Gain Warehouse Productivity with Affordable Warehouse Automation
As warehouses and distribution centers have struggled to keep up with the volatile shifts in consumer demands over the past year, many material handling equipment suppliers have been touting the benefits of automation. These technologies can absolutely improve an operation’s efficiency and productivity, and they certainly are worth investigating.
But not every operation can afford the type of capital investment required of automated technologies. Or, for that matter — with lead times being so extended these days — many companies can’t wait 12 to 36 months for a warehouse automation implementation to help alleviate their throughput issues.
Fortunately, there is a solution that can improve operational efficiency and productivity without a major investment in money or wait-time: process improvement.
Some organizations have internal groups or specific managers focused on continuous process improvement, others use independent consultants to leverage an outsider’s unbiased expertise — and some rely on both. Regardless of who spearheads the effort, the methodology involved in analyzing and streamlining existing processes is the same.
Step 1: Establish organization-wide metrics.
Often, one of the biggest handling process inefficiencies starts with a lack of alignment across the organization on metrics. This disconnect most frequently happens between purchasing and warehouse operations, as the two departments are often measured on completely different key performance indicators (KPIs).
For example, if purchasing department employee compensation is partially based on their ability to negotiate better pricing, that person might be incentivized to buy five truckloads of canned soup at a $0.10/can discount — in May. However, at the warehouse, maximizing cubic utilization might be the most important metric. So, when the five truckloads arrive at the distribution center, there’s no excess capacity available to accommodate an out-of-season bulk buy and process efficiencies fly out the window.
Therefore, it’s important to first establish organization-wide metrics that align strategically with the overarching company objectives before attempting to improve processes. Only then can you be sure that the process improvements implemented will deliver on the goals.
Step 2: Begin at the beginning.
A warehouse or distribution center process improvement project nearly always means streamlining the processes that revolve around handling inventory. Therefore, it makes sense to start evaluating processes at the point of inventory receipt, then working through putaway, storage, replenishment, order picking, packing, and outbound shipping.
Through each phase of the handling process, document how many times an item is touched, all required data entry points, and the capture methodology (RF scan of a barcode, manually keying in data, passage through a scan tunnel, and so on). Record each portion of the process through each workflow area as a separate line item. It helps to do this visually, either with sticky notes on a whiteboard or in a spreadsheet — one note or cell per process step.
Step 3: Determine what steps are — and aren’t — adding value.
A value-added step is something the company’s customers will pay for; non-value-added steps are everything else. One of the easiest ways to see how many value-added versus non-value-added steps are occurring within a process is to color-code them. Consider using green sticky notes or spreadsheet cells to indicate a value-added step in the process; mark the non-value-added steps in a different color, such as red. Then share the findings with the appropriate internal stakeholders.
Company personnel is often surprised, if not shocked, to see how many non-value-added steps happen within every handling process. More than one senior executive has announced that it’s not possible that their warehousing team could be performing so many superfluous steps, only to be contradicted by a floor-level associate who confirms that indeed they do.
Step 4: Eliminate the non-value-added steps.
The point of this exercise is not to shock upper-level management, however. It’s to assess and determine which of the non-value-added steps can be totally eliminated or combined into other steps to streamline the process. While many people in the organization likely know how things happen in the warehouse, very few know what process steps are occurring at a granular level.
This is a great time to encourage the operations team to channel their inner 3-year-olds and ask “why?” as in: “Why do we do this step, and what benefit does it bring to our operations?” Often a step was added to the process years ago to capture a specific piece of information or verify inventory or pick accuracy, but it’s become redundant and unnecessary today. If a process that required 20 steps has five of those steps removed immediately, that’s already a 25% improvement in productivity and efficiency.
Step 5: Establish a time standard for the new process.
While eliminating process steps might intuitively suggest that productivity and efficiency will improve, you won’t know by how much unless you measure. The basis for this determination is a comparison of the actual demonstrated performance prior to making the changes against the current performance with the new, streamlined process.
This is often where an outside consultant brings additional value — by helping to quantify the improvement. The optimization of the process should be borne out in the numbers. For example, if it was taking an associate five minutes to document the intake of a pallet at receiving and now it only takes three minutes, that’s a 40% improvement in efficiency. When that improvement rate is multiplied by the number of associates assigned to receive product and their hourly wages, operations can easily demonstrate the value of that increased process efficiency.
Looking for more ideas on how to improve your facility’s operational performance? To learn more about working with DCS, connect with us.
Mark Kidwell, Director of Supply Chain Consulting, firstname.lastname@example.org
With over 35 years in the material handling industry, Mark Kidwell provides valuable solutions for our clients regarding operations and process improvement, labor efficiency, DC design, and inventory management consultation.