3 Steps Toward a More Efficient Warehouse – February 02, 2017

You can never be too busy to review how your warehouse is laid out and how employees move around the space. Awkward or repetitive movements by employees, oversized packages and disorganized layouts can slow down productivity and even lead to medical and disability claims. Small adjustments can make a big difference in your bottom line. Here are three steps toward more efficient warehouse management.

1. Know Your Cycle Time

Looking around the warehouse, you probably see a lot of people and products in motion. But don’t equate constant motion with efficiency. A closer inspection may reveal people and products waiting in queues due to blocked aisles, unavailable forklifts or computer glitches. You may even find some workers wandering aimlessly for misplaced or hard-to-find items.
 
Improving efficiency starts by reviewing the order fulfillment process. Do you know how long it takes to process an order from start to finish? Your average cycle time is a critical benchmark. The goal is to find ways to reduce it by minimizing errors, wasted movements, congestion and inefficient picking paths. Bottlenecks, idle workers, unused space and piles of unattended inventory represent opportunities for improvement.

2. Implement Improvements

Formal policies and procedures are an obvious way to reduce inefficiencies. Efficient warehouses have a specific protocol for putting away shipments of new items, restocking returns, cleaning up messes, responding to accidents, and storing warehouse supplies and equipment.
 
Once those types of standard operating procedures are communicated to employees, focus on streamlining fulfillment. Examples of workflow improvements include:

  • Rethinking floor, aisle and rack layout to improve space utilization,

  • Rearranging product locations so the most popular items are located on ground-level bins that are nearest to the packing stations, and

  • Redesigning signage to make it easier for pickers to identify aisles, racks, products and workflow.

After you’ve implemented improvements, measure your new-and-improved cycle time. Knowing how much you’ve shaved off the baseline metric can be a powerful motivational tool. Use it to drive continuous improvement.
 
For example, a distributor was able to reduce its cycle time by 15% by allocating work to pickers based on units of time, rather than assigning a picker to fulfill one entire order at a time. This strategy keeps the pickers moving and feeds packing stations in predictable intervals. The distributor also assigned pickers to specific zones in the warehouse to avoid congestion and improve equipment availability.

3. Consider Technology

Manual processes and outdated systems can cause errors and delays in fulfillment. So why not automate certain functions using technology? Bring your existing inventory management systems into the 21st century with upgrades such as wireless mobile devices, radio frequency identification (RFID) technology, automated material handling equipment and voice-picking applications. Doing so can potentially speed up fulfillment, reduce errors and enhance customer satisfaction levels.
 
Before investing in a technology upgrade, it’s important to carefully weigh the costs versus benefits. You’ll also need to evaluate compatibility issues with your existing accounting or resource planning systems. Train employees on how to use the technology; otherwise, you may not reap all of its potential benefits.
 
While there are certainly many other best practices to improve profitability for manufacturers, starting with these three areas can make a significant impact.
 
Contact Matt Cunningham at mcunningham@cohencpa.com or a member of your service team for further discussion.
 
Cohen & Company is not rendering legal, accounting or other professional advice. Any action taken based on information in this blog should be taken only after a detailed review of the specific facts and circumstances.