Embrace Lean Warehousing

Editor's Note: Take a look at our featured best practice, Lean - Value Stream Mapping (VSM) (157-slide PowerPoint presentation). Value Stream Mapping (VSM) is a lean management technique used to analyze the flow of materials and information currently required to bring a product or service to a Customer. The goal of value stream mapping is to reduce the end-to-end lead time of a process by highlighting and eliminating [read more]

Also, if you are interested in becoming an expert on Process Improvement, take a look at Flevy's Process Improvement Frameworks offering here. This is a curated collection of best practice frameworks based on the thought leadership of leading consulting firms, academics, and recognized subject matter experts. By learning and applying these concepts, you can you stay ahead of the curve. Full details here.

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Editor’s Note: Charles Intrieri is a consultant with over 25 years of experience in Operational Excellence, Supply Chain & Logistics, and Metrics-driven Management.  He has made available a number of reports and tools related to these areas on Flevy, which can be viewed here.

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Lean is the elimination of all waste, increasing throughput and bringing value to the customer beyond their expectations. 

Even the most determined business optimist would be hard-pressed not to find a warehousing cost that isn’t creeping skyward. From the electricity powering the lights to the labor costs of each order picked, embracing “lean” principles is one of the few proven ways that a company can fight back from its bottom line.

Upholding stagnant concepts such as “this is the way we’ve always done it” will leave your business growth in a similar stagnant rut.

One of the core concepts behind lean is the need to look closely at operations within your warehouse, and never fall into the trap of complacency — even if things seem functional at the moment. Costs saved now are capital for unexpected gaps later.

In effect, a properly-executed lean philosophy acts as an insurance policy against every type of rising cost.

Apply Lean to Your Physical Assets

Imagine you have 10 warehouse racks, but at any given time, you only use shelf space equivalent to 7 full racks. Those large gaps on each shelf aren’t hurting anyone, right?

In fact, very few warehouse managers would see an issue with unused space.

Consider this: each time one of your employees needs to pick an order’s worth of items from the shelves, they need to scan each rack.

Whether that’s an in-depth look from shelf to shelf or a minute’s worth of quick glancing, that happens every single time an order is picked. If your warehouse handles 180 orders a day, that’s three hours – or more! – of labor wasted on that “harmless” empty space, every single day.

Your physical stock and assets should always be efficiently filled and properly arranged to minimize wild goose chases. 

Not only are these chases unproductive for your operational ROI, but they also contribute to frustration and irritability on the part of your workforce.

Apply Lean to Your Processes

Chances are, you have at least one wasteful process that happens every single day in your warehouse. Whether it’s a “workaround” for an outdated system your team no longer uses or a failure to rotate stock to reflect current demands, think of these issues as small cracks in an hourglass.

#1: Profile Analysis

The first place to start is creating, or updating, a profile analysis — a description of the mix of products coming in and going out of the warehouse.

• How many pallets are coming into the warehouse?
• Are they single products or mixed products?
• How are products leaving the warehouse?
• Are there seasonal shifts in the product mix?
• Are there market trends driving changes in the mix of products or how they are handled in the warehouse?

The profile drives virtually everything else in warehouse operations — labor, equipment, and layout — so it is critical to have an accurate profile and to keep the profile up to date as the mix of products changes.

#2: Standardize Processes

One of the myths of warehouse operations is the tasks performed every day are simple and do not require a lot of analysis. While that may have been true 50 years ago, today’s warehouses are complex mixes of products, people, and equipment; and warehouse managers are more like orchestra conductors, making sure everyone is performing the right process at the right time.

Warehouse processes should be standardized, so all the players know what they need to do. Managers need to document those processes and make them visually available for everyone to see.

The benefits of standardized work include:

• Documentation of the current process for all shifts
• Reductions in variability
• Easier training of new operators
• Reductions in injuries and strain
• A baseline for improvement activities

Even if a stream of wasted sand is small, eventually it can drain the entire hourglass.

Each day, you only get one flip of that hourglass to make the most out of your company, your warehouse, and your team — so why would you let waste go unchecked when it’s so easy to fix?

The key to discovering these bothersome little cracks in the glass is learning how to communicate with your warehousing staff directly, and observing their daily routines with an eye towards improvement.

Are they struggling with large loads and needing to make several trips? Do you see a bottleneck at the packing area? Are scanners difficult to operate or too slow to respond?

These are all issues you can correct with simple equipment improvements or even just shift a table to the right or left on the warehouse floor. The overall goal is to make each trip through your warehouse – whether it’s picking, packing, stocking or inventory cycling – as fast, user-friendly and efficient as possible.

Apply Lean to Your Team

While no worker should be considered a single-task “asset,” lean hiring and employee management mean playing to your team’s strengths. Again, this is where open communication will serve you well; discussing their likes and dislikes about their responsibilities will help you steer them into positions that will ensure your company maximum efficiency and effort while simultaneously offering them excellent work satisfaction.

This isn’t to say you can’t assign an employee several tasks, but ensure these tasks add value to the operation.

Smart allocation with your current staff will support productivity and reduce wasted time.

When making new hire decisions, actively seek candidates that would be a good fit for several positions at the same level and hire candidates with prior lean experience — this will ultimately give you more lean flexibility and hedge against staff retirement or losses.

Apply Lean to Your Supply Chain Partners

Even though most of their work happens outside your warehouse walls, vendors and logistics providers are important components to reinforcing lean habits. Your systems need to be able to seamlessly integrate with theirs, to the end of utilizing their data and effort whenever possible.

If the works already done and your company can make use of it, that’s labor and time you won’t have to expend to make things happen. If you’re current supply chain partners are resistant to the evolution of your partnership or sharing data, don’t be afraid to carefully consider your ongoing partnerships with them.

As market demands grow, you’ll need scalable support that’s poised to help – not hinder – your business goals.

Lean is as much a way of life in the warehouse as it is a set system and principles. It’s efficient, not stingy or cheap. It aims to streamline the warehouse experience, rather than tie it up with overblown expectations and red tape.

If you’re not already practicing Lean concepts and processes in your warehouse, there’s never been a better time to start — your company’s ability to fiscally compete in future markets may depend on it

Want to Achieve Excellence in Process Improvement?

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Process Improvement involves analyzing and improving existing business processes in the pursuit of optimized performance. The goals are typically to continuously reduce costs, minimize errors, eliminate waste, improve productivity, and streamline activities.

As we continue to deal with COVID-19 and its economic aftermath, most organizations will prioritize Business Process Improvement initiatives. This is true for a few reasons. First, Process Improvement is one of the most common and effective ways of reducing costs. As the global economy slows down, Cost Management will jump to the forefront of most corporate agendas.

Secondly, a downturn typically unveils ineffective and broken business processes. Organizations that once seemed agile and focused during periods of growth may become sluggish and inefficient when demand drops off.

Lastly, COVID-19 has expedited Digital Transformation for most organizations. One of the quickest and most impactful forms of Digital Transformation is Robotic Process Automation (RPA). Thus, we have included numerous RPA frameworks within this Stream.

Learn about our Process Improvement Best Practice Frameworks here.