You’ve barely finished shipping fall and holiday, but it’s time to assess your 2014 peak season operations performance and start planning for peak season 2015. What are your objectives for improvements in 2015? Here are eight steps to help you prioritize which changes have to happen this year, and which second-tier projects can be pushed out to 2016 and beyond.
Critique your distribution processes for warehouse layout and flow
Is the flow of inbound product receipts through put away efficient and without bottlenecks? What is the “dock to stock” time from receipt of customer returns until you actually process them – two hours, a day or more? If more than a couple of days you are sitting on inventory that if it’s a hot seller, you could restock and move vs. missing a sale. You need to resolve any slowdowns/bottlenecks before your next peak. Sometimes it’s helpful to develop flow diagrams of the processes to depict what is happening.
Reducing the number of touches required to move product through the inbound and outbound processes lowers costs and improves throughput. How much rework and costs is there on inbound receipts?
Here are some problems we see with layout and flow:
- Layouts that worked when the business was smaller but don’t have scalability for a company experiencing good organic growth or growth through acquisition
- Dock doors and receiving areas planned too small
- The need to implement ASN and EDI scheduling and receiving
- The need for vendor compliance policies to reduce freight costs and rework (i.e. re-bagging, re-boxing ship-alones, etc.) and failure to adhere to company paperwork requirements
- Inefficient use of floor space and overhead cube
Now is the time to assess these issues while still fresh in the mind, asking staff what the congestion and issues were. Did anybody take photos or document the issues?
Warehouse capacity and storage
If your shelves and floor space were overflowing you may need to evaluate additional or different racking, re-layout of the facility or additional/new space.
Some of the issues we commonly see are:
- The need to improve slotting concepts, i.e. strategic placement of “hot picks”
- Adjusting bin/slot size to item sales velocity rather than one size for all products
- Too frequent replenishment of forward stock
- Warehouse back orders and floor congestion between picking and replenishment
- Storage configurations which don’t use cube and footprint efficiently
Use KPIs to set your 2015 goals
You can’t improve something you haven’t measured. Do you have the KPIs in place to measure your processes, costs and customer service? These should include cost per order; productivity across all warehousing functions; measures of turnaround such as dock to stock, customer order processing and returns processing; and initial order fill rates on customer orders.
Also include measurement of errors such as mis-picks, warehouse back orders and damaged in transit items. These should point to where improvement can be made. Use external benchmarks as a guide to future performance.
Involve key members of your team
Your staff knows where the pain points are. By involving them in identifying the problems, you start the process of buy on solutions and how they will be implemented. The staff doesn’t always know what the solution is, but they sure know where the pain is.
Apply technology and automation
Consider how technology and automation can change your productivity, improve inventory accuracy and provide better customer service. Many fulfillment operations are highly manual processes. What opportunities are there to improve efficiency? One of the most productive technologies out there is to implement voice technology into receiving, inventory control and put away. Voice-enabled smart phone and tablet technologies are offering lower cost device options too.
Material handling equipment (MHE) in conjunction with the right warehouse layout will reduce bottlenecks and streamline process. More than 50% of the labor in fulfillment is generally in picking and packing; how can you reduce these costs further? As new processes and technology are considered, get IT support for your selected options.
Seek out new potential solutions to be considered
Consultants, material handling integrators, vendors and trade shows like Operations Summit can provide a wide range of new possibilities and ideas you may not have considered.
Analysis of options and deciding the plan
Before you leap at a few great ideas, consider all aspects of the fact finding in the steps above. Generally there are too many possibilities to be implemented before the peak. Develop viable options and scenarios. Which can bring the most benefit, at what cost and in the time you have in 2015? Once again, get the buy in and understanding of the staff.
Commit to continuous improvement agenda
Hopefully the improvement process generates more ideas and potential than what you can do in one year. In January 2016 repeat the process again. What do your historical benchmarks of performance show you about this year’s changes? What has changed and what should be considered for 2016?
A continuous improvement process is essential to enhancing productivity, containing costs and improving customer service in every company.
Curt Barry is president of F. Curtis Barry & Company