Why do companies not devote the same professional skills to managing their warehouses as they do to their factories?
A supply chain manager for a food company asked me why his cost per picked case was so much higher than the costs of another company. The key questions that need to be asked are:
1. How many products do you have to pick from? That shows the extent of the pick face and walking distances.
2. When you do pick, how many cases per product are you picking? That tells you the ratio between walking time and potential picking time.
3. How big are the cases you pick? That tells you how quickly you fill a pallet and have to take it to the despatch area and collect an empty pallet.
4. Can you pick up two cases at a time? That can make a big difference to productivity.
5. How well do you manage your staff's non-value added time? If you allow pickers to perform a range of clerical tasks or force them to write on each line of each despatch note, you will penalise considerably their productivity.
6. How do you incentivise your pickers to be accurate and productive?
We found there were a number of mitigating circumstances that accounted for about 30% of the difference in productivity. Wage rates and shift premiums accounted for another 15% of the difference. The remaining 55% of the difference was not accountable for by answers to any of the first four questions above.
The 5th question showed answers that related partly to the difference in warehouse management system (WMS) between the two companies. My client's company had a very basic WMS with no systems assistance in picking. The other one had a WMS with barcodes and radio frequency links: his value-added time when picking was high.
This still did not make up the whole of the difference in productivity and we agreed, in the end, that his warehouse needed a thorough overhaul in which, with improved productivity and a simple productivity/accuracy scheme, we could almost certainly justify the move to a modern WMS environment, a thought that had previously been dismissed as too expensive.
Tim Knowles is Director, ProActive http://www.proactive21.com