I'm convinced that every small-to-medium-sized distributor has a wealth of valuable treasure hidden in their warehouse. It's not something you can hold in your hand like gemstones or gold doubloons. What I'm talking about is the profits to be gained when you create more efficient processes in your warehouse operations.
A long walk in the warehouse
Are you sitting down? According to The Logistics Institute at Georgia Tech, 70% of warehouse order-picking time is spent on "travel and search." That's a LOT, and while I think that any small-to-medium distributor is going to acknowledge inefficiencies in their warehouse processes, they're also going to want to do better. And to do better, we must identify areas for improvement. In the case of "travel and search," they can include:
- Time spent wandering in search of items whose locations are unknown or uncertain to the order picker.
- Repeated long-distance trips when popular inventory items are stored in far-off reaches of the warehouse.
- Frequent trips to the printer for pick tickets. (They don't seem to take that much time - until you multiply the trips and calculate the time in total).
- Then there are return trips when a picker picks the wrong item because it closely resembles the correct item (think about all the small variations in hardware or machine parts).
You CAN take baby steps toward your treasure...
This article from SupplyChain247.com suggests some clever "warehouse hacks":
- Store only one SKU per bin location. Instead of hunting, pickers just grab and go.
- Institute batch and cluster picking to reduce travel time.
- As space permits, store your most popular inventory items at ground level and in proximity to packing/shipping.
- As much as possible, store your most popular (most-picked) items together in an area where there's more space for pickers to move about - because that's where your pickers are going most frequently.
These are great ideas, but they're incremental. If this is as far as you're willing to go, you're only going to see pocket change (at best) for your efforts. To unearth that hidden treasure in your warehouse, you need to step confidently into the 21st century. And that requires 21st-century systems.
... or you can get to it faster with a modern WMS.
Twenty-first-century distributors are unearthing their own hidden treasure—in the form of higher productivity and lower costs—with modern warehouse management systems (WMS). The big idea behind a WMS is a simple one: Tell your people precisely what to do and where to go, whether they're receiving new inventory at the dock or fulfilling orders on the floor. (In other words, "Don't think, just do.")
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At the heart of a 21st-century WMS are two components:
- Bar-coding
- Hand-held scanning computer terminals, also known as "RF"
Bar codes are affixed to every incoming inventory item and scanned into the WMS. Then, from put-away to picking to shipping, no inventory moves without a scan. When warehouse workers follow this protocol, the WMS can serve up real-time communications and positive scan confirmations on items, locations, lots, and serial numbers. You have end-to-end control of your warehouse operations.
How a WMS benefits your enterprise
I'll repeat it: end-to-end control of your warehouse operations. When you deploy an WMS, that total operational control means:
- You eliminate nearly all the manual processes and wasted time that are such a drain on your productivity and profitability. There are no more trips to the printer for pick tickets, because orders appear on RF devices. No more wandering and hunting, because the system, through the RF, tells pickers precisely where to find what they need, right down to the bin (where only one SKU is kept).
- You reduce the number of "touches" per line—the fewer times an item is moved, the faster it (and your warehouse) moves.
- You get vastly improved visibility into operations and inventory. In real time you can know how many lines you're filling per hour. Or precisely how much of any inventory item remains in stock.
- You can measure and account for employee activity. Who are your starts? Who needs coaching?
- You improve order accuracy, which reduces the cost resulting from returned merchandise AND bolsters customer loyalty.
- Leveraging the data gathered in your WMS, you can strategically configure your warehouse and place inventory to minimize travel time by receivers, pickers, and shippers.
- You know the status of non-stocks and back orders at all times, and allow them to be fulfilled at speed.
The results we've seen
While specific results will of course vary among enterprises, distributors universally reap rewards when they commit to a 21-century WMS:
- Reduced cost by line
- Increased pick efficiency - by multiples as high as 3x (Read about the difference this kind of business velocity can make in your distribution enterprise.)
- Increased shipping accuracy - as high as 99.9% (I've said it before and I'll say it again: A 90% accurate order won't make your customers 90% happy.)
- Reduced receiving errors
- Rapid updates of inventory quantities on hand, reducing back orders
- Reduced shortage
- Business growth without headcount growth. The same number of people are moving more inventory in and out, with less wasted motion
Your treasure hunt is over.
Something special about this hidden treasure is that you can keep unearthing more and more of it. Continual improvement will yield improvements in efficiency and profit metrics. For instance, you'll probably re-optimize inventory placement in your warehouse to account for changes in seasonal demand.
A commitment to WMS will put the hidden treasure of efficiency and profitability in your reach. It can also future-proof your business by giving you the velocity and responsiveness to retain your existing customers and compete for new ones.
Speaking of "future-proofing," you can learn how your peers and competitors are using tech to protect and grow their businesses in our exclusive Innovation in Distribution 2018 survey report—download your copy now.