Dr. John Visich teaches supply chain and operations management at an east coast university, and contributed to APICS Magazine’s January, 2012 “Lessons Learned” column an anecdote from his personal experience that we thought was worth sharing – because we’ll bet a lot of warehouses run like this. His story provides insight into knowing how your warehouse employees should perform, and the need to ensure that performance.
Visich visited the warehouse of a manufacturing company to evaluate whether it needed a larger warehouse to accommodate its growth. His first discovery was that each functional area of the warehouse had a stand-alone computer that did not update the main system until the next day. Then, he noticed that was only the beginning of their problems.
On a warehouse tour, “Fred” gave the consultants a tour. A huge stack of boxes had just arrived, and Fred opened one and scanned the packing slip. It contained 35 steel rods, each 2” long. Fred placed 10 rods in 3 plastic bags and wrote “10” on each. When asked “Why?” Fred replied, “To make cycle counting easier.” So now the company had 3 bags of 10 rods plus 5 rods left over, which were put back into the original box.
Next, Fred put the 4 packages of rods on a cart and headed to the shelves to put them away in locations known to the warehouse computer – except the box of 5. It wouldn’t fit, so Fred put it into a new location and updated the inventory record in the standalone PC.
Now, if cycle counting were the point, what group do you think the rods belong in, A, B or C? A simple item like a rod is most likely a “C” item, right? So Fred’s efforts to make cycle counting ‘easier’ were a waste. Or, since it did matter to the shipping manager and there was no particular pattern to which parts were counted each week… maybe Fred’s efforts were beneficial. Fact is, it’s impossible to say!
Multiply this uncertainty by the number of parts in the warehouse, and the need for a formal cycle counting program becomes obvious. It’s also worth noting that Fred took just that single item, the rods, out to the shelves, when his cart could have held many more parts – a waste of time and labor. And of course, the main computer system wouldn’t even know the rods were received, nor would it have the location for that partial box, until at least the next day.
But the real point here? Don’t blame Fred. He’s doing as instructed. Management is ultimately responsible for laying out the procedures – with all due input from those doing the job – and then seeing to it that they are implemented. In this case, Visich’s team made two key recommendations: Get rid of obsolete inventory to free up space; and train employees in efficient warehouse procedures. Easier said than done of course, but if you’ve read this narrative you probably already have a few ideas of your own.
Now… what about your warehouse?