Benefits of warehouse optimization
Companies that fail to continuously optimize their warehouse space may be leaving money on the table, sacrificing efficiency and incurring unnecessary operating costs that could easily be suppressed with a few procedural tweaks.
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Let’s look at 3 common opportunities for improvement in the warehouse management space.
Automated inventory count and management
Large warehouses managing high volumes of small parcels must have in place automated means to reduce warehouse theft. By their very nature of operations, warehouses have many points of entry and exit, such as employee entrances and cargo docks. Unless the facility has a large budget, there is no easy way to practically secure every single one of these points. Hence, theft prevention measures are best implemented at the rack.
Radio Frequency Identification (RFID) technology has come a long way since 1973 when it was first used commercially. The technology is now extremely affordable with disposable tags costing a few cents and shelf mounted tag scanners being able to cover a large reach.
If used with carefully designed processes, RFID technology can take a lot of work away from traditionally resource intensive processes like monthly cycle counts and inventory audits. RFID could also provide dynamic updates when tags are no longer readable because they were cut when they should not have been, or when tagged cargo is being moved without authorization.
Storage and racking set-ups
The bread and butter feature of every warehouse is of course the infrastructure required to keep products. But this goes beyond the arrangement of racks, set-up of shelf height and the purchase of very narrow aisle (VNA) cranes. Storage systems must be complete solutions that meet the following needs:
- Can shelf height be easily adjusted to accommodate for out of normal gauge cargo? This may not be a concern if the warehouse is never expected to receive non-standard sized cargo.
- Does the warehouse management system (WMS) allow users to identify specific racks or bins where products are kept? Granular visibility of storage space allows the warehouse administrator to plan better utilization.
- Does the WMS allow execution of standard good warehouse practices such as FIFO (first in, first out)? Other good practices can include triggering volume balances or expired stocks.
- Does the racking system allow goods to be stowed and retrieved with minimum risk of damage, even preventing scratches? Typical warehouse designed serve most purposes but some cargo can be very difficult to carry through a very narrow aisle.
- If very high racks are used, are they secured safely at height and foundation to minimize chance for tipping even if an inexperienced warehouse user over stacks heavy articles on top? Tipping racks cause catastrophic damage to warehouses and may even result in death of warehouse staff.
- Does the warehouse execute good house keeping practices, such as reorganizing loosely packed items to be placed at the bottom shelf for easy picking and minimizing risk of falling cargo injuring warehouse users?
- Does the warehouse have a labelling activity prior to storage that allows for tracking of inventory to specific shipments? This will help improve response times in product recall exercises.
Physical layout of the warehouse
Warehouse spaces typically remain unchanged for years due to the difficulty of rearranging bolted down racks, moving postponement or redressing equipment and the damage risks associated with transitioning inventory through a layout change.
However, reviewing the layout of a warehouse could reap tremendous benefits by:
- Reducing man-hours required to complete routine daily tasks, by prioritizing facilitation and access for frequently accessed shelves.
- Reducing accidents in the workplace, by eliminating common blind spots and reducing convergence points of fork lift and people movement activity.
- Increasing the speed of completion for routine tasks, by bringing postponement activity area closer to affected cargo.
- Reducing errors in picking and packing operations, by separating frequently confused products due to similarity or lack of markings.
Since reorganizing a large warehouse is a somewhat costly exercise that includes some down-time for warehouse operations, any attempt to do should be carefully thought through with technical studies done to ensure that the changes being made truly improve operations in some way. This may require the services of an experienced professional with knowledge in specialist areas such as Six Sigma.
Warehouse optimization is a not a trendy new concept
The academic field of warehouse optimization is not new in the supply chain industry and has been a topic of discussion since warehouses were first used. However, regardless of how experienced or knowledgeable they are, logisticians must be aware that every warehouse is different and every optimization solution must fit its purpose. For example, if the warehouse is operating on a tight budget with low inventory held on turn around time, implementing an expensive FIFO solution may not be the best way to spend money especially if the product is a non-perishable. Also, if a warehouse is only used to store a single type of non-lot managed products with no expiry date an expensive WMS may not be required.