Warehouse Optimization … The Little Things that matters

Globalization with the advent of information technology and the rapid improvements of industry standards has open doors to various opportunities in areas such as Warehouse Management, Supply Chain Management, Logistics and other areas just to mention a few.

When people think of optimizing warehouse operations, they usually think of warehouse management systems (WMS), automated material handling systems, bar coding and automated data collection. Often neglected are the “little things” that affect warehouse operations. These little things usually require little to no investment and can sometimes have an enormous impact on operations.

Training

Employee trainings in most organizations today are seen as a “little thing”, the fact is, training employees is inexpensive and will have the greatest return on investment of anything you will do in your operation.

An immeasurable wealth of an organization is the level of professionalism acquired via training on the job available to the employee for utilization and adoption to the job activities.

 

Operations that lack adequate procedures and employee training are likely to suffer from poor quality, low productivity, safety issues, low employee morale, highly stressed supervisors and managers, and a general lack of control. These chaotic conditions caused by poor training tend to contribute to the ongoing cycle of inadequate training by making it difficult for supervisors and managers to find time to define procedures and train employees. The only way to break the cycle is to take the time to define and document the procedures and implement an employee-training program.

Tools

Making sure employees have the proper tools readily available to perform their job functions can also have significant impact on operations. Time wasted by employees wandering around the warehouse searching for a pallet jack or a tape dispenser will certainly be more detrimental to the bottom line that will the cost of purchasing more of these low cost items.

While it’s OK to put emphasis on employees taking care of these tools, the fact is that items like pocket calculators, tape machines, markers, and razor knives will disappear. Whether they are lost, broken, or go home is someone’s pocket, doesn’t change the fact that you now have an employee that doesn’t have the proper tools to perform their job.

You’re much better off treating these as consumables and always having extras on hand than risking employees making counting errors because they don’t have a calculator, risking product damage because they couldn’t find a tape dispenser, or risking injury because someone couldn’t find a pair of safety glasses. Also make sure you are purchasing quality tools and supplies. Stretch wrap that doesn't cling or breaks in the middle of wrapping, tape dispensers that don't work properly, tape that doesn't stick or doesn't come off the roll correctly, and pallet jacks that require excessive pumping will not do much for productivity or morale. Below is a list of some of the key tools used by warehouse workers.

·         Warehouse Tools

• Pallet Jacks
• Hand Trucks
• Stock Carts
• Rolling Ladders
• Banding Dispensers
• Banding Cutters
• Banding Crimpers
• Pry Bars
• Stretch wrap Dispensers
• Tape Dispensers
• Pocket Calculators
• Clip Boards
• Razor Knives and Blades
• Markers, Pens, etc.

·         Cleaning Supplies

• Brooms
• Dust Pans
• Mops
• Trash Containers

·         Safety Items

• Safety Glasses
• Dust Masks
• Gloves
• Aprons
• Respirators
• Hard Hats
• Wheel Chocks

It will also prove to be very useful to have specific areas for these tools to be stored within each department. Tools required for daily operations should be made quickly accessible to workers while items only used occasionally should be stored away from the high activity areas.

Supply Chain Management is everybody’s business

"If you are in supply chain management today then complexity is a cancer that you have to fight, and process management is the weapon. This framework develops a robust model of supply chain management processes and properly defines them so that they can be managed. It has enabled our organization to understand that supply chain management is too important to be just a function. Instead it's everybody's job.”

—Tom Blackstock
Vice President, Supply Chain Operations, Coca-Cola North America

In the information age Supply Chain is not adopted as a business function anymore, but approached as a network of SCM frameworks and other industrial standard frameworks. It is the implementation of cross-functional relationships with key customers and suppliers in that network, thereby enabling new business models necessary for organizations to succeed in every function involved.

In today’s environment, there is the added pressure to be more socially and environmentally responsible and there are risks which need to be mitigated and managed. Then, there is the complexity created by ever increasing customer requirements and expectations, globalization, the pressure on cost, and the availability and access to resources. On top of this, management is expected to improve profitability, increase revenue growth and capture and protect larger market share.

In order to succeed, management must recognize that the ultimate success of an organization depends on the ability to integrate the company’s network of business relationships in a mutually beneficial way.

With this understanding, every business organization irrespective of the industry as a part to play in the supply chain processes. Your job role is a node of the chain which is dependent on others and of which other must rely on your quality output.

For your business organization meet the demands  or standardization in quality of product and services, you need to answer the following questions;

• ·         How effective are your business processes adopted in my organization?
• ·         How well as information technology been adopted to automate the business processes?
• ·         How do we track business performance in line with Supply Chain Management processes?
• ·         Is the quality of data from our business organizations dependable for others to rely on without issues?
• ·         As business owners, how well do we invest in the skill set of our employees?
• ·         Do we align our standards with industry standards?

By understanding the supply chain management process and how it should be implemented, you will be able to better understand the quality of value expected to build a sustainable business and global economy at large. 

Maximizing Information Technology Resources In Inventory Control & Warehouse Management.

Inventory Control and Warehouse management is a core entity within the Supply Chain Management (SCM) framework which if not effectively managed, can jeopardize the entire SCM process cycle. Inventory control & warehouse management in itself is a robust framework which requires a high level of efficiency, documentation, reporting and communication for effective operation.

With the introduction of Information Technology data capture, processing, reporting and communication is provided and applied at every stage of Inventory & Warehouse managements.

The table below shows how and where Information Technology can effectively improve Warehouse Management and inventory Control.

Other advantages using information technology management application:

• 1.       Visibility on real-time inventory balances across multiple locations
• 2.       Low inventory alert and re-order process trigger based on set threshold
• 3.       Inventory valuation methods is effectively setup and utilized for various group of inventory items
• 4.       Effective stock count using barcode integration.
• 5.       Tacking of stock transaction history and other related information
• 6.       Real-time report for decision making
• 7.       Integration with Account Management and other cost related entities.

      

Maximizing Barcode Technology In Inventory Control & Warehouse Management

    

Barcode is a unique technology which has been around for a long time now, which has contributed to the effectiveness of the warehouse operations. According to Wikipedia, “A barcode is an optical machine-readable representation of data relating to the object to which it is attached.” The barcode display varies from one another based on the dimensions, data structure and parameters configured by the barcode generator (a software application used to generate barcode labels), which are readable via a barcode reader for effective data capture.

Irrespective of the barcode display, each barcode is different from the other based primarily on the data structure computed into the system such as;

1.       Product Name

2.       Manufacture details

3.       Item properties e.g. size, unit of measure, quaintly, etc.

4.       Shipping details e.g. name of shipping company, location, movement time, etc.

5.       Storage details e.g. warehouse name, location, bin collection, etc.

Why should every store outlets, Warehouse Company, shipping or packaging company just to mention a few embrace Barcode Technology?

Inventory:

1.       Bar code readers provide accurate and up-to-date inventory item details with speed thereby reducing operational time.

2.        Warehouse operations such as stock count and audit are enhanced thereby reducing data duplication

3.        Stock movement in & out of the warehouse are easily facilitated, thereby tracking the in-flow and outflow of stock items

Price Scanning:

Shopping malls have now adopted barcode technology integrated to Point of Sale (POS) to enhance the price collation of items purchased by customers. The barcode on each product for sale contains product price which can be read by the barcode reader and displayed in the POS machine which sums the customer bill.  In addition, bar code readers provide accuracy and speed for scanning prices at the checkout.

Delivery Services:

Delivery services such as Federal Express and United Parcel Service use bar codes to track packages throughout the delivery process, so customers can inquire at any time where their package currently is located in transit.

Key Performance Indicators (KPI) In Warehouse Management

In order to have a 360^o view of business investments in Warehouse Management, it is essential to develop a Key Performance Indicators (KPI) for effective business decision. Before we continue, let us understanding some terms;

Key performance indicator (KPI) is a measure of performance of the business in order to benchmark against the competition and explore the possibility to improve in order to gain competitive advantage.  Warehousing function is a very critical within any supply chain.  If the products do not move seamlessly within supply chain business would face serious service related challenges.  Hence, it is necessary to drive the performance of the warehouse through key performance indicators.  Further, in a continuous improvement environment, it is essential to benchmark against the industry standards in order to drive improvements.

What is Benchmarking?

“Benchmarking is the process of comparing one’s business processes and performance metrics to industry bests and/or best practices from other industries.”Benchmarking is essentially a process to measure a business’s processes against the competition, world standards or the business itself.

How do we benchmark and why?

The benchmark scope typically includes productivity, quality, time, and cost. The objective of this activity is to improve from learning the performance measurement in order to execute things better, faster, and cheaper.  The benchmarking effort is driven by a desire to evaluate business processes to see if they may be improved. The resulting improvements should then be related to how those improvements may be implemented to help a company better meet the requirements of its customers

How to determine KPIs?

People, Cost, Space and Systems drive the performance inside the warehouse.  Hence, generally warehouse KPIS are based on the above mentioned drivers and focused on activity in order micromanage the performance.  The following activities are common in any warehouse:

1.       Receiving;

2.       Put-away;

3.       Storage;

4.       Pick-n-pack;

5.       Shipping

Receiving:

The receiving activity is fundamental to warehousing function. Unless the merchandise is properly received, it will be very difficult to handle all other subsequent functions. The receiving function allows warehouse operators to receive product against a purchase order, and against an Advanced Shipping Notice (ASN) that has been received via Electronic Data Interchange (EDI). Receiving process could include goods physically received at the warehouse and stored or directly delivered at customer site or cross-docked.

The relevant KPIs for receiving function should include the following:

1.       Cost – Cost of Receiving per receiving line;

2.       Productivity – Volume received per man-hour;

3.       Utilization – Receiving Dock door utilization %;

4.       Quality – Accurate receipts %;

5.       Cycle Time – Time taken to process a receipt.

Put-away:

Once receiving activity is completed, the accepted merchandize has to be stored in a location that is convenient to retrieve for further action.  This process is called put-away and this is just reverse of order pick function.  We have different types of put-away processes.

·         Direct Put-away – Put-away directly to primary or serve locations.

·         Directed Put-away – Put-away directed by Warehouse Management System.

·         Batched and sequenced Put-away – Received material sorted and put-away processed in batches to maximize the efficiency.

·         Interleaving – Combine put-away and retrieval to avoid empty travel.

The KPIs for this activity should include the following:

1.       Cost – Cost per put-away line;

2.       Productivity – Put-away per man-hour;

3.       Utilization – Utilization % of labour and equipment;

4.       Quality – Perfect put-away %;

5.       Cycle Time – Time taken for each put-away.

Storage:

Broadly we have two types of storage systems and they are manual storage and the second one is automated storage and retrieval system (AS/RS).  Again within manual storage, we have six different types of storage and they are:

1.       Block stacking – “Units loads stacked on top of each other and stored on the floor on the storage lanes.”

2.       Stacking frames – “are either frames attached to standard wooden pallets or self-contained units made up of decks and posts.  Stacking frames are portable and enable users to stack material several loads high.”

3.       Single-deep selective pallet rack – “is a simple construction of metal uprights and cross-members providing immediate (pick-face) access to each load stored (that is, no honey combing).”

4.       Double-deep rack – “are mostly selective racks that are two pallets position deep.”

5.       Drive-in rack – “extend the reduction of aisle space begun with double-deep rack by providing storage lanes from five to ten load deep and three to five loads high.”

6.       Drive-thru rack – “is merely drive-in rack that is accessible from both sides of the rack.”

The KPIS for this activity would include:

1.       Cost – Storage cost per item;

2.       Productivity – Inventory per sq. foot;

3.       Utilization – % Location and cube occupied;

4.       Quality – % Location without inventory discrepancies;

5.       Cycle Time – Inventory days on hand.

Pick-n-Pack:

This activity again can be broadly divided into two parts.  First one deal with case picking and the second one deal with small item picking.  Further case picking can be classified into three categories.  The first one is known as Pick-face palletizing where warehouse operator palletizes at the pick-face as he/she traverses the picking tour.  The second one is downstream palletizing where cases are picked onto conveyors and sorted at the staging area.  The third one is direct loading where the cases were conveyed directly into the truck.

Further, the small item picking can be classified into three categories.  The first one is known as picker-to-stock, where the picker moves around to pick the cases.  The second one is stock-to-picker.  In this case stock was sent to the stationed picker through AS/RS machine. The third one is known as automated item picking.  In this process items are automatically dispensed into shipping cartons or tote pans.

The relevant KPIs for this activity would include:

1.       Cost – Cost of picking per order line;

2.       Productivity – Order lines picked per hour;

3.       Utilization – Picking labour and equipment utilization %;

4.       Quality –  Perfect picking lines %;

5.       Cycle Time – Order Pick cycle time per order.

Shipping:

Shipping is the last step in warehouse activity in handling shipping goods to the customer or handling stock transfers.  This process is the origin to moving product from point A to point B.

The KPIs for this activity could include:

1.       Cost – Cost of shipping per order;

2.       Productivity – Order process for shipping per man hour;

3.       Utilization – Utilization of shipping docks in %;

4.       Quality –  Perfect shipping %;

5.       Cycle Time – Shipping time (from the time order picked to physically movement of the truck) per order.

“Continuous improvement is better than delayed perfection.” Mark Twain

The above are the broad KPIs identified for each activity inside the warehouse.  Warehouse operations profile could change based on the product handled.  For instance in a FMCG/Retail warehouse the order picking could be manual whereas in the aerospace industry the order picking is totally automated and AS/RS is in operation.  The volume of labour deployed, cost of operations and capital equipment deployment largely depends upon the product handled in the warehouse.  Hence, the KPIs are to be customized based on product profile.  In my opinion warehouse is the most happening place in any business and there is huge potential for improvements in the areas of productivity, cost and avoiding accidents which could result in operational disruption.  Activity based costing would help monitoring warehouse cost behavior against the budgeted expenditure.  Process mapping and time and motion study will help the business to improve the productivity. The KPIs should be tangible and measurable improvements that can be identified and achieved.  I strongly believe that KPI setting is the stepping stone for performance improvement.

Reference: Supply Chain Optimization (Vijay Sangam, 2010)

Business Competitive Edge in the adoption of Best Practice Processes

There is more to having a successful business organization than learning the secret handshake, showing up at the meetings and delivering the elevator speech. You need education. You need training and experience. The specifics of the education training and experience depend on which branch of profession or industry sector you associate with.

All business organizations run on the engine components of processes, ethics and skill set of its resources to deliver its goods and services, but its sustainability and future depends on how these components have been refined and adopted.   

The adoption of best practices in an organization business processes provide competitive edge and enlarge the coast of opportunities it attracts. Such best practice methods include the following;

• ·         Supply Chain Management
• ·         Human Resource Management
• ·         Information Management
• ·         Traffic Management
• ·         Order Management
• ·         Contract Management
• ·         Warehouse Management
• ·         Health & Safety

Supply Chain Management leads the chart of business process framework on the basis that it encompasses inter-related methods, such as inventory use, warehouse management, procurement and contract management, financial management, logistics, etc.

Benefits of Best Practice Adoption (BPA)

1.       Employees in the business organization deliver optimal performance as their skills are enhanced with effective business processes

2.       The organization will have a competitive edge amongst its competitors, thereby attracting investors

3.       The organization experiences fast growth with effective business continuity

4.       There is high retention of skills and expertise which over time helps in setting a benchmark for the market or industry

5.       Adoption of best practice provides proper visibility and qualitative facts for decision making 

Business tools that helps to drive adoption of Best practice processes and methodologies:

1.       Enterprise Resource Planning (ERP) applications: These are business solution software built on processes and logics enforcing data capturing, processing and delivery of report in a standard controlled approach.

Some of the inter-related modules found in ERP systems are Financial Management, Account Payables, Account Receivables Management, Warehouse Management, Logics/Fleet Management, Procurement and Contract, etc.

2.       Business Process applications: These are software applications that help to develop properly defined processes based on logics, parameters and definitions entered or selected in the application based on an industry sector. With this, business organizations can have a benchmark definition to work with while building their businesses.

Bob Engel (Supply Chain Quarterly, 2011) identified 10 best-in-class ideas (listed below) for businesses running Supply Chain processes & Methodologies;

• 1.        Establish a governing supply chain council
• 2.        Properly align and staff the supply chain organization
• 3.        Make technology work for you
• 4.        Establish alliances with key suppliers
• 5.        Engage in collaborative strategic sourcing
• 6.        Focus on total cost of ownership, not price
• 7.        Put contracts under the supply chain function
• 8.        Optimize company-owned inventory
• 9.        Establish appropriate levels of control and minimize risk
• 10.     Take green initiatives and social responsibility seriously

If you already have implemented many of these practices, the insights and examples offered here will serve to validate your current strategy. And if you aren't taking all of these steps, then adding the remaining ones to your lineup will help you complete your transformation to a best-in-class supply chain organization.

Critical Factors affecting Supply Chain Management (SCM)

Globalization with the advent of information technology and the rapid improvements of industry standards has open doors to various opportunities in areas such as Warehouse Management, Supply Chain Management, Logistics and other areas just to mention a few.

Supply chain management is applied by companies across the globe due to its demonstrated

results such as delivery time reduction, improved financial performance, greater customer

satisfaction, building trust among suppliers, and others. The image below identifies some components of Supply chain Management.

Factors that affecting SCM

In order to understand how a supply chain works, it is important to identify the factors affecting supply chain management. The identification of these factors has been based on previous work by Li (2002), and Quesada and Meneses (2010). The following sections show generic supply chain management factors and sub-factors that might affect supply chain management activities.

1.      Environmental uncertainty

·   Company environment

·   Government support

·   Uncertainty aspects from overseas for international operations

2.      Information technology

·      Communication tools

·      Planning tools

3.      Supply chain relationships

·      Relationships with suppliers

·      Relationships with customers

4.      Value-added process

·      Flexibility

·      Quality

·      Production system

5.      Business management

·      Process strategy

·      Process performance

·      Marketing strategy