Efficiency

Warehouses of any size, once they reach a certain threshold of income and product intake, have a lot of financial details they need to keep an eye on.

Even if you’re not the head of the financial department, warehouse managers still need to factor cost and revenue into everything they do, as financial statements can have a huge impact on your ability to replenish stock, manage your current inventory, and plan for the future in regards to what items you need (and when you need them).

No matter what role you serve in your warehouse, or how your financials are handled, here’s five monthly charges that should always be considered to help prepare for the future:

Receiving: 

When receiving goods, there’s a few ways to track the overall cost, but generally what you need to focus on is the cost per item or per pallet. The true cost of a palletized item combines both the cost or value of the good itself, as well as how much “work” is required to receive it – ‘work’, in this case, referring to the labour spent organizing, sorting, and tracking each individual SKU or UPC on the pallet. Intangible costs such as this will play a huge role in your overall warehouse expense calculations.

Storage: 

This is the big one. No matter how many pallet racks, steel shelves, and other types of commercial shelves you use, you need to keep an eye on how much space your products are currently taking up to prevent overcrowding or damaged goods. The best way to check this is to see how many locations (or storage bins) a specific product or SKU takes up, and then see how many products you need to store overall. This can give you an idea of where you need to make product reductions, and what you can do to help manage your space usage.

Pick & Pack: 

Similar to the cost of handling the goods upon receiving, the labour costs involved with finding the items, picking them, and packing them for shipment can begin to add up. Do you have workers wasting time due to an inefficient zone layout? Do you have a dedicated picking staff, or does your team have to spend time on picking that they could be using for other tasks? See where the inefficiencies start with your picking team and work from there to better find opportunities to streamline and cut expenses.

Shipping: 

Even after the item has been found and is ready to hit the bricks, shipping costs can add up. Do you have your own shipping account, or are you working with one of your clients or vendors to use theirs? See if you can find a balance in shipping costs vs. overall destination and consider adding a flat-rate shipping option like so many other retailers are starting to look into.

Consumables/Miscellaneous: 

No matter how meticulous your warehouse operation may be, there’s always the little things that help you get work done that may go unnoticed. Things like shelf labels, hazardous materials storage for batteries and chemicals, product breakdowns, and the like. Small uncategorized steps like this have a habit of falling through the cracks and can start to add up financially unless they’re carefully tracked and monitored. Don’t let anything too small slip your notice, and you’ll start having a much better idea of where you are, fiscally speaking.

Efficiency

Outgoing goods, and the storage thereof, are a fact of life for any warehouse – but the cost of storing and packaging these goods can add up quicker than you might expect.

Perishables, food items, consumer goods, the list goes on. Whatever you store at your warehouse, you’ve at various points needed to package these items for shipment and find a way to store them before the shipment goes out. The supplies required for this storage can be costly and difficult to store in and of themselves, continuing to ramp up overall operational costs even for an item that may be considered secondary to other types of industrial storage, or even the specific goods your warehouse deals in.

In these times of increasingly green storage options and versatile packaging designs from various vendors, it can be easier than ever before to help reduce the cost of packaging- and shipping-related goods in your warehouse by packing smarter and using more effective packaging materials.

For example, you can cut down on a lot of costs by knowing exactly how you’re billed for shipments. Rather than the old method of billing by weight, most major logistics providers have started to factor in overall packaging size. If your warehouse only uses bulkier boxes for shipping or tends to ship items with a lot of empty air inside them, you could be costing yourself a lot in the long run. Invest in smaller, lighter packaging such as smaller envelopes (for size-appropriate goods) and keep a variety of packaging sizes on hand to make sure you’re not spending too much to ship small goods.

Understanding what goods need what type of packaging can help as well. A lot of warehouses consider their shipping options to be a “one-size-fits-all” solution, and wind up using the same three box sizes to send everything out no matter what the situation calls for. Take a look at your average shipment size – that is, the goods you sell the most of, and how many items you need to put out in one shipment – and work backwards from there to see what size boxes and envelopes you should actually be investing in. This can stop you from sitting on a pile of unused boxes, costing you money, time, and space when the other boxes for your orders seem to be doing all the work.

Of course, packaging is more than just shipping the goods to their final destination. Packaging also involves the materials you use to store your goods on pallet racks and metal shelves while they’re still in your warehouse. Even if you don’t design the packaging of the end product (which is more often than not the case in warehouses that stock and ship goods), you need to have the right supplies to safely store the items while they’re there, such as plastic wrap and wooden pallets. This can help save you money in the long-term by making sure your goods aren’t damaged while in storage or transit, as improper packaging and handling is one of the most common causes of shrink.

By reviewing the amount and type of packaging you use both for outbound shipments and internal storage, you can work towards reducing your warehouse’s overall costs of operation and keep your goods safer on their way to the client.

Efficiency

Manufacturing warehouses often must fulfil two very distinct purposes – the manufacturing of goods and products, and the safe storage thereof until they’re sent out to customers.

The two-fold nature of manufacturing warehouses can lead to very specific problems, even above and beyond the typical issues encountered by warehouses. These issues can lead to inventory shortages, missing products, and other obstacles that can prevent your warehouse from working as smoothly as possible, but with a little preventative maintenance you can keep your products flowing and your customers happy.

One of the biggest issues a manufacturing warehouse faces is missing items during replenishment. When your team must pick and fulfil an item, are they going for the entire pallet or just a single item? If they must take the pallet down, are they putting it back on your pallet racks correctly? Misplaced items during replenishment and picking can lead to greater issues down the line, and your team needs to be coached on replacing items back where they belong. Greater visibility for item locations may be part of the issue, and you may need to come up with a better barcoding system and use better shelving labels to keep everything identifiable.

Similarly, a huge problem with warehouse inventory comes from product movements not being tracked properly. In a lot of busier warehouses, particularly ones that manufacture their own parts or products, products can get relocated physically but without their new location being saved properly in your WMS, or vice-versa. If any of your goods are moved between pallets, or from your metal shelves to wire shelves elsewhere in the office, the new location needs to be reported and tracked immediately in your inventory management system, and then it needs to be confirmed and finalized out on the floor. By updating your databases every time a product gets moved, you can save yourself a lot of time and lost productivity in the long run.

Of course, even if the products aren’t getting relocated, you still need to be able to complete cycle counts to keep up with current inventory levels and locations. A lot of manufacturing warehouses encounter a problem with products missing from cycle counts, due to the level of products they deal in. With a lot of inventory management software, they may trigger a new cycle count upon discovering an item is missing, and if this happens too often throughout the day you can really start to lose productivity. Make sure your workers know every step of the counting process, as well as the process of tracking each item’s location, to help reduce the risk of human error in your counting. When it comes to counts, you also need to make sure your warehouse isn’t understaffed for counters. A lot of warehouses are unprepared for the amount of inventory counters they may need, and as the amount of warehouse storage you use increases, the number of dedicated cycle counting staff will increase as well. If your cycle counts are getting done slower than normal, or if you need to perform more of them than you had in the past, make sure your staffing levels are where they should be.

Efficiency

Warehouse analysis can take many different shapes and forms as needed, and it can be hard to know exactly what method will work best for your warehouse.

A common type of analysis many warehouses have been turning to these days is ABC analysis. ABC analysis is a simple method of categorizing inventory that divides items up into three distinct categories: A, B, and C.

While the actual categories can vary wildly and become more intricate as needed, the ABC method provides a strong baseline to start separating products and dividing them up into high-level categories that can help keep your warehouse organized.

Think of each level as a different tier, and sort products accordingly:

• A products should be the most high-value, high-margin, and/or have better sales forecasts than others. Products in this category should be reordered more frequently, and a priority needs to be placed on avoiding stock-outs for any item in this category.
• B products benefit from being an intermediary between A and C, with some factors of both. B products should be less important than group A and less tightly controlled, but they can be monitored closely to see if they need to be moved into group A due to a rise in popularity.
• C products are products that don’t move as quickly as groups A or B and don’t offer nearly as much benefit to keeping in stock. These items don’t need to be as tightly controlled as the first two groups, and will likely not be re-ordered nearly as often (if at all).

While sales volume isn’t the most important metric of tracking an item in the warehouse, it can have a big impact on how you organize and track your warehouse overall. Items in the A category, for example, need to be given precedence when it comes to tracking. Give them the priority spaces on your pallet racks, metal shelving, and wire shelving so they can be more quickly retrieved due to the higher number of sales they get.

From there you can work backwards and organize the remaining items—B items should still be accessible but not given as much priority, and you may want to consider giving C-category items their own place to stay away from the more popular items that need to be retrieved and sold more frequently.

This can also help with sales data and analysis. If an item is categorized into C, you can start reviewing your options and seeing what you can do to clearance the item out or return it to the vendor so you’re no longer spending money on storing and tracking it yourself. B items can be considered based on their sales volumes and moved into the other categories as needed.

While ABC warehouse analysis can require some work to set up, it’s a common warehouse practice that can help you sort your items more effectively and better understand where everything should go.

Efficiency

No matter how well-organized your warehouse racking may be, there always seems to be traffic when it comes to picking.

Many warehouses make the mistake of considering pick paths an afterthought, or something to worry about after the bigger issues such as product location and inventory counts have been taken care of. By putting it off until later, a lot of warehouses find themselves running into major traffic snarls and lost productivity by workers not finding the best routes to take on their way.

While path optimization might seem overly complicated to a lot of warehouse managers, one of the fastest and easiest ways to help manage your picking paths is through location sequencing.

Location sequencing is the process of assigning every picking location in your warehouse a number in a sequence, and then having your staff follow that sequence every time they pick products. This provides an interesting twist on standard picking paths by placing priorities on where the item is being stored and less so on the item itself.

Say, for example, you have some pallet racks that hold the majority of your most-picked items and are in a convenient location near the front or center of your warehouse—you would assign those pallet racks to be number 1 in your sequence. That means that no matter what else is part of the order, items from those pallet racks would be picked first before moving to location #2, and so on.

This helps in a few ways. Primarily it keeps your pickers more productive by allowing them to follow a more logical path during picking and avoiding ‘zig zags’ along the way. A properly sequenced pick would help workers start at the top of the warehouse and work their way through in an orderly fashion without having to constantly backtrack or loop around to find items.

It can also help with item replenishment as needed. When new shipments of products come in, you can set your locations to prioritize which items need to be replenished first to help your stock stay balanced and refreshed as soon as possible.

Implementing location sequencing can be a big benefit to many warehouses, but as always, you’ll want to make sure your warehouse already has systems in place to support it. For example, if your warehouse already uses zone picking, you’ll want to make sure your sequencing matches up with your previously established zones to keep everything aligned. For many warehouses, however, location sequencing can be a huge benefit and may help improve productivity and prevent traffic snarls through the entire warehouse.

Efficiency

You don’t need us to remind you of the importance of having a well-organized warehouse – but actually getting your warehouse organized is a different matter altogether.

As soon as it feels like you’ve gotten your warehouse under control, you can suddenly find a million more things that need to be attended to, and it can start to be a little overwhelming after too long. In the rush to always make sure your warehouse is well organised; you can start to encounter a few mistakes and errors that make the whole process that much harder for everyone.

If you want to get out ahead of these mistakes, or if you worry that you might’ve made them already, and you want to figure out what you can do to get your warehouse back into shape, here’s five of the most common organizational mistakes we’ve seen in warehouses:

Excess Inventory: 

Many warehouses struggle with finding the perfect balance of inventory levels. Sure, keeping around extra products is a good idea in some cases, but eventually you’ll find yourself running out of space on your warehouse shelves that could be better used for more active products. Take a look at your inventory levels and look for products that have sold slowly, items from last season that aren’t moving as well, or backup stock of products you didn’t need to have backups of after all, and make room for goods you’ll actually sell out of.

Poor Layout: 

Warehouse layout and traffic management can be a major factor in how successfully your staff can find the items they need, as well as how long orders can take to fulfil. If you’re noticing a lot of traffic snarls due to warehouse conveyor placement, or if your aisles are starting to be too narrow for your new forklifts and transportation to get through, you may need to take some time to rearrange your layout.

Lack of Labelling: 

Even if you know where your products are supposed to go, a lack of proper barcode usage and labelling can lead to lost items and lengthy picking times. Review your shelves and pallet racks to make sure everything is labelled and tagged correctly, otherwise you could find yourself with incomplete inventory counts or missing items when you need them.

Poor Housekeeping: 

Similarly, a lack of planning and housekeeping can lead to missing products, slow picks, and inaccurate orders. Don’t let your warehouse get too cluttered – schedule regular clean-ups to straighten out your shelves and prevent improperly stored inventory from getting in the way of the items you need most.

Lack of Forecasting: 

Even if everything’s been tidied up and put away correctly, you don’t want to start resting on your laurels. Make a plan for the next sixth months to a year, to make sure you know what products you’re expecting and what you could do better in the future to prevent the need for major reorganizations. Staying on top of your organizational needs will make sure you don’t need to do as much to get organized down the road and can help your warehouse stay more efficient overall.

Efficiency

No matter how advanced inventory tracking software may be there’s always something to be said for the human element.

The fanciest RFID or barcode scanners in the world still need to be operated by a human being behind the scenes, and making sure everyone is on the same page when it comes to inventory checks will help instil a greater sense of responsibility and accountability for your staff, and can work to reduce overall errors throughout the warehouse.

This will require a bit more hands-on approach with both your inventory and your team, but the reduction in inventory errors (and the associated reduction in cost, both labour and financial) will go a long way towards helping your warehouse work better overall. Here are four quick tips to provide better inventory accountability through your warehouse, and help your team count goods better than ever before:

Clear and consistent training

Your team won’t be able to do what you need them to do without having a clear understanding of what’s expected of them, and how they can best accomplish their duties. For any of your warehouse installations, from things like hand scanners and tablets, even for mobile aisle shelving, make sure there’s clear documentation on how to use these tools and make sure every worker gets the same amount of training and explanation on how they work.

Improve visibility

Wordy signage or overly long location descriptors can prove fatiguing to the human brain, and may cause more confusion and miscounts than they prevent in the long run. When it comes to things like rack/shelf labels or signage throughout the warehouse (to indicate item location or provide directions) try to use as many images as possible, and if words are needed, keep it simple to improve readability.

Reduce travel time

No matter how well-trained or well-equipped your team is, mistakes can happen at any time, and the chances of a picking error or item miscount increase if your workers are overly fatigued. Rearrange your warehouse shelving in a sensible way that places the most commonly-picked items up front to reduce the amount of walking your team needs to do, and for harder-to-reach items or warehouses with longer layouts, turn to gravity conveyors to help your products get from point A to point B without a lot of wasted movement on your workers’ part.

Regular quality control checks

As part of your regularly scheduled inventory counts, make sure to review things like your picking process and training methods to see where mistakes could be made. If a certain step in the process is causing a lot of picking errors, or if one specific item always seems to get miscounted, take the time to review your processes and see if there’s a specific point in the picking method where something can get overlooked or miscounted. Even if no immediate errors are found you might be able to identify an area where something can be done more efficiently, or at least faster.

Efficiency

Moving products from one place to another is darn near 90% of a warehouse’s job description – but how you move those products can depend on a lot of different circumstances.

One of the most popular ways to help transport goods within the warehouse itself (that is, goods that have already been received but need to be sent either to your pallet racking or to the shipping/receiving area) is with roller conveyors. Also known as gravity conveyors, these conveyors work similarly to the belt-style conveyors you see in many factories, except they’re simply powered by gravity and the natural motion of products going down the belt via a series of rollers and wheels.

These conveyors can offer specific advantages over other types of product conveyance (including motorized belt conveyors) but their effectiveness largely depends on the needs of your warehouse. Size, for instance, is one of the biggest factors. Conveyors need a wide berth in aisle space between warehouse shelving, and you’ll want to make sure you actually have the space for these conveyors when you start planning your belt route.

Belt route is another strong factor in deciding where you should place your conveyors, and how helpful they can be to your warehouse overall. Will your conveyors be moving from the product locations straight to shipping/receiving, or will they have to stop off at various points along the path? Will these belts get in the way of vehicles like forklifts, or do you have the space to make sure they won’t be interfering with your traffic?

Of course, a lot of these questions can be answered quickly by figuring out exactly what role the conveyors will be fulfilling in your warehouse. Does your warehouse deal in assembly or work-in-process, or are the goods already finished and packaged by the time they get to you –  that is to say, are you using these belts to help assemble products or just to transport them? Will the belts be going between pick stations, or will it serve as one long path from the inventory to the shipping/receiving area? Will additional picks need to be made along the way?

Luckily for a few needs, roller conveyors can be pretty easily customized. Curves can be easily installed to help reach around tougher areas, and gates can be added to help traffic cross through the conveyor without needing to interrupt the flow of products. The biggest question, then, is how it’ll be used – but if your warehouse deals in a large volume of products, you’ll be happy for the added versatility.

Efficiency

No matter what metrics you track or how your warehouse judge’s success, we all know the biggest impact on these numbers stems from the holiday months.

The end of the year is where the biggest information about yearly sales, staffing levels, and other KPIs is found, due in large part to the pure sales volume of the holiday season.

While the influx of information can get overwhelming at times for even the most experienced warehouse manager, there’s a few metrics that you can specifically focus on to help get a better idea about where your business is going and what kind of growth you experienced over the previous year. Here’s our picks for the top three end-of-year warehouse metrics to watch:

Inventory accuracy

Accurate inventory counts and clear availability are things that every warehouse should strive for but maintaining this accuracy even amidst the chaos of the holiday rush is the truest indicator of how your warehouse can handle the end-of-year onslaught. As your team unloads products onto your pallet racks and shelving, try to take note of how rough the process is. Is there not enough space for needed items? Are things going missing through miscounts or insufficient instructions on how to store different types of items? As data rolls in through the holiday months (particularly right after the peak sales season) try to keep an eye on important inventory metrics so you have an idea what to do elsewhere.

Picking efficiency and accuracy

Picking is one of the parts of warehouse management that needs the closest supervision regarding metrics and KPIs. While getting an order right needs to be priority #1 (as nothing loses sales faster than someone needing to return an item), the constant pressure from ecommerce giants that offer faster shipping means you need to be able to process items as fast as possible. Take the time to look at how long it takes your team to pick a single order and go from there—are your most popular items too far from the packing stations? Are items frequently purchased together across the warehouse from one another? Is there a bottleneck at the shipping/receiving station that’s causing a long delay in putting together packages? Identifying these weak points when the volume is at its highest will help you through the rest of the year—and well into the next busy season.

Cost per item shipped

Even with all the sales you must bolster your bottom line, you’ll still want to monitor your individual item sales to get a better idea of what your expenses are. Track the cost per individual item shipped across all related metrics (cost of labour to pick, orders picked per hour, etc), and then divide it by the total number of items (not shipments) you shipped during the holidays. This will go a long way towards helping you identify your biggest movers and may affect how you ship or handle certain items going forward.