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Increasing your Inventory Efficiency to Increase your Profit.

I recently read an article from Distribution Center Management that spoke on the subject of distribution center productivity. The article touched on the subject of organization, maximizing your employees output, and cleanliness. These three things are common denominators for managing a healthy and strong distribution center.

Part of managing an efficient warehouse involves knowing where your inventory is and who has access to it at all times. Now ask yourself, what separates inventory from another bank account? The answer is nothing. In fact, if you were to look at your inventory in this manner you would feel a lot differently about where it is and who has access to it. You wouldn't just give anyone permission to go in and manage your bank account and a warehouse is no different. There are several procedures you can implement into your system to ensure that your inventory is being maintained properly. First of all, as stated above, it is important to make sure that the right people are taking care of your inventory. These people should act as your bankers. You must be able to trust them and give them permission to handle your inventory just as you give the bank permission to hold your money. It is also important to distinguish these guys from everyone else, giving them an identity. You want these people to understand the responsibility they hold and separate them from everyone so they can fully grasp how important their job is. A way to do this, as the article suggests, is implementing uniform colored shirts for those in charge of inventory. That way it is easy to spot someone who is unauthorized to be in that area.

Along with creating that right group of people, it is also important to focus on the main areas that affect your inventory. For example, most companies fall short on keeping their receiving area up to date and efficient enough to handle the flow of business. If the items can't get in they most certainly can't get out and that is just more money you lost that day. Receiving is the first step of the process, so it is important that this transaction be correct and efficient in order to make the rest of the process flow smoothly. If one part of the process is lacking then all the parts are lacking. Also, it is important to make sure that people in such areas as receiving know what they are doing. People who are inexperienced or improperly trained will generate more mistakes and we all know mistakes cost money.

When it comes to keeping order in your inventory, the article suggests a multitude of options. First, your warehouse should be easy to get through. Employees should be able to find what they are looking for quickly to get the order picked faster. This can be achieved by using signs to show your order pickers where to go, whereas another option is to create a map through your warehouse so employees can choose the most constructive path. The more time your employees are wandering around trying to find what they are looking for the more money you are losing. Also, when you give your employees the environment and equipment they need it challenges them to work harder.

The layout of your warehouse plays a huge part in maximizing efficiency when it comes to order picking. The second article from Distribution Center Management talks about a couple of options when it comes to designing a warehouse. Of course, completely redesigning a warehouse would be an extremely difficult task; however, for those warehouses just being built it would be an important article for you to read. The article touches mainly on two designs, the "Optimal Cross-Aisles" and the "Fishbone."

The "Optimal Cross-Aisles" design, shown above, forms the shape of a "V" where order pickers pick up the order and drop it off in the same spot. The article stated that when used correctly this design caused an 11.2% decrease in travel time. The other option suggested in the article is known as the "fishbone" design.

This design, shown above, includes vertical picking aisles inside the "V" and horizontal picking aisles outside. This has been known to show improvements double that of the optimal design. The information from the article on these two layouts is based on unit load facilities as opposed to an order picking process. However, that does not mean that some of these benefits will not spill over. Though maximum productivity in a warehouse is extremely important and necessary, only a small few have actually taken steps towards supplying an environment that would allow this.

Also, for those of you who handle many accounts with a lot of items in an order. A tip would definitely be color coding! Implementing a color coding system will organize your orders better and allow employees to work quicker as they can just look at the color and know where that box is supposed to be rather than having to look through a whole bunch of papers to find out that same information. This would prevent orders being shipped wrong decreasing the amount you would have to spend on fixing mistakes.

Finally, it is important to have a set of rules or guidelines for when orders should be completed. For example, if your employees start an order in one day they must finish it in that same day. Not doing so would add more hours to your lead time causing you to have incorrect records. It would also be a good idea to implement a team that checks all orders before they leave your property ensuring that no orders go out wrong. This way you won't have to face the cost of mistakes after they walk out the door. Along with this, employees should be conscious of their environment and take pride in their work. They should want to keep it organized and want to do their best possible work. When you give your employees an identity and make them feel at home or at least comfortable in their surroundings they will feel a sense of ownership and want to care for "their possession." When things are sloppy merchandise gets lost and that's like throwing money right out the door. It would the same as having bankers throw your money all around the bank for everyone to see and then leaving it there never bothering to pick it up or to see if anything was missing. I can't imagine anyone who would want that!

The article finishes by stating the benefits of using cycle counting. Cycle counting gives you a daily report card of how you are doing. It does not replace a full physical count but it will give you a better idea of how your inventory is moving and where the mistakes are in your system. It shows you exactly where the discrepancies lie and therefore you can better record your perpetual inventory. As discussed in one of our previous articles, Issue 47, there is a simple way to conduct a cycle count that allows your employees to continue working while the inventory is being counted. A company trying to make major changes to become more consistent would really benefit from this system.

        All of the ideas stated above would lead you to a healthier more efficient distribution center. Whether you implement all or just one, it's a step towards more profits!

 Preventing Mistakes and Maximizing your Inventory Efficiency will Lower Costs.