Warehouse Efficiency: 5 Ways to Improve
Efficiency can be defined as the ratio of work done to the amount of time and energy invested. In warehouse standards, this means how fast and effortless can product be moved off the shelf and into a customer’s hands. As with most businesses, productivity can be the difference between a profit and a loss. Companies often think that warehouse efficiency needs no more investment, as long as the product rolls out on time. However, product can be moved faster and customers can be made happier. As long as there is money to be made, productivity can be increased.
The next step toward efficiency is a new one. Here are 5 concepts you can implement in your warehouse to improve productivity and create a seamless operation.
5 Ways to Increase Warehouse Efficiency
Take Advantage of Cubic Space – One of the biggest mistakes in warehouse optimization is not sufficiently using available cubic space. Your first look as you walk through a facility should be up. Studies show that the cost of space and utilities ranges from 25% to 35% of the cost per order. Inefficient use of cubic space leads to increased costs for additional space that you don’t actually need. Use pallet racking, mezzanines, and multi-level order picking concepts to increase your warehouse’s space efficiency.
Performance Metrics – An organization cannot increase efficiency until they understand what drives and doesn’t drive their current productivity. Key performance indicators (KPIs) are used in general business to evaluate success. Warehousing KPIs tend to focus on external performance that impact customers directly, such as on-time shipments. Although this is a good measure, we can go deeper and make KPIs more area-specific. For example, the receiving department has critical measures such as cost per line item received, truck time at the dock, volume per man-hour, and accurate receipts. The simple act of measuring and reporting the results to your employees will yield improvement. Most employees just want to know their performance. Setting a bar and then telling employees how they measure up to it will improve overall productivity.
Warehouse in a Warehouse – Every warehouse wants to cut down order fulfillment time. One way to do it is to build a warehouse inside your warehouse. Figuratively meaning, to group together your most popular inventory to make it easily accessible. You can greatly increase efficiency by grouping together the 20 percent of your SKUs that make up 80 percent of your orders, reducing travel time for your order pickers.
Streamline Receiving – The receiving area of your warehouse can be frantic. Employees from various departments, and delivery people may all pass through this section of the warehouse. Create a system to organize flow of traffic, and devote adequate room to receiving. Cluttered and disorganized conditions can lead to errors. Errors in receiving blossom into bigger and more complex problems down the line.
Adopt Enabling Technology – A warehouse management system (WMS) is a software application designed to support warehouse and distribution management and staff. A WMS can improve warehouse efficiency by suggesting the routes and methods for order picking or put-away. Also, the system can provide an automated pick list that can be sent to mobile devices to help eliminate mistakes and cut down on time and paper usage.
Never Stop Improving
Any warehouse looking toward process improvement should be evaluating existing warehouse operations and seeking ways to increase efficiency constantly. The above list represents five good places to start. With the largest in-stock inventory in the midwest, Warehouse1 is always looking for new ways to streamline warehouse operations and increase productivity. Let us help you do the same. Check out our online store for new and used equipment or chat with one our warehouse operation experts.