Many businesses are starting to realize that the V-shaped economic recovery is not likely to come any time soon. So, they’re settling in for a long, slow recovery and beginning to assess where they can save money or gain efficiencies in their operations. So, what does that mean for the supply chain professional or the warehouse manager?
American Storage and Logistics, the largest stocking dealer of new and used warehouse equipment in Grand Rapids, recognizes that there is, quite often, a lot of room for improvement in warehouse design and layout. The idea that you can make up for a lack of operational efficiency with additional sales just is not going to work going forward.
“We’re seeing more and more warehouse managers looking at projects that focus on streamlining the order picking process,” said James Wiese, president of American Storage. “This applies to small businesses with a 5,000-square-foot warehouse, just as much as it does to Amazon.”
The largest expense for a distribution facility is typically employee travel time. Travel time accounts for about 54% of all labor costs in a warehouse or distribution facility. Minimizing travel distance, number of touches and the role of paper can all contribute to a significantly more efficient warehouse design.
ASL recommends small business owners and warehouse managers collect some basic data on their operations prior to designing a warehouse layout. This includes:
- Developing an accurate layout or floorplan of their current operations
- Calculating key statistics: total number of SKUs and volume per SKU, maximum storage requirement, inventory turns, dimensions of a typical pallet load
- Understanding people and product flow
“It takes a bit longer to step back and document where you currently stand, but we believe it leads to a much better warehouse design layout at the end. You are no longer having to rely on gut feel or intuition,” Wiese said. “In the era of COVID-19, it also makes it much easier to collaborate with a consultant or professional since these documents can be easily shared on a Zoom call.”
In a survey of supply chain professionals, implementing the right metrics and setting the right goals was ranked as the most important factor in driving long-term success. So, after you have collected the data, ASL suggests you apply it to your current warehouse design in order to:
- Determine clear warehouse design standards. What are you trying to get out of a reconfiguration?
- Eliminate waste from the picking process
- Group or consolidate SKUs to maximize utilization
Since travel time is three times more important to cost than search and selection time, high-velocity SKUs should be placed in convenient, easy-to-reach areas. Furthermore, it costs more to pick vertically than horizontally. So, fast-moving SKUs should be placed on the lowest levels in bins or on shelves.
“Once you’ve done the hard work of developing an accurate picture of your current warehouse design layout and setting goals for your operation, it’s all about reviewing and reconfiguring,” James said. Review the plans you have developed and reconfigure your space based on what you’ve learned and your available resources. Developing a discrete rhythm to review performance against established objectives will help you stay ahead of potential issues and will be handy in identifying the return on investment of any particular project you identify.