacturers
WAREHOUSE PROBLEMS TO AVOID
Some distributors blame the recession for decreased warehouse productivity and accuracy, but some problems existed even during good times. Here are three stories of warehouse problems that were easily and inexpensively solved. Think of the causes of these problems as a checklist of warehouse aspects that should be examined – so problems can be avoided.
Running Out of Space During the Recession
Not every distributor reduced inventory as the recession resulted in decreased sales. One distributor actually increased inventory in the face of slowing sales, and planned to add lines. But there were two problems. First, almost all the slots in the warehouse were occupied; a warehouse arranged by velocity. Second, picking productivity was lower than it had been before warehouse head count had been reduced. The owner thought about putting on an addition to get extra space, but a call to contractors revealed that it would cost a lot, and divert money needed to add lines. And he worried that another building would require pickers to walk longer distances, thereby decreasing productivity.
He needed someone to objectively determine if there were ways to store new lines in the existing space, and ways to increase productivity right now. I emailed a standard pre-visit questionnaire, and one of his answers caught my attention.
So the first order of business while on site was to confirm the extent of slow moving and "dead" inventory; an ABC report showed that it was huge. Then it was necessary to determine if the dead and slow moving items were stored far away from the head end of aisles. A list of several fast moving and several dead items was created, and I used it to determine if they were stored in velocity-appropriate locations. Most of the dead items in the sample were stored near the head of aisles, at eye or chest-level. Many of the fast moving items were stored at the back end of aisles, and on the top shelves – some 16’ to 20’ up. Bass ackwards.
The first recommendation was to determine which dead items had enough value to warrant the time needed to sell them via a clearance sale or to a buyer of surplus. Those without value would be discarded. Returns to manufacturers were out of the question for items that had not sold in six years or more. A related recommendation was that as dead items were removed and up-front slots became available, relocate those fast-moving items now stored where slow ones should be. A third recommendation was to implement a process for re-assigning storage locations as item velocities change.
When I last talked with the owner, he explained that the refuse collection company he uses is literally and financially cleaning up by providing several dumpsters for dead, no-value items; and mis-stored fast moving items were in the process of being moved to where they belonged years ago. All thoughts of an addition had vanished.
Too Much Space Reduced Productivity
Almost all distributors who provide construction-related items reduced inventory as the recession deepened, including a west coast distributor with a 200,000 sq. ft. warehouse. The facility is divided into a fast-pick section, with small items and small boxes of items, and a (wide-aisle) section where pallet loads and large boxes are stored. All the aisles are long, and within each section, items are stored based on velocity.
The distributor had reduced head count, which he thought was the reason for low picking productivity in the fast-pick area. But he wasn’t sure, and wanted an unbiased evaluation. One of the answers to the standard pre-visit questionnaire indicated a source of the problem, but one that could account for only a small portion of the problem.
Using a unique, proprietary checklist, an inspection of the fast-pick section revealed the main source of the problem, and confirmed the minor source. About 15% of the slots were never used, uniformly along the aisles and top to bottom of the bays. Yet the slower moving items were stored at the tail end of the aisles. And even though inventory had been reduced, there was still too much. When the warehouse manager was asked why there was so much open space, he stated that he had been told to save space for growth. No one could explain why there was too much inventory. With sales down some 30%, any growth was now many years away.
The first recommendation was to reduce the level of inventory by purchasing less; this would free up space. Second, starting at the head end of each aisle, fill up all empty slots with further-away items, until all items were moved as far up front as possible. After waiting a few weeks for inventory to decrease, it took a few weekends to move items forward, and the result was better than just higher productivity – one less picker was needed.
Very High Productivity Caused Mistakes
A distributor of "soft" items was experiencing a high rate of mis-picks, all of which were being reported by angry customers who received the wrong items and/or quantities of correct items. Sales were down slightly, but head count was not. The warehouse was arranged by velocity, with any overflow stored directly above the slots used for picking. Productivity was very high – if no one counted the time spent putting away the wrong items that were returned, and the time spent picking the right items to replace the returns. Management believed that the pickers were the cause of the mistakes, but wanted an unbiased, objective 3rd party to verify their belief. Answers to the standard pre-visit questionnaire explained why mistakes were not being detected before items were delivered or shipped, but did not explain why the mistakes were occurring.
Using my checklist, I determined that about 10% of the products being put away were not being put in the slots designated for them. They were being put in adjacent slots meant for very similar items. Most pickers assumed that all items in a slot belonged in that slot, and so did not verify that all boxes were the right ones. Some pickers spot checked while picking, and made sure to get the right boxes – but did not inform the warehouse manager of the problems they were finding and correcting.
The people doing the packing compared the number of boxes picked to the data on the pick list, but did not verify that all boxes were the right ones; boxes of very similar items looked the same.
The main recommendation – which would slightly reduce picking productivity—was to store similar items at least three slots away from each other. Other recommendations included having pickers record (on the pick list) incorrect storage locations that they find, and having packers spot check boxes and record (on the pick list) mistakes they find. The warehouse manager was to scan all pick tickets for information about mistakes, and track those mistakes over time.
As a result of implementing the recommendations, overall warehouse accuracy soon reached 99.95%. And, because almost no time was being spent putting away returns and re-picking, overall warehouse productivity actually increased.
Dick Friedman, the author, is a recognized expert on warehouse planning, operations, management and technology for distributors. He is anunbiased Certified Management Consultant and does NOT SELL warehouse technology or systems. Dick reduces warehouse mistakes and costs through inexpensive, quick changes which do not require technology. Call 847 256-1410 for a FREE consultation, or visit www.GenBusCon.com for more information or to send e-mail