General Business Consultants, Inc. www.GenBusCon.com
MAKING "SYSTEMS"-USE and OPERATIONS MORE-PROFITABLE
For Distributors, WHOLESALERS, Manufacturers
HAVE YOU ADJUSTED YOUR WAREHOUSE TO THE NEW NORMAL?
When sales decreased to the lowest level in decades – to the so called "new normal" -- most distributors reduced warehouse staffing and the level of inventory. Today, inventory levels have crept up, but warehouse staffing levels remain historically low. At some distributorships, lower warehouse staffing continues to result in mistakes that are costly to correct and anger customers; or worse, result in loss of sales or customers. But few distributors want to spend much money to prevent the mistakes. Nor does a lot of money need to be spent to adjust for the new normal. Here are some tips for adjusting.
The Warehouse EnvironmentClichés that still matter: cleanliness is next to godliness; a place for everything, and everything in its place. A messy, disorganized warehouse encourages warehouse employees to be messy and disorganized, which results in costly mistakes and lower productivity. In this new normal, there should be free time to keep a warehouse clean and organized. So once a month, after everyone else has left the building, the warehouse manager should walk through with a clipboard in hand. Note litter and debris that should have been cleaned up, items stored in a messy fashion, received items that are on the floor but should have already been put away, items pulled for delivery but not stored in designated staging areas, etc. Then talk with subordinates about using that free time to straighten up and prevent future problems like these.
Storage PatternThe way in which items are stored can have a major impact on warehouse productivity (cost) and accuracy (customer service and cost). With rare exceptions, no one storage pattern can result in high productivity and high storage density and a low rate of mistakes. It’s a trade-off. The pattern(s) that was right for the boom times may no longer be right for the new normal. Based on the recent history of item velocities, and an estimate of future velocities, determine if the current storage pattern(s) is (are) the right one (ones) for making the trade off. But before moving items to new storage locations, project resulting savings of effort over a few years, and then determine if those savings would justify the effort it would take to move the items to new storage locations.
ReceivingMistakes made here "flow downstream" and are often not detected until items are packed or loaded; sometimes, not until customers receive the wrong items/quantities. In every warehouse, receiving personnel proof packing list data against
the corresponding PO data, but not all distributors check the physical receipt against the PO data unless data on the vendor’s packing list differs from PO data. This mistake can result in customers not getting the quantities they ordered, or not getting the items at all. In the new normal, vendors too have reduced staff, so they are making more shipping mistakes. The warehouse manager should inform the people who do receiving to not hesitate to open shrink wrap and count what has actually been received; spot check if time does not allow for a 100% check.
Put AwayThough warehouse employment has not increased since the meltdown, as warehouse people truly voluntarily left their employers, some distributors have hired replacements. Typically, less-expensive, inexperienced people have been hired, and that has caused warehouse problems. As with Receiving, mistakes made during put away "flow downstream", etc. The most frequent mistake is failing to "quickly" put away items. One result is that many computer systems show that items/quantities are available to pick, but when a picker goes to pick, there isn’t enough, if any. And the picker may not now how to use a terminal - or have the time to use one - to determine if there was a recent receipt that has not been put away. One way to minimize this problem is to get the computer system to highlight (on a list or display) those items for which customers are waiting or for which the quantity on hand is below the reorder point or Min.
PickingAt distributors where the computer system allocates inventory to specific customer orders, a frequent "mistake" made by pickers – especially new ones --- is ignoring the computer-determined "quantity to pick", and instead picking the quantity ordered. Whenever the warehouse manager briefs pickers about other issues, he/she should remind them to pick only the quantity shown to pick.
Another reason for picking (and other kinds of) mistakes, and for lower picking productivity, is unknowledgeable pickers -- people who do not recognize that they are picking the wrong items/quantity. Take the time to educate the new personnel about the items stocked.
PackingThe most frequent type of mistake made during packing -- especially when a truck is waiting for an order -- is assuming that the quantities being packed/staged are the same as those shown on the corresponding pick ticket or packing list. Compounding that mistake is the use of pickers to do the packing – which low levels of
staffing often necessitates Whenever the warehouse manager briefs packing personnel about other issues, remind them that before they shrink wrap or load, they should count the quantities being packed/staged, and verify them against the packing list (or pick ticket if a packing list is not involved). If time and staging patterns preclude a 100% check, do a spot check.
Loading and Shipping/DeliveringEven when thorough counting is done during packing, a frequent mistake -- again, especially when a truck is waiting and due to a smaller warehouse crew -- is failing to verify that every item on each order has been loaded, and loaded on the designated truck. If time is available, the warehouse manager should ensure that item-level verification is done for each order, and done on the truck that will deliver the order being verified. If time is tight, spot check trucks and orders.
CountingThe most frequent mistake isn’t made during the counting, it’s when discrepancies are discovered. A thorough investigation of discrepancies is too often not made before changing quantity-data in the system. Before any quantity on hand is changed, someone other than the counter should first examine the inventory transaction history and sales history of each discrepant item. Perhaps the data will provide a clue about a discrepancy. Then, if needed, look in warehouse areas for "missing" items. And any adjustments to data should be made only by personnel very experienced in using the system to make such changes.
Warehouse ManagementOne way to attack the problems described above, is for the warehouse manager to hold a weekly meeting to discuss the prior week's warehouse mistakes, determine the cause(s), and define preventive measures that will result in happier customers and lower warehouse operating costs. This should be in addition to the on-the-spot reminders mentioned above. Encourage personnel to describe problems and suggest solutions.
Living with the new normal does not mean that warehouse performance has to be less than customers expect. Most of the recommendations in this article can be implemented quickly and cost nothing.
Dick Friedman, the author, is a recognized expert on warehouse operations, management and technologies, for distributors and wholesalers. He is a Certified Management Consultant and isobjective and unbiased, so he does NOT SELL warehouse management systems or technologies. Dick applies more than 30 years of experience to help distributors reduce warehouse mistakes and costs -- often through quick, inexpensive changes to operations, management or technology. Call 847 256-1410 for a FREE consultation, or visit www.GenBusCon.com for more information or to send e-mail