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Archive for the ‘General WMS (Warehouse Mgmt) Articles’ Category

Our friends at Insight Works, a provider of automated warehouse and software solutions, have pointed out the most common ways companies lose money through warehouse and inventory mistakes.  Considering that these mistakes are common, and that the U.S. Bureau of Labor Statistics says that the number of U.S. warehouses has risen 15% since 2010, they are worth sharing.

Overstocking.  It’s an expensive issue for all supply chain operations.  Statistics show that U.S. companies are sitting on $1.43 of inventory for every $1 in sales – and that’s too much.  Errors that range from incorrect bin labeling and putaway procedures, to lack of oversight or pure laziness are all contributors.  But the bottom line is a considerable amount of tied-up working capital which, if recaptured, represents a sizeable bump in the bottom line.

That’s where automation helps, and often, very quickly once implemented.  A warehouse management system can automate stocking processes and ensure accuracy in stock counts, while also supporting managers with insights into optimal time to restock.

Mispicks-and Mis-shipments.  A single mis-pick costs, on average, about $22, and the average U.S. company has been shown to lose $390,000 annually due to mis-picks (yes, this obviously includes some pretty large firms, but not exclusively).

Here again, automation pays.  A robust warehouse management system can pinpoint and address inefficiencies. Barcode scanners help reduce the chances of mispicks and mis-shipments by eliminating risks associated with manual data entry.  Any picking errors are identified instantly by the barcode scanner, and incorrect items never make it to shipping, let alone customers.

Inventory count errors.  Mistakes in cycle counts, prevalent in manual or paper-based systems, hurt efficiency and drive up mistakes of either too much, or occasionally, too little inventory.

As the folks at Insights Works note… While inventory counts are undertaken to help support accurate inventory records, manual counts are time-consuming and prone to error.  A worker may, for example, accidentally group differently sized items together and count them as the same size, resulting in an incorrect count.  Replacing these manual processes with an automated system that leverages barcode scanners can reduce time spent on cycle and inventory counts and cut down on errors.  Best of all, when items are scanned and counted, data is automatically added to the inventory management system, further reducing administrative tasks and supporting accuracy without extra work.

Picking time.  Today’s WMS systems can direct workers on the most efficient routes to make their picks when filling orders.  Some can even provide optimal picking order based on certain order characteristics.  Workers save time, increase pick rates, and substantially reduce picking errors compared to manual systems.  This helps make even new, less experienced workers more efficient in short order.

Incoming inventory errors.  Some warehouses still use time-consuming and error-prone manual processes for counting and reconciling incoming shipments, which delay outgoing orders awaiting updated inventory data.  Instead, workers can leverage barcode scanning to more quickly receive and verify incoming shipments because scanned data is automatically sent to the warehouse management system — no extra steps needed. This supports speed and accuracy, and ensures that human errors related to incoming inventory are avoided.

 

The bottom line is this: Automated warehouse management systems have been around for years, and they greatly improve the efficiencies of all warehouse operations.  In fact, probably no other ERP automation component provides a faster payback.  If you’re not already fully automated ‘out back,’ perhaps it’s time you asked yourself why.

 

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We’ll end 2017 with the conclusion of our two-part post about improving your warehouse through better data.  As we pointed out in our prior post, having a decent Warehouse Management System within your ERP system is not enough – it needs to run with accurate data.  The answer: barcoding.

In our prior post we reprised comments from Insight Works’ Brian Neufeld regarding how barcode scanning is the best choice for warehouse goods tracking.  As Brian notes:

  • Barcode scanning efficiency results in more frequent inventory and cycle counts, and faster cycle counts can improve data accuracy which also improves productivity and fill rates.
  • Order fulfillment is more accurate, ultimately improving shipping times and customer satisfaction.
  • Warehouse managers see a reduction in necessary labor time, so barcode systems can pay for themselves after the first annual count.

How?  Well, in a manual environment, ONLY with great effort.  Inventory counts performed outside regular hours and requiring overtime are often required to collect, record, check and input the data.  It can take days, as we’ve seen with some companies.  And the counts are still subject to many errors.

With barcoding, employees utilize handheld scanners to scan bin numbers, and 2D labels on products and bins make unit counts quick and easy.  Counts can be entered into the scanners when required, and each employee is a unique (and accountable) scanner/counter.  Scanning can cut inventory count times by up to 90%.

As always, it comes down to cost, but here, the news is mostly good.  Most barcode solutions, once successfully implemented (and yes, there is time and a learning curve and some integration to be considered) can yield a payback with a relatively quick ROI — especially when you’re saving up to 90% of the time-value of those costly and tedious inventory counts.

A consultant can help you determine answers to issues like selecting the right barcode method, the right devices (fixed or mobile), and the right formats, labels and media.  The cost recapture on the savings from reduced data entry errors, reduced picking errors, and especially from reduced inventory, can add up much faster than most people realize.  The combination of savings in a typical warehouse can run into the tens of thousands of dollars in savings in very short order.  We’ve seen it often.

In the end, it’s not a question of “if” you should do barcode, but “when.”  You have to crawl before you walk before you run, as we often like to say.  It’s not usually the first warehouse project we tackle, but when your WMS and ERP and inventory systems are ready, it can be one of the fastest and biggest payouts you’ll find inside your company.

Sounds like a great way to start the New Year, doesn’t it?

And on that note… Our best wishes to you and yours for a very Happy New Year as well!

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For the year’s final two posts we take a look at an issue that’s troubling to many of our clients and would-be clients: effective warehouse management.  Starting a new year seems to be the perfect time to address this nemesis of many a distribution and manufacturing operation.  Many companies use the pre-New Year’s week as a week to wind down and to attend to inventory and warehouse matters… so here goes.

Managing a warehouse accurately can be a multi-faceted and almost overwhelming responsibility, made worse by the fact that most warehouse operations are in a constant state of flux.  That’s true even in smaller warehouse operations.  So in this post and our next one we’ll take a look at some issues and advice on how warehouse managers can ‘get a grip’ on their operations, and how today’s tools can make the job more manageable.

The better ERP systems (though not nearly all) can act as a repository for warehouse data.  But just because you have an integrated ERP system that holds that warehouse data doesn’t mean you have complete control over the operation.  You simply have a tool – one that can highlight existing inefficiencies, inaccuracies, bad counts, inventory overstocks and shortages, and a host of other issues.

Warehouse managers face tough challenges that include having capital tied up in too much excess inventory, bad records that too often lead to costly ‘expedited’ purchases, lower than anticipated margins, late shipments and lower customer satisfaction and/or on-time deliveries.

The common problem in all cases is inaccurate data.  After all, if it weren’t, you’d have the right inventory, and you’d have what you thought you had (or the reports told you that you had) in your bins and shelves.  You’d deliver on-time more often, more accurately.

Often, even with a WMS (Warehouse Management System) in place, warehouses can become beholden to too many slips of paper – handwritten receipt notifications that never quite make it “into the system,” or hand-marked (and re-marked) physical inventory counts, picking tickets and special notes to pickers.

At some point, it all becomes too time-consuming, frustrating and error-prone.  And that all comes at a cost.  WMS is not enough – you also have to have accurate data to work from.

And that’s where barcode scanning comes into play.

As Brian Neufeld of Insight Works points out (in a post on MSDynamicsWorld):

“In terms of cost and universal acceptance, barcode scanning is the best choice for warehouse goods tracking. Put simply, these software systems allow transactions in a warehouse to be processed much faster and with considerably less errors, with such transactions encompassing everything from inventory counts to put-aways, receipts, picks, shipments, and more.”

We agree wholeheartedly with Mr. Neufeld, and so in our next and concluding post, we’ll take a look at how to put a solution into action.  Stay tuned…

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3plThird-party Logistics providers (or 3PLs) have special warehouse management needs, above and beyond those of, say, the manufacturer that distributes its own products, as pointed out recently in a white paper by WMS publisher Accellos.  That’s worth remembering, the article states, when a third party logistics provider that’s looking for warehouse management software hears it biggest customer suggest they simply use what the they’re using.  Accellos’ conclusion: a 3PL’s special needs warrant looking at a product designed specifically for their logistics niche.  As a result, they highlighted Five Business Drivers a 3PL should consider when evaluating warehouse management systems for their own purposes…

  1. Inventory Integrity – To a 3PL nothing is more important than properly assigning, tracking and managing their clients’ respective inventories.  It’s even more daunting when multiple clients’ inventory share the same building.  The ability to concatenate (or ‘join’) overlapping identifiers such as item codes or pallet codes with a client ID to provide a truly unique identifier should be considered.
  2. Customer Service Enablement – A system built for the multi-client environment of a 3PL must ensure client access to their information only.  So in addition to providing real-time information on inventory, you can provide individualized client self-service features too, like custom alerts or exception reporting.
  3. Concurrent Client Logistics – This means being able to manage multiple clients within a single building, utilizing shared resources while maintaining inventory integrity and data security for each 3PL client’s workflow.
  4. Revenue Assurance – Tracking revenue producing activities from client to client, with different standards and actions, can be complex.  Clients often want to be billed in different ways for differing actions or rules.  A system dedicated to the needs of a 3PL can handle these requirements by tracking the right revenue producing actions, client by client.
  5. Beyond the Four Walls – Items outside the building should also be taken into account, like transportation and supplier management.  If you overpay to move goods in and out of the facility, your internal cost efficiencies can be compromised.  Improvement requires the management of routing rules for multiple clients that may not be included in a standard WMS package.

The takeaway for 3PLs is the need for a careful needs analysis, taking into account all the factors that make your distribution center and policies unique.  One size does not fit all, would seem to be Accellos’ overarching point, and a “purpose-built” WMS may be the better solution for the full-service 3PL.

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warehouse putaway

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?

 

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leading_laggingAPICS Magazine recently published an article titled “A Failure to Communicate” by Ron Crabtree, an author of five books on operational excellence.  In it, Crabtree points out a variety of both leading and trailing indicators that, when analyzed correctly and acted upon, can yield considerable improvements in a company’s fulfillment performance out of the warehouse.  The points and conclusions we’ve drawn from his article are worth sharing… and will, we believe, be of value to anyone seeking to improve warehouse performance.

In the article, the author breaks down a variety of common performance metrics used in warehousing and distribution operations.  Most warehouse performance indicators tend to be of the “trailing” nature.  That is, they reflect, usually from a financial performance perspective, what has already happened in the warehouse.  Trailing indicators include:

  • Hours worked (and hours worked per unit)
  • Invoice lines shipped per hour
  • Parts and Labor cost per line

But what if you could use your trailing (or financial) indicators as a springboard to improving warehouse performance by analyzing key “leading” indicators?  These would be the data you need to improve future performance.

Crabtree relates the experience of a retail-level consumer goods fulfillment center that was using cost per line shipped and percentage of returns as its key metrics of financial success.  But returns were unacceptably high, and a quick analysis determined this was the result of the wrong items being shipped in the first place.  This resulted in still greater costs being incurred because the company was performing a 100% audit on outbound containers to seek out the problem’s source.

Crabtree’s consultants decided to examine the underlying causes, which turned out to revolve around issues with the handheld units and location labeling.  It turned out that the warehouse was handling 25,000 different items, about double what it was sized to do.  As a result, goods were crammed into every nook and cranny.  Partly due to the excess in items stocked, bar code labeling had deteriorated over time, and upon review it was determined that handhelds were failing far too often.  The combination was stressing the system to the point of having financial (i.e., “trailing indicator”) impact on the company.

But by looking at the more “leading” indicators (such as handheld reliability, location accuracy, and quantity on hand accuracy), the team could find the root causes and begin to identify solutions.  In this case, those turned out to include creating baseline measurements for scanners by utilizing some trusted quality measures — taught by APICS — including TPM (total productive maintenance) and OEE (overall equipment effectiveness) principles.

By instituting rolling audits of unreadable locations, and a maintenance strategy based on a well-known quality and lean tool known as the Five Ss, the company brought their warehouse issues under control, resulting in a 20% reduction in cost per order line (a financial, or “trailing” indicator) and a 75% drop in wrong items shipped – needless to say, a huge money saver overall.

By utilizing these TPM and OEE indicators, “a meaningful set of metrics that directly attached the root causes for bad picking” was created, notes Crabtree.  This in turn improved workforce morale and accountability, and as the metrics went down, it served as an early warning that cost and accuracy issues were looming.

Hence, by identifying and acting upon the key “leading” indicators, the financial (“trailing”) indicators were brought into line, to the improvement of not just the warehouse’s lot, but the company’s financials as a whole.

 

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Directed putaway in a warehouse refers to the placement of items into storage locations based on direction, or ‘rules’, offered by warehouse management software.  Shelf locations can be advantageously directed this way to improve warehouse efficiency and labor savings in areas like shipment throughput velocity, returns processing or warranty repair.

By using business rules (or a warehouse management system that is ‘modifiable’), directed putaway can eliminate much of the guesswork on the part of a warehouse staffer, and shorten the time it takes to get new staff up to speed in the warehouse, since they don’t have to learn complicated location putaway schemes.  The system can direct putaway to bins optimally located for, say, a kitting process required before final shipping – requiring that like items be grouped together for example.

One corollary to directed putaway that we’ve found useful (we utilize this in our own WMS package, called E-Z WMS) is a form of bin reservation, whereby a user stocking shelves is directed via a handheld device that only product “X” can be placed in bin “123”.  This can be especially useful in environments that store small but expensive components, or where precise location is important for other company-determined reasons.

Sometimes, the packaging and storing requirements for a product will determine a directed putaway.  Other times, special handling requirements (e.g., refrigeration) can determine storage locations.  In lumber, putaway can be determined by species, lengths, assembly sequence or other common criteria – with the software either directing, or providing guidance to, the warehouse worker.

In the end, such models can create greater warehouse efficiencies, provide better use of critical warehouse space, create a more optimal order-filling process, and better support “mixes” of order types or special handling needs.

Using product putaway rules can often take what was a complex manual process and begin inserting some computer based logic into the system, based on your unique product, category or packaging requirements.  With primary and secondary rules, you can begin to build into your WMS a level of intelligence that lets your whole floor team do more with less – less labor, fewer steps, lower costs.  Best of all, since rules are often made to be broken, you can determine which rules to follow and when, and then build these contingencies into your system over time – provided that system is highly rules based, or allows for future modifications.

The facility for some form of directed putaway (or modification to allow it) is yet another key consideration in the management of today’s warehouse, and in the selection of the best warehouse management system for your firm’s unique requirements.

 

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