Superman’s outfit was cool, but it must have cost him a bundle. Besides, do you really need material handlers who can leap over tall buildings with a single bound? A more realistic expectation is that they rev up productivity in their daily tasks without blowing your budget.
The one major responsibility for any DC manager is to establish warehouse handling productivity levels that are both reasonable and attainable and at the same time help the business become competitive in the marketplace. The two basic models for measuring material handling productivity are (1) historical performance based on handling similar products in a similar environment, and (2) expectations based on predetermined engineered standards.
Knock ‘em dead Before you consider which of these options is best for your operation, you must address the barriers to productivity that you face. Some of these are obvious, others less so, but you can’t improve productivity in your facility without removing these obstacles. Hurdles that are immediately apparent include blocked lanes, confusing floor layout, uneven workload, incorrect tools, an inadequate scheduling system, and historical data files that lack accuracy and completeness. Among hidden barriers, you’ll find little or no written operating procedures, lack of training, wrong staffing levels, high absenteeism, and weak management style.
One place to begin knocking down these barriers is facility layout. Does the floor plan make sense? Is prodproduct flow logical? When analyzing your warehouse’s layout, use available data to support your ideas, and make sure to solicit the advice of the material handlers who work in the facility. They have a great deal of common sense and experience and should be given an opportunity to offer their input. Any efficiency improvement program needs the cooperation of everyone from the top of the organization to the bottom, because the program not only benefits the company but provides job security for workers. Increased productivity raises the return on investment from both human and financial capital.
Make a production Low productivity falls into five main categories, not necessarily exclusive to warehousing. Employees (1) don’t know what is expected, (2) don’t know how to do the job, (3) can’t perform the job as it is defined, (4) run into organizational barriers, or (5) don’t want to do their work.
The first three result from a lack of training. How often have you been surprised by workers who don’t know the specifics of their job or what tools they need? Some workers may not even know who their boss is. In these cases, you must establish clear lines of authority and responsibility early on. A very tiny percentage of employees really don’t want to do their work. You may be able to correct this with training programs and by communicating your expectations clearly. Another effective strategy is to establish communications circles among managers, supervisors, and warehouse material handlers. This process is a learning experience for all concerned and, except for the time invested, can be accomplished at minimal cost.
The point is to tackle current roadblocks before implementing new schemes. Fix employee issues early on, or you can’t lay the foundation for making your facility perform better. If your problems stem from poor warehouse layout, you will need to change that before beginning a productivity enhancement program.
High standards As mentioned earlier, you can use either historical data or predetermined standards to improve warehouse performance. Although both methods take roughly the same amount of time and effort, the results can be substantially different. The basic distinction between the two approaches lies in how long it takes to do the function versus how long it should take. If material handling expectations are based on estimates, historical data, or experience, the foundation of the measurements is unstable, and it could be difficult to justify or prove performance increases. Of course, you can design a productivity process using this data, but the time, effort, and funds spent on doing so will not be much less than those expended on pre-engineered standards, which are universally approved units of time that measure various functions.
By laying out a flow sheet or pattern and breaking down material handling functions into movement, you can assign units of time to each function. Add these times together, and you will get the total time that you should set as a productivity target. Four typical activities that can be measured are:
* Receiving and unloading to staging
* Checking and removal to storage
* Order picking and transfer to staging
* Checking and shipping to delivery vehicle
Within each of these functions, include travel time on a lift truck, walking, stooping, writing, and reading. Using a worksheet or pattern sheet, record each task performed in your operation as well as the units of time for each one, taken from a manual of pre-engineered standards. Most facility activities do not change from day to day or even week to week, so over a period of a month or so you will be able to set up patterns for each function and identify productivity expectations.
Pre-engineered standards, or the time it should take to perform a task, can be calculated using data from methods time management (MTM) along with a process explained in master standard data (MSD). Both of these sources are available from industrial engineering consultants or similar resources.
Time will tell An example of a handling time analysis and costing worksheet is shown below. The numbers inserted are based on standard times for inbound receiving, checking, and stocking, and outbound order filling, checking, and shipping. In this case we know that it will take one hour to receive and stock and 10.71 hours to ship. Based on a fully loaded cost of $23.29 per hour, the total hourly cost to perform the tasks is $23.76 for inbound and $249.44 for outbound. Third-party logistics providers perform similar analyses to generate unit rates for handling.
These numbers come from actual time studies and observations from a variety of warehouse operations, both nationally and internationally. They have proven reliability and have passed the test of labor arbitration and, more important, common sense. Recorded at 100% effort, these standards are adjusted for fatigue factors and repeated motions. Typically, warehouse workers will perform at a lower level during the learning curve.
Upon completion, handling rate worksheets should be tested, checked, and compared for reasonableness. Where they are incorrect, analyze them again and insert the correct time allowance. Review the worksheets with your warehouse material handlers, and ensure that you get their feedback. Most employees will support the program if your expectations are reasonable.
Right on schedule Once the pattern sheets have been reviewed and tested, the next step is to design a scheduling system. Based on the amount of work performed either the day before or the morning of the work day, calculate labor hours based on the engineered standards and work assigned. Tasks can be assigned in short intervals of one to three hours or for an entire day, depending on the type of operation and the labor intensity required.
The final step involves using your handling rate measures to develop internal benchmarks. Most important, remember that benchmarking means measuring. As long as you don’t use your findings as a reason to discipline but rather as a tool for teaching, employees will work with you in developing accurate task measurement in your facility.
Efficient use of space boosts material handling productivity, so make the most of every inch of room available in your distribution center. You can assess storage utilization in two ways:
(1) Gross space/storage utilization. This benchmark measures the total number of units that can be warehoused regardless of aisles, sprinkler risers, utility rooms, or damage staging areas. Although this is a fictitious number, it does provide a yardstick against which to measure net utilization. Consider this example:
Warehouse = 300′ x 150′ (45,000 sq. ft.), 20′ high Pallets = 40″ x 48″ (13.33 sq. ft.), 4.5′ high Gross space utilization = 45,000 ? 13.33 x 5 = 16,879 pallets (storage target) Cartons = 12″ x 12″ x 12″, or 60 per pallet Gross space utilization = 16,879 pallets x 60 cartons/pallet = 1,012,740 cartons (storage target)
(2) Net space/storage utilization. This type of analysis considers aisles and other areas where product cannot be stored, so facility layout will have a great impact on storage targets. You need to compare net and gross space utilization to help determine if layout improvements should be made. Take a look at the example below:
Warehouse = 300′ x 150′ (45,000 sq. ft.), 18′ high under sprinkler heads Net total sq. ft. = 45,000 – 10,260 (aisles and other staging areas) = 34,740 Pallets = 42″ x 50″ (14.58 sq. ft., 2″ between pallets), 4.5′ high Net space utilization = 34,740 ? 14.58 x 5 = 11,913 pallets (storage target) Cartons = 12″ x 12″ x 12″, or 60 per pallet, 4.5′ high Net space utilization = 34,740 sq. ft. ? 14.58 x 5 x 60 cartons/pallet = 714,815 cartons (storage target)
Use of space in the facility can be measured as often as needed, even several times a month, if you need to be able to track storage space regularly. Your purpose should be to measure what is actually in the warehouse at any given time and compare it to gross and net targets. Any differences you spot can be caused by honeycombing, high inventory turn rates, inefficient layout, or poor storage practices. For instance, if the gross space target for cartons is 1,012,740, the net space 714,815, and the actual space 557,760, calculating the percentage of difference among these numbers will enable you to judge facility capacity and determine whether to lease or buy additional space.