5_tips_on_warehouse_efficiency_BCR_333At times, do you associate your warehouse with a money pit rather than with a facility to store your goods? Are you struggling with productivity and wondering how you can improve asset utilisation while maximising efficiencies and customer satisfaction?

Please rest assured you are not alone!

Here are five measures related to space utilisation that can assist you identify how your warehouse (or the goods stored within) can reach new heights.

Preparation is half the battle!

The good news is that there are numerous ways to improve performance by looking at the nine key areas below and by applying a number of best practices:

1. Costs
2. Use of space
3. Distances travelled/materials handling
4. Handling equipment utilisation
5. Labour utilisation
6. Customer service levels
7. Inventory Management Effectiveness and Stock Control Systems
8. Damages
9. Safety record

Sure enough, best practises do vary from industry to industry, but never the less; there are some that can universally be applied to most industries and companies. A remote diagnosis is very challenging to say the least, but we can point you into the right direction by highlighting some of the most important measures to bring your warehouse up to speed.

In order to be able to prioritise your actions, we suggest starting with a detailed analysis of your processes and costs, and implementing activity based costing. This will give you a solid understanding of what your cost drivers are and which areas you should prioritise.

The usual suspects!

Typically one of the biggest cost drivers in warehouse operations is the under utilisation of space. It seems to be obvious, but how effectively you use your space is not only subject to how you operate the warehouse and what handling equipment you have; in fact it starts much earlier, namely with the initial planning and warehouse design: Very often companies select a warehouse first and then try to fit their operation into the four walls, when in fact they should define the operational needs first, and then hunt for a suitable facility. That being said, let’s just assume we have to work with what we have.

1) Check your slotting – how rightsizing per product slot can boost warehouse efficiency

What is slotting? Slotting is the allocation of space to a particular product and is in a sense a trial and error process. If the slot allocated for a product is too small, it affects the productivity of your workforce as the slot needs to be replenished more often. If the slot is too big, well…then you are wasting prime “real estate”. Therefore, slotting needs to be reviewed much more frequently than you’d think. Approximately 50-60% of a picker’s activity is involved in travel time. Hence, not only the size of the slot is important, but where the slot for a particular product is located within the warehouse is also critical, and can have a huge impact on your warehouse productivity, either in a good or a bad way.

2) Classify your products – how to reduce travel times within your warehouse

It is a common rule of thumb in business that 80% of your sales come from 20% of your customers. The same applies to your product range: 80% of sales are typically generated by 20% of your items (ABC classification). Translating the Pareto principle into your warehouse environment, you can classify your items into “fast moving” (X-items), moderately “fast moving” (Y-items), “slow moving” (Z-items) and “dead slow moving” (Z2-items) based on how many picking transactions occurred over a period. By grouping together the 20% of your SKUs that complete 80 percent of your orders and by storing these items in a so called “Golden Zone” you can reduce traveling times significantly.

3) Maximise using the “Wheelhouse” – the ideal positioning for fast-movers in your warehouse

By now you have right sized your slots and you have also created a warehouse within the warehouse for your high frequented items. In order to achieve additional efficiencies in picking your fast movers, you should slot your fastest-moving SKUs in the waist-to-shoulder or “wheelhouse” area. This reduces picking times while also having a positive impact on OH&S (Occupational health and safety) by improving ergonomics for pickers tremendously.

4) Eliminate “Honeycombing” – how the correct length of lanes impacts warehouse space utilisation

Honeycombing is a term that describes the loss of storage space in floor storage due to the requirement to store a single item either horizontally or vertically in one lane, or column respectively. Most warehouses show signs of honeycombing: Either lanes are designed too long, which leaves warehouse space unutilised, or lanes are too short, which necessitates an increased number of aisles. Moreover, if the commodities cannot be stacked, or only to a certain height, the warehouse height and cube remain underutilised. If you suffer from honeycombing, we recommend a more detailed investigation of what the order pattern is per SKU, how long these products are stored and how much inventory and how many different SKUs you normally carry.

5) Select the right storage and material handling equipment – considerations

In order to utilise both floor space and elevated rack storage space more effectively, the right storage solutions need to be selected and implemented across your warehouse operations. You might consider various racking options such as selective, double-deep, drive-in or drive-through pallet racking, or you might look at bin shelving or a gravity-fed Carton Live Storage (CLS) system as more suitable for your storage and handling requirements.

Now it’s your turn!

Walk through your warehouse and pay attention to slots that appear to be too big. Do you see any indications for honeycombing, or do you have the feeling that your items are scattered all across the warehouse regardless of their pick frequency? We suggest you conduct a fast – slow moving analysis for all your items and revisit their storage location and their slot size. If you have further questions, you can consult with the team of experts at BCR. You can either seek for our assistance in making your warehouse more efficient, or you can entrust our experts by outsourcing your entire warehouse operations to us.

These 5 measures are just a starting place. You have a vast range of measures at your fingertips to increase your warehouse efficiency, you might just once again apply the Pareto principle by focusing on 20% of these measures and achieving 80% of the expected outcome. This will deliver quick-wins, which can have a significant positive impact on your warehouse operations, and on the way you think about your warehouse.

What cost drivers did you identify and what symptoms for waste of space did surface?

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For more than a century, BCR has continued to help small, medium and large businesses achieve an optimum logistics solution with warehousing and transportation, including air freight and sea freight services to and from the major ports including BrisbaneSydneyMelbourne, Adelaide and Fremantle (Perth).