How is your warehouse really doing?

As the seasons change, some people pack away their clothes from the past season and unpack their wardrobe for the upcoming one. Others, however, keep all their clothes in the wardrobe year-round. This works if your wardrobe can accommodate everything, but otherwise, you quickly reach maximum capacity and end up with a bit of a mess. This, in turn, can lead to challenges in finding the right clothing, in the right place, at the right time.

How your inventory is doing may not be something you think about daily, but whether it’s your wardrobe or a company’s central warehouse, it’s an important question to ask. Just like your wardrobe needs to be inventoried and adjusted now and then, so does an inventory. As we all know, maintaining an inventory costs money, and having an inventory that isn’t functioning well only costs unnecessary amounts of money.

Step 1 – Measuring

A good way to find out how your inventory is performing is to start measuring the daily operations. How many orders come in every day? How many of these are handled? How many different items are in each order? How often are goods returned due to picking errors? How often is the item out of stock/what is our actual service level? How long does it take to pick and pack each order? How many people work in the warehouse – and who are particularly good at picking, and what do they do differently? How long have certain items just been sitting on the shelf without being picked?

By starting to measure different parts of the process, you clarify how much time and resources each part requires. This is fundamental information for the next step.

Step 2 – Managing the Results & Improving

Different industries and companies have different goals, and although all companies essentially want to improve, become better, more profitable, and have happier customers and employees, we should start by asking ourselves what quality goals we should set for the customer. What is a reasonable level for picking errors, service levels, and lead times? Is our assortment right, and what savings could we achieve if we reduced the number of items in stock, or alternatively sold off items that haven't moved? This sets the framework for where we want to go and establishes requirements for staffing, the number of items, and the quantity that needs to be stocked. Which requirements can we meet, and which ones can we not meet today? And last but not least, what cost level must we maintain for our inventory to be competitive?

Step 3 – Having the Right Thing, in the Right Place, at the Right Time

Once you’ve started measuring the operations and set the basic requirements, it’s time to manage the results.

• Which pickers are faster than others and why? Investigate what they do better and ensure everyone follows suit!
• Explore opportunities to automate to increase efficiency.
• Review the placement of items and how often different areas are visited (is our ABC classification correct?).
• How can the assortment be changed? Are there items gathering dust?
• How can we change our spaces?
• Do we have the right staffing in different areas?
• Do we have the right flexibility in terms of full-time employees and temporary staff to handle variations in demand?

At DB Schenker Consulting, we have extensive experience helping our clients create efficient warehouse operations. Don’t hesitate to reach out if you have any questions.