How to improve your warehousing and distribution without breaking your budget
For many warehouse managers, this sounds too good to be true, but at http://www.dmg-freight.com/we know that there are simple, effective techniques that can really benefit warehouse management to improve your warehousing and distribution … and they don’t have to cost a fortune.
Managing your warehouse metrics
The simple truth is that it’s impossible to improve something that isn’t being measured. The success of almost every improvement programme from WeightWatchers to the success of the British Cycling Team at the Olympics is down to one single thing. Effective key performance indicators. Having 3-5 clear and easy-to-understand metrics is the ideal. Sometimes warehouse managers go overboard and move from having no KPIs to trying to manage a dozen or so, and that just confuses staff, causes massive administration backlogs and fairly rapidly becomes pointless. Things to watch out for when picking suitable metrics are:
- Can I get the data together easily?
- Will my team understand the data?
- Do I know how to turn the data into progress?
As an example, an organisation that doesn’t know the cost per box and cost per line of shipped orders, can’t implement cost reduction measures because it can’t tell if reorganising its dump stacks will gain it twelve pence per box (incredibly worthwhile) or 00.002 pence per box (there’s probably a better cost reduction measure to be implemented). Nor can it tell how soon it can expect the price of cost reduction measures to be earned back – again, if it’s going to take four months to see cost benefits the team really needs to know that, or else senior management will look at the situation after a month and think this new initiative isn’t working.
Finally, if a company can’t explain to its personnel why it’s changing things, and what improvement they can expect to see such as improved costs, better working conditions, faster turnarounds, happier customers, they will rapidly become disillusioned and may even fight to hang on to their old way of doing things, because it’s familiar and they can’t really see what the problem is.
Once a business has good metrics, the next thing is to explore if warehouse layout can be optimised to improve efficiency. The crucial point here is to regularly reexamine if the layout to ensure it meets current need. Even the best warehouse layout can become disorganised and slow to navigate as people take shortcuts that appear to save them time but which accumulate to reduce efficiency. In the worst case scenario, poor warehouse architecture can result in workplace hazards which cause stock damage or even staff injuries.
Once you’ve established an optimum arrangement of stock, retrain your staff regularly on this layout – and make sure you have a reporting structure that allows them to inform youof any stock issues. A big failure in warehousing management is not to recognise that seasonality can have a big impact on performance, and often your staff team are the best guide you can have to seasonal demand and how it impacts your picking, packing and distribution processes. Regular retraining offers the opportunity for your warehouse personnel to give you feedback on their experience, which may lead to revising your layout to account for seasonal demand.
Sometimes the boldest approaches to warehouse layout can bring amazing results. One organisation decided to double-stack its pallet trucks overnight to create greater floorspace for stock. Having to use a hydraulic lift to raise and lower two of their four pallet trucks every morning and evening caused the warehouse staff to reconsider efficient usage – as a result they discovered they often didn’t need to have all four trucks working, saving energy and wear and tear on the vehicles and developing more efficient ways of moving stock around which reduced overheads.
Develop an incentive programme
Few parts of your operation will benefit from performance targets as much as your warehousing operations. While this is obviously a business cost in the beginning, it rapidly pays for itself and then starts to generate financial benefit in the form of improved productivity, reduced cost, proactive enthusiastic staff and a better business reputation. There are three main ways to motivate your team to improve performance:
- Paid leave for performance improvements – this is a huge motivator and can help especially with Health and Safety issues such as wearing safety clothing, implementing safe manual handling procedures etc. If you have warehouse cameras they can be a good source of evidence for this kind of performance improvement and you can use management staff to check procedures and clothing. Staff who achieve a clean sheet for 90 days can be given a paid day off, whilst those who fall short can be offered a short retraining programme.
- Bonus payments – some people respond well to hard cash, and if you can create some good metrics (see point 1) you can then reward your warehouse staff according to their ability to achieve those KPIs. A bonus payment is often delivered as Bronze, Silver, Gold level awards which scale up as the individuals, or teams, get better results. This can create healthy competition within your warehouse facility which also boosts morale.
- Random treats – a season ticket to the local football team, tickets to a concert, or vouchers that can be exchanged at High Street stores are all great ‘random’ rewards that many of your warehouse team will be keen to compete for. This kind of incentive is best kept for when you need to train your team on some new process, standard or equipment. By first offering training and then setting up a measured incentive scheme, you can motivate your staff to put the training into practice. You need an effective monitory system (often a graph or chart or material displayed on the intranet system) so people can see how they are performing, and to give regular reminders to the team of what’s at stake and how they can be the lucky winner(s).
Of course all these improvements cost something, there’s no system that doesn’t have some kind of implementation cost, but these three approaches to better warehousing and distribution all involve low cost, low risk activities that can produce substantial process improvements, more effective cost control and better decision making, based on better data.