This is our second-to-last post derived from a report compiled from the findings of over 200 companies by the Aberdeen Group, available here, and titled “On-Time and Under Budget: Maximizing Profits with Efficient Warehouse Management.”
In our previous four posts (starting here) we talked in Post #1 about the competitive pressures that are forcing today’s companies to take a hard look at their warehouse operations. In Post #2 we looked at the costs of warehouse mistakes in hard dollars. In Post #3 we looked at the surprisingly large number of dollars that can be recaptured by eliminating those errors. In Post #4 we looked at the key action points that Best of Class companies use to excel in warehouse management. Here in Post #5 we’ll look at Aberdeen’s three key conclusions – and break them down according to whether those recommendations are for the Best of Class, the Average, or the Laggards in WMS performance. In other words, everyone has room for improvement.
For the Laggards… Aberdeen has three key recommendations:
- Implement cycle counting. Companies utilizing an organized, systematic batch-oriented approach to cycle counting (or what we often call ABC – Activity Based Costing – analysis) have 8% fewer inventory discrepancies between what they have and what they think they have in the warehouse.
- Enable centralized direction of warehouse processes. Here, organization is the key. As Aberdeen writes, “When tasks are assigned from a single source, and not dictated by the choices of individual workers, there is a common basis for all order fulfillment operations.” The result is higher inventory accuracy and significantly improved on-time performance.
- Provide additional training resources to warehouse staff. Those companies providing resources for process improvement and technology to staff enjoy noticeable improvements in picking accuracy and on-time performance.
For the Industry Average performers, Aberdeen recommends:
- Improve collaboration with suppliers and customers. Collaboration with suppliers regarding incoming deliveries and with customers for visibility into outbound shipments yields higher on-time delivery success.
- Implement Engineered Labor Standards. Conducting discrete studies related to warehouse tasks can help reset the bar on performance, according to Aberdeen. The idea is to shift from benchmarks for past achievements to higher theoretical ideals.
- Enable real-time communication and confirmation. Mobile, electronic warehouse technologies for order fulfillment, confirmation and mistake reduction collectively serve to increase picking accuracy and on-time delivery, as well as faster turnaround times.
Finally, even the Best of Class companies show areas that can be improved:
- Optimize inventory location. Strategically locating inventory in optimal positions, or slotting, “based on customized criteria rather than SKU velocity” helps to speed order turnaround.
- Increase the focus on labor management. Activities like ongoing data collection, performance comparison, process changes and training all show a positive effect on the quest for continuous improvement.
- Implement dynamic task assignment. Picking routes that minimize work travel distances are an important first step to improved warehouse operations. But task-interleaving – combining pick and put-away tasks on the “same trip” — increases the number of tasks completed while keeping travel to a minimum.
Our final post in this WMS series comes next, highlighting the differences in performance among firms who use enabling WMS technology, and those that do not.