In recent years, warehouse operation in most organizations has undergone significant change. Not long ago, warehouses stored large quantities of parts that could sit for months or even years. Organizations believed this was a way to provide a high level of customer service.
Executive Director, Center for Manufacturing Systems, New Jersey Institute of Technology
Eventually, organizations found this method of storage to be too costly, so warehouses transitioned to making more frequent inventory transactions in a greatly compressed time frame; storing and handling smaller loads; implementing more value-added services such as special labeling, customized packaging and supplier-managed inventories; using less storage space; and integrating more computer technology in the warehouse. These changes came as companies sought to satisfy customers while operating an “overhead function” as efficiently as possible.
As we strive to find ways to improve warehouse operations, it’s good to go back to the basics to understand the key functions of a warehouse, which are:
1. Ensure the safety of everybody who enters the warehouse. Traditionally, warehouses have been the source of many workplace injuries. Loading docks, powered trucks, conveyors, storage racks, ladders and charging stations have contributed largely to injuries. Therefore, they must be made as safe as possible for employees working in the warehouse and those who occasionally need to be in it. The need for warehouse safety cannot be overstated, nor can potential dangers be over-identified. Clear signage indicating everything from caution areas to equipment safety is helpful. However, only a good training program that reinforces safe practices and regularly scheduled safety audits, which seek out and correct unsafe conditions, can significantly reduce the risks of workplace injuries in a warehouse.
2. Receive parts and put them away in an assigned location. This is generally the first step in the warehouse process. It requires recording the item and quantity received, determining space requirements, determining the best storage location, moving the items to a designated location and completing the put-away transaction in a timely manner. Timely processing is a critical component of an accurate inventory.
3. Store the parts. This involves effectively utilizing space and ensuring certain safety protocols, such as stacking safely, staying within the maximum load capacities of storage racks and keeping parts out of aisles. In addition, clearly marked location identifiers are critical to effective warehouse management. There are numerous ways to store parts in a warehouse. For instance, an organization can employ a volume-dependant system, with fast-moving items in front or on the bottom and slow-moving items in back or on the top.
Other storage categories include product zones (storing all stainless steel, brass or other similar items together); part families (parts used together are stored together); customer zones; and purely random (based solely on space available). There are pros and cons to all of these approaches, prompting some warehouses to use a combination of each.
4. Pick the parts from the storage location. The part-picking process involves determining where the parts are stored, which specific parts to pick (considering issues such as aging, lot control and first-in-first-out requirements) and how to complete the transaction in a timely manner. Any weaknesses in the warehouse management process are generally found during the part picking stage, when parts are either not in the correct location or there are not enough of them.
5. Manage inventory. This ties everything together so that organizations have what they need when they need it and accurate records that reflect this. Effective inventory management relies on a high degree of inventory accuracy, which is generally measured on a percentage basis. For example, a 98-percent inventory accuracy means that 98 percent of the parts have an actual inventory amount that corresponds with an organization’s records. There are many tried and true ways to ensure inventory accuracy, including:
• Implementing automated data collection systems (bar code readers).
• Using systems that are easy to understand.
• Setting daily targets for completing transactions.
• Keeping employees well-trained.
• Establishing and enforcing inventory withdrawal procedures.
• Taking swift corrective action when problems are discovered.
• Performing audits.
Further means to improve and maintain inventory accuracy include taking a periodic, physical inventory in which every item is counted and inventory records are adjusted to reflect the actual quantity on the shelf. Companies can also employ a cycle-counting program, which counts part of the inventory every day in an effort to find and correct causes of inventory discrepancies.
By analyzing your warehouse operation in terms of these specific functions, you will be able to identify the areas of greatest opportunity to meet the challenges of today and the future.