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Warehouse problems to avoid

by Dick Friedman

Some distributors blame the recession for decreased warehouse productivity and
accuracy, but some problems existed even during good times. Here are three stories of warehouse problems that were easily and inexpensively solved. Think of the causes of these problems as a checklist of warehouse aspects that should be examined so problems can be avoided.

Too Much Space Reduced Productivity
Almost all distributors who provide construction-related items reduced inventory as the recession deepened, including a West Coast distributor with a 200,000 sq. ft. warehouse. The facility is divided into a fast-pick section, with small items and small boxes of items, and a wide-aisle section where pallet loads and large boxes are stored. All the aisles are long, and within each section, items are stored based on velocity.

The distributor had reduced head count, which he thought was the reason for low picking productivity in the fast-pick area. But he wasn't sure, and wanted an unbiased evaluation. One of the answers to the standard pre-visit questionnaire indicated a source of the problem, but it could account for only a small portion
of the problem.

Using a unique, proprietary checklist, an inspection of the fast-pick section revealed the main source of the problem and confirmed the minor source. About 15% of the slots, uniformly along the aisles and top to bottom of the bays, were never used. Yet the slower moving items were stored at the tail end of the aisles. Even though inventory had been reduced, there was still too much. When the warehouse manager was asked why there was so much open space, he stated that he had been told to save space for growth. No one could explain why there was too much inventory. With sales down some 30%, any growth was now many years away.

The first recommendation was to reduce the level of inventory by purchasing less; this would free up space. Second, starting at the head end of each aisle, fill up all empty slots with further-away items, until all items were moved as far up front as possible. After waiting a few weeks for inventory to decrease, it took a few weekends to move items forward, and the result was better than just higher productivity; one less picker was needed.

Very High Productivity Caused Mistakes
A distributor of "soft" items was experiencing a high rate of mis-picks, all of which were being reported by angry customers who received the wrong items or the wrong quantities of correct items. Sales were down slightly, but head count was not. The warehouse was
arranged by velocity, with any overflow stored directly above the slots used for picking. Productivity was very high, if no one counted the time spent putting away the wrong items that were returned, and the time spent picking the right items to replace the returns.

Management believed pickers were the cause of the mistakes, but wanted an unbiased, objective third-party to verify their belief. Answers to the standard pre-visit questionnaire explained why mistakes were not being detected before items were delivered or shipped, but did not explain why the mistakes were occurring.

Using my unique, proprietary checklist, I determined that about 10% of the products being put away were not being put in the slots designated for them. They were being put in adjacent slots meant for similar items. Most pickers assumed that all items in a slot belonged in that slot, and so did not verify that all boxes were the right ones. Some pickers spot-checked while picking, and made sure to get the right boxes but did not inform the warehouse manager of the problems they were finding and correcting.
The people doing the packing compared the number of boxes picked to the data on the pick list, but did not verify that all boxes were the right ones; boxes of very similar items looked the same.

The main recommendation – which would slightly reduce picking productivity—was to store similar items at least three slots away from each other. Other recommendations included having pickers record (on the pick list) incorrect storage locations that they find, and having packers spot-check boxes and record (on the pick list) mistakes they find. The warehouse manager was to skim all pick tickets for information about mistakes, and track those mistakes over time.

As a result of implementing the recommendations, overall warehouse accuracy soon reached 99.95%. Because almost no time was being spent putting away returns and re-picking, overall warehouse productivity actually increased.

Running Out of Space During the Recession!
Not every distributor reduced inventory as the recession resulted in decreased sales. One increased inventory, and planned to add new lines. But there were two problems: almost all the slots in the velocity-arranged warehouse were occupied; picking productivity was lower than it had been before warehouse head count was reduced.

The principal needed someone to objectively determine if there were ways to store more in the existing building space, and if there were ways to increase productivity. I e-mailed a standard pre-visit questionnaire, and one of his answers caught my attention.
The first order of business while on site was to determine the extent and storage locations of slow-moving and "dead" inventory. Spot-checks revealed that a large portion of inventory hadn't sold in several years; many of those items were still being stored in the locations assigned when they were first added to inventory as fast movers. Worse, many of the current faster-moving items were stored in locations that hurt picking productivity.

The first recommendation was for warehouse employees to determine exactly which items were truly "dead" and discard them. Then, determine which empty slots can be used for fast-moving items, and move those items there. Finally, if more space was still needed or desired, identify the slow-moving items that were stored in locations that should be used for fast-moving items; move the slow movers out, and the fast movers in.

When I last talked with the principal, he explained that the dead items were gone, most of the slow movers were relocated, and faster moving items had been moved into velocity-appropriate slots. There was enough free space for new items, and productivity had increased.

Dick Friedman is a recognized expert on warehouse operations, management and technologies for fastener, tool, industrial and MRO distributors. He is a Certified Management Consultant and is objective and unbiased, so he does NOT SELL warehouse management systems or technologies. Call (847) 256-1410 for a FREE consultation, or visit www.GenBusCon.com for more information or to send e-mail.

This article originally appeared in the Jan./Feb. 2012 issue of Industrial Supply magazine. Copyright 2012, Direct Business Media.

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