To implement a warehouse improvement program you have to understand the numbers and know that key factors that can change the numbers. To identify the catalyst, examine the fulfillment errors in each category—not the total number of errors—and undertake proactive strategies to reduce them. For example, let’s look at the three categories usually omitted from a fulfillment accuracy measuring system—defective item sent, damaged goods due to poor packaging and unpicked items due to inventory discrepancy.
Defective items can be caught before they are shipped at various stages in the fulfillment process, but usually at receiving quality assurance. Search for answers to the questions about defective products:
- Is there a pattern?
- Is there an inbound inspection program?
- If so, how successful is it?
- If not, should you begin one?
Damaged merchandise as a result of poor packaging can be prevented. Working with packers, carton suppliers, and transportation companies, alternative packaging methods and materials can reduce this error.
Problem orders—or orders not picked due to inventory discrepancy—are most important and most complicated. These orders are sent incomplete because an item cannot be found that the system shows to be available. Some companies spend countless hours looking for missing items –as much as 20% of the picking time—trying to track down the missing goods.
The main reason many companies refuse to take the problem of inventory discrepancies into account is that this can bring the fulfillment accuracy down. It is not uncommon, for example, for 2% of shipments to leave the fulfillment center with this problem. Instead of 99.5% shipment accuracy, that figure dwindles to 97.5%.
More accurate inventory recording is required to fix the problem. One way to improve measurement of quantity of items stored in each location is to perform cycle counts. Cycle counts are periodic physical counts of merchandise at each location that are used to reconcile the amount actually on hand with the amount that the system shows to be in inventory.
Wayne Teres is president of Teres Consulting, a Framingham, MA-based operations consultancy