What is the difference between a warehouse whose operations eat away at profits, and one that meets all customer expectations while operating under budget? Efficiency, of course. But what does that entail?
The truth is that it varies from warehouse to warehouse. One operation might need to shore up its receiving procedures to cut down on mistakes. Another might be facing bottlenecks due to labor management issues. There are problems and challenges common to all warehouses, but the list of what gets done well, and what could use improvement, varies with location, company, culture, and even product.
All the more reason warehouses and fulfillment centers need to track their performance. By keeping data on workflows and orders as they are fulfilled, you can see which steps are not being performed as optimally as they should. Once you know weak areas, introducing new efficiencies is relatively trivial.
Four areas where tracking your warehouse operations can save time and money
It’s Better to Receive—Properly
Start with the point at which goods or materials first enter your facility: Receiving. When items come in, how long do they sit on a dock or floor before they are inspected, entered into the system, and shelved? How long does the actual put-away take? Are there signs of inefficient receiving and storage, such as empty pick racks, congested staging areas, or items that are regularly found to be damaged or spoiled?
All of these signs can arise if you begin tracking received items as soon as they enter the warehouse. Then you can begin to assess the degree to which receiving is creating unnecessary costs.
If it is, you can begin to address the problem: Having a way to immediately enter items into your inventory management system, assign them shelving space, and create a workflow to put them there can easily minimize congestion and loss, not to mention make picking easier when the time comes.
While We’re On Picking...
Having optimal pick paths for order fulfillment is another important part of optimization. The main idea here is to track your employee's’ movement through the warehouse to see which paths minimize time spent moving. Picking paths that are NOT optimized can lead to excessive travel times which, in aggregate, culminate in slower turnaround time and unnecessary labor costs.
Once you have an idea on the paths that employees currently take, you can begin optimizing them by doing things like:
- Storing items near each other when they frequently are purchased together.
- Fulfilling orders in such a way that individual items in one area are all picked before moving to the next area.
- Utilizing linear picking orders, where warehouse employees complete their picking run at a location close to the final shipping area.
Going Forward with Forward Staging
Another way to optimize picking is by using forward staging. This strategy can be a real timesaver for items with high velocity (that is, they sell rather quickly).
Forward staging simply means having a set amount of stock in forward locations close to where packing and shipping will occur. When an order for one of these items comes in, an employee can choose items from the forward location quickly. As the quantities in the forward location get low, replenishment stock from elsewhere in the warehouse (or from a less-expensive off-site location) can then be brought forward.
Forward locations can be a huge timesaver, especially with popular or high-volume items. The idea is to minimize trips to more remote locations in the warehouse at the same time that you minimize the distance a picker has to travel to get an item.
Comparing Apples to Apples
Once you have a warehouse management system set to track the various activities in your warehouse, you can begin to look for differences—differences that could very well mean a difference to your bottom line.
Consider these examples:
- Do different shifts differ in the time it takes them to do certain tasks?
- Is there a difference in time spent on items that need to be placed in cold storage versus those that can be at room temperature?
- Are employees spending more time going back and forth to the warehouse shelves for individual orders than they are packing and shipping those orders?
- At each step of your workflow, how long do items sit idly waiting for someone to complete a step?
Needless to say, these are questions a warehouse manager would love having answers to, especially because they impact efficiency.
Customer Service is Still the Bottom Line
All this said, efficiency does matter to the customer experience as well. Consumers have grown accustomed to two-day delivery times, and the merchants that can make them happen are the ones who will capture the most market share.
Not only that, but knowing how your facility works means that you can deliver on a bigger and bolder brand promise. Imagine being able to make the claim “Order by 3 pm and your order will ship the same day!” That could get customers to buy sooner rather than later. But that is a promise you can make only if 1) your warehouse is running at maximum efficiency, and 2) you know precisely how long it will take to process an order, given your typical order volume. Otherwise, your promise is blind.
Internal efficiency goes a long way toward injecting that level of dependability into your brand promise. How do you meet that efficiency? With constant adjustment in your operation based on hard data. Data doesn’t lie. But you have to have that data in the first place.
When we set forth to create Infoplus, we built it on a backbone of real-time data and warehouse tracking metrics so that merchants could effectively track everything going on in their warehouses and storage facilities. This way, it would be easy to see how much time each step was taking, generate a report, and move forward with adjustments to improve those operations.
If you would like to see an example of this kind of reporting, contact us. We’d love to show you what having the right kind of data can do.