Once products enter your warehouse, how many times are they handled — as individual items (eaches), cases, or pallets — as they make their way from receiving, to putaway, to storage, to replenishment, to picking, to packing, and finally to shipping?
Many operations can’t answer this question precisely, but they do know that the more touches occur, the higher their inventory handling costs will be. That’s because, as a general rule, each time an associate touches a product within your facility it costs $1 to $2; every pallet touch costs $3 to $4. Those numbers add up quickly. It’s been estimated that the total cost-per-touch of products during handling — regardless of the industry — ranges from 2% to 5% of the value of the inventory.
With potential expenses that high, it makes sound financial sense to consider ways to minimize the number of times your employees interact with your inventory. Here, let’s explore a few approaches for doing so.
Understand Inventory Metrics
You can’t reduce the number of inventory touches without knowing how frequently each stock keeping unit (SKU) in your warehouse is picked. Known as SKU velocity, items are typically assigned classifications from A to D (A being the fastest moving, most often picked, items; D being the items that are rarely ordered). Once product velocity is determined, an appropriate layout for the warehouse can be designed. Known as inventory slotting, such an arrangement minimizes replenishment handling — or how often a pallet of stored product must be located, removed from racking, and transported to forward picking.
For a traditional, manual warehouse, the optimal layout might include picking the fastest, A movers directly from the pallet upon which they were received, placed in a forward pick zone closest to packing stations. For B movers, a carton flow area presenting pick faces of multiple products is located in close proximity to buffer inventory for replenishment stored in nearby pallet rack. The slowest velocity items, D movers, should be stored farthest away from the picking and packing areas and on the highest levels of racking, as they will be ordered at the lowest frequency and handled the least often.
Warehouse Management Software
Too many operations rely on spreadsheets — or even the operations manager’s memory — to determine what inventory is in stock and where it’s been stored. With the right warehouse management system (WMS) or warehouse execution system (WES), inventory is tracked automatically from the point of receipt. The software automatically analyzes product velocity and assigns an appropriate storage location based on that information. It also tracks that location, directing an associate to the precise storage position of a pallet or SKU, eliminating search time.
Additionally, a WMS/WES continually reassesses SKU demand and can be leveraged to interleave picking and replenishment tasks with moves that update the inventory slotting scheme on a continual basis. This ensures that the highest velocity items are always in the areas easiest to locate and pick. Such software can also factor in upcoming peak periods or special promotions and direct the relocation of associated inventory accordingly to further minimize touches.
While many operations currently not using a WMS/WES can be hesitant to make an investment in the software, they should consider software-as-a-service (SAAS) as a more affordable approach. Cloud-based and modular, facility managers can pick-and-choose the functionality they need from a WMS/WES, effectively customizing standard modules to fit their unique application. Not only does that reduce the overall cost of the software investment, we’ve found that it significantly shortens the payback period — particularly because of the drop in inventory touches.
Automated Storage and Retrieval Systems
The ultimate way to reduce inventory touches is to invest in an automated storage and retrieval system (AS/RS). These solutions come in a full range of options, handling everything from eaches to cases to pallets depending on their construction and configuration. Usually equipped with on-board inventory management software, or interfacing with the facility’s WMS, these systems store and retrieve products automatically — significantly minimizing manual inventory touches.
When a SKU is called for, the system retrieves it and presents it to an associate. Pallet-based AS/RS may deliver a pallet to a forklift pick-up zone or deposit it directly to a transport conveyor. Case- and tote-handling ASRS might interface with conveyor, sorter, or robotic arm to route the load to its next destination; alternately, some of these systems are configured for goods-to-person picking, presenting the case or tote of eaches to an operator at a designated workstation for selection of the required quantity of items. Each-handling AS/RS often dispense one or two items into shipping cartons or totes as they pass beneath the system, eliminating picking touches for small products.
Need more ideas for more effective inventory handling in your operation? To learn more about working with DCS, we invite you to connect with us.
Drew Thomas, Senior System Sales Consultant, firstname.lastname@example.org
A 20-year veteran of the material handling industry, Drew has experienced many different roles – engineering, project management, business development and sales consulting. Leveraging his background in controls automation and his passion for technology, Drew has continuously sought to push innovation in the industry. He cares about making the world a better place by improving the life of others through automation. Outside of the office, you will frequently see Drew on the golf course or exploring the great outdoors with his family.