Warehousing has evolved from just simple storage of goods. Using the same old warehouse management techniques for a growing distribution company like yours may lead to some of the most prominent challenges managers of today face, such as increasing productivity, accuracy, and customer satisfaction while reducing cost. Businesses that experience these challenges and growing complexities in their operations (taking on more suppliers and more customers) may find a need for process improvement.
Process improvement means identifying and analyzing your warehouse and distribution operations to improve performance and experience for your staff and customers. We’ve put together seven good warehouse management practices we’ve learned over the years to help you manage your warehouse operations and set your company up for continued success.
1. Slot your inventory based on usage rate or how often a product is picked:
Slot your fastest selling items or best sellers within close reach and slower selling items in upper rack levels or away from your pick density. Proper organization can help your employees fulfill orders quickly by reducing travel time.
2. Slotting inventory on product and bin size:
Most warehouse management systems (WMS) utilize bin locations as an “address” to locate your material. This helps for the quick and accurate location of products within your warehouse, amongst other things. Your warehouse can have multiple different bin sizes, so using the right sized bin for each product is essential. It is easy to store a small item in a large bin, but you will have lost valuable real estate. Sorting your warehouse by product and bin size creates a space-saving and organized appearance.
3. Use forecasting models to calculate your EOQ and order controls:
Forecasting tools use your historical sales data to predict future performance. You can use this to assess EOQ and ordering controls. Your Economic Order Quantity (EOQ) is a calculation you’ll perform to represent your ideal order size to allow you to meet demands without overspending. It is used to minimize holding costs and excess inventory. Proper ordering controls will improve fulfillment, reduce carrying costs, and ultimately reduce your warehouse footprint.
4. Cycle counting your inventory based on how fast an item sells or the value of your product:
Cycle counting is a method used to confirm physical inventory counts match your inventory records. It is an inventory management practice that allows you to count items in a designated warehouse area without stopping your operations to complete a physical inventory. You may cycle count your fastest selling products (compared to those that sell once a year) and your most valuable products. Alternatively, you may choose to cycle count based on the product type or even zones within your warehouse. Cycle counting aims to identify and rectify any discrepancies in the inventory record. The benefit of this includes higher fulfillment rates, early detection of thefts, fewer errors, reduced audit fees, fewer inventory write-offs, etc.
5. Keeping quality control checks on picked orders
Quality control checkpoints in each stage of your distribution workflow can keep tabs on and reduce fulfillment errors in high-pressure or fast-moving workflows. If a company ignores warehouse quality control in the name of quick fulfillment, inaccurate, damaged, or poorly packaged products will be shipped, often costing more to correct these orders. With quality control checks set up, your warehouse managers can see what errors often occur and plan to prevent future occurrences. Having quality control systems in place can help you fulfill customer satisfaction and save unnecessary expenses.
6. Develop metrics (KPIs) to track “dock-to-stock” times
Identifying and tracking key performance indicators (KPIs) is another warehousing best practice. From receiving to storage, there are many KPIs and quality control metrics you can calculate to ensure continuous operational improvement, increased customer satisfaction, and lower operating costs. It is fundamental to review your metrics regularly so you can detect problems early and prevent failure in your supply chain.
Dock-to-stock is a KPI defined by your ability to move products from the receiving or inbound floor to your inventory, ready to pick. It starts from items arriving on your shop floor to your loading dock and ends when they’ve been stocked and accounted for until a customer places an order.
7. Discuss challenges with staff productivity:
When you track employees with metrics based on how fast they receive, pick and pack, work is often rushed to “have the best numbers,” leading to errors in your distribution or unhappy customers. Someone might put away 100 items an hour but find that half of them were not slotted accurately. You can optimize the pick and pack process and support your staff productivity with these warehousing tips and tricks:
- Using mobile technology such as scanners to improve inventory accuracy
- Developing an optimal layout for your warehouse to reduce the turnaround time
- Introducing automation to improve efficiency and minimize panic during peak times
The Racked Out team is well experienced in developing warehouse site plans that deliver efficient use of space, provide cost savings, and ensure safe operations. Applying these good warehouse management practices and investing in improved warehouse management can help you reduce your overall costs by up to 20% each year. Contact us today for a warehouse assessment and any of our racking installation services.