An increase in efficiency will usually lead to an increase in profitability, which is everyone’s ultimate goal in business. Knowing that you can’t improve what you don’t measure, it’s critical to analyze what’s currently being done in your warehouse.
To do this, you may want to conduct an operations audit to systematically look at your labor, work flow, systems and facilities and determine how you’re performing in some key areas. Ask yourself the following questions:
How is your space being used? One of the biggest culprits in lost profits is an inefficient use of the cube. Receiving, picking, packing and shipping tend to use up to 50 percent of your space, with product storage taking up the rest. Using racking, a multi-level order picking concept and power conveyors can increase your effective use of your cubic feet. Can a simple reconfiguration lead to more product storage?
Can you reduce walking time? As much as 70 percent of a worker’s time can be spent walking. Reducing this number will increase orders picked per hour. Consider establishing a system in which you can store at least one week’s average unit movement in the pick slot as well as a “hot pick” area for extremely fast movers.
Are you taking full advantage of the power of bar codes? Demand consistent bar code standards from all your vendors, so you can utilize them throughout the process to track products, verify accuracy, speed up processing and eliminate paperwork.
Are the products available when pickers need them? Use a combination of scheduled replenishment of the primary pick slot, utilizing the min-max and demand-replenishment concepts to ensure consistently available inventory levels.
Is your warehouse neat? Organization and neatness organically increase productivity and worker morale. Get rid of obsolete equipment. Keep everything in its place.
Are you flexible? As it becomes increasingly difficult to predict the future, your flexibility and scalability will be the keys to your survival and growth. This will allow you to effectively respond to changing requirements, such as merchants increasing their SKUs or changing the types and sizes of items they offer. Are you allocating space for future growth?
Do you know where all of your inventory is located? Sound silly? It’s a significant shortcoming if your system does not allow for multiple locations of inventory to be shown. For efficient operations, your warehouse inventory system must be able to identify what SKU is stored in each location, as well as the quantity of each.
Does your staff know how they’re doing? The simple act or measuring and reporting key metrics to your workers will improve efficiency. People like to know where they stand and want to succeed. By giving them this feedback you will see an uptick in productivity.
Are your vendors meeting your needs? Because so much of what you do depends on what your vendors do, enforce a vendor compliance policy on everything from bar code standards to packaging standards. This will prevent you from incurring additional labor costs to repack or re-code products.
This auditing process should remain an ongoing initiative to continuously measure and improve your productivity and efficiency, and thereby your profitability as well.