Paso Robles, CA
Warehouse Optimization/Cal Poly Small Business Development Center for Innovation Consultant
First, look at the inventory: Is it pallets? boxes? SKUs? No, it is money. It is money in a bank. The bank must be secure. No one should roam the warehouse and take parts for samples/sales unless they notify the warehouse staff. It is money you are taking! One of the root causes for variations in cycle counting on hand in the warehouse versus on hand in the computer is: theft!
Typically, 80% or more of a company’s inventory, and sometimes accounts for more than half of its working capital, would get plenty of attention. However, in reality, only a few companies seem to really pay attention to their stockroom or warehouse, or the five processes that affect it (receiving, put-away, picking, shipping and maintenance, where “maintenance” represents the combination of cycle counting, consolidation, and other processes that maintain the stockroom in good operating order).
You can’t create a truly Lean warehousing process if you don’t have effective processes to supply materials to the floor. If it takes a week or more for inbound shipments to move from the receiving dock to warehouse shelves (which it many times does…) and then out to the shipping door, you’re robbing other departments (R&D, Marketing, even IT) of capital that could make them more effective.
That lack of attention represents an opportunity for individuals, to make a difference at their companies and customers.
A stockroom that only holds materials for New Product Introduction will look very different from a manufacturing warehouse for a television or large appliance factory. But more frequently I’ve found that the problems I’ve observed were due to not making necessary investments. (Focused investments in materials handling operations can have considerable ROI. Improving receiving and warehouse performance can enable you to take multiple days out of inventory.)
How to solve warehouse problems: Use DMAIC: Define, Measure, Improve, and Control. Also use PDCA: Plan, Do, Check and Act. Use a cross-functional team to solve problems.
What Warehouse Management System (WMS) do you use? Is it effective? Without data accuracy, it is ‘garbage in; garbage out.” Make cycle counting and root cause analysis a central focus in your warehouse: put up a large chart and post accuracy percentages for everyone to see because inventory records accuracy affects ALL departments in the company. Do you have and use task interleaving in your WMS? You can save money here! Is your inventory turning 6-8 + times/year? If not, you can save money. If you are have automation, do you have a Warehouse Control System (WCS) integrated in to the WMS? Or, do you have a Warehouse Execution System (WES=WMS + WCS).
Whether it’s big or small, whether it handles small parts, large items, or a mix, a well-run warehouse will have the following characteristics:
The warehouse should have a Lean culture and practice: 5S, Kaizen (and Kaizen Blitz for Continuous Improvement, Kanban pull systems, and Lean Six Sigma. You must Continuously Improve Warehouse Operations daily.
SKUs will be stored:
There are trade-offs between these, especially when resources are limited. If space is limited, a well-run warehouse may decide to pack some of its slow-moving parts into a small space. This make picking those parts less efficient, but it will also increase the amount of space (and decrease handling time) for the frequently picked / fast-moving parts. If automation (forklifts, conveyors, etc.) is limited, the stockroom may use more floor storage.
What you should see when walking through a stockroom and associated areas like receiving, staging, etc.:
› Picking processes and storage strategies that are designed to minimize the amount of time and effort spent on the most frequently picked items while maintaining control of inventory. Examples of this include:
› Cleanliness and good order: Take turns cleaning the warehouse: it is your home away from home. Use Lean’s 5S: Sort, Set in order, Shine, Standardize and Sustain (Sustaining 5S is the most difficult.) You should be able to easily see box labels, and items should be stacked neatly. There should be a clear distinction between each storage location. Usually that means a physical barrier (like a metal divider) or air. Make it obvious which items are in each location. Set up signs for: Aisles, bays, Shelves and Slots.
› Bay location IDs are on the shelves & racks, to identify each individual storage location.
› Generally, one item stored per location. There can be temporary exceptions to this rule when a stockroom or warehouse is near or over capacity, but multiple part numbers in the same location will lead to picking and inventory errors if allowed to become normal practice.
› Attention to Safety/OSHA (top priority) and ergonomics, including adequate and efficient lighting. Workers shouldn’t have to spend their days kneeling on the floor, nor should they be asked to frequently pick up heavy boxes. At minimum, you should see manual conveyors, tables, and carts for workers to use while receiving and picking goods. If forklifts operate in the aisles, there should be obvious attention to safety requirements. Fork Lifts should practice task interleaving so there are no “deadhead” loads in the warehouse. Every time you see a Fork Lift/Driver, they are carrying a load, and are not empty.
› There should be a small area holding received goods that can’t be processed, quality issues, return to vendor (RTV), reverse logistics and items in “quarantine” and other problem items. The items in this area shouldn’t have aged more than a week or two.