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8 Ways To Measure and Enhance Warehouse Efficiency


a section of an enhanced warehouse for efficiency

How can one determine whether a warehouse is operating effectively, and what are the steps you need to take to enhance warehouse efficiency?

Before making an investment in warehouse technology or filling new positions, one can gain insight into performance by performing routine audits and monitoring key performance indicators (KPIs).

During a warehouse audit, various warehousing processes are observed to ensure they operate effectively.

An audit may provide responses to enquiries, including:

• Do any sections of the warehouse experience a deceleration in the process?

• Is a malfunctioning piece of equipment impeding progress on specific duties or posing a threat to safety?

• Can the area be reconfigured to facilitate more streamlined warehouse sorting operations?

• Can the racking be reconfigured or fitted with different racking styles to increase inventory levels or simpler methods of storing and retrieval of goods from racks?

Based on the gathered data, warehouse managers will possess the capability to propose enhancements that will augment both productivity and efficiency.

Before implementing any enhancements, you must determine which warehouse KPIs will be monitored.

Monitoring warehouse receiving periods, for instance, can provide valuable insights into the efficiency of your staff during the process of receiving new inventory. At this juncture, you can also monitor inventory accuracy.

Likewise, time lost as a result of errors, picking efficiency, cycle time, and total order cycle time are additional KPIs that can be utilised to assess the efficiency of a warehouse.

Warehouse KPIs can be categorised in order to determine which areas require the most improvement. The distinct regions comprise:

• Inventory: the effectiveness of your inventory management

• The efficiency and precision of the receiving procedure

• Put-away: arranging items in their designated locations within a specified period of time.

• Picking and packing: order fulfilment speed and precision

• Performance: time management throughout the entire warehouse

• Safety: the duration in days preceding any work-related injuries

What damage an inefficient warehouse can cause to a company

Warehousing efficiency can guarantee the maintenance of supply chain agility.

However, the significance of enhancing warehouse efficiency becomes apparent when one examines the detrimental effects of ineffective warehouse management on a business.

Consider a few of the most significant complications that may result from an inefficient warehouse.

Significantly prolonged completion times for various processes are among the most apparent consequences of an inefficient warehouse.

For instance, in the event that employees are incapable of proficiently stowing items subsequent to their receipt, it could potentially result in staffing deficiencies in other sections of the warehouse.

In the event that employees encounter difficulties in locating the items they are required to select, the fulfilment process will be considerably disrupted.

As a consequence, the overall delay time for fulfilment is prolonged, thereby posing a challenge in sustaining customer satisfaction. The inability to promptly despatch orders results in a subsequent postponement of last-mile delivery durations.

Orders continually require additional time to be shipped due to inefficiencies within the supply chain operations. Customers are frequently required to follow up on their orders and endure lengthy delivery times.

Consider the implications of this for the consumer experience. You can be certain that you will frequently encounter customers who are dissatisfied.

Item damages and order errors are two of the most significant dangers associated with inefficient warehousing. This will frequently lead to consumers receiving defective or erroneous products, which will inevitably increase the number of returned items.

In certain instances, consumers may opt to return their orders due to impatience caused by the lengthy wait time. They may have even placed an order with your competitor for a comparable product.

Irrespective of particulars, warehouse inefficiencies will ultimately result in a greater number of consumer returns.

The aforementioned concerns have the potential to compromise a company’s revenue and growth prospects.

Insufficient lead times impede the ability to meet the demands of growing order volumes, while ineffective warehousing procedures result in accumulating operational expenses.

Not to mention the necessity of compensating employees with overtime due to the untimely completion of certain duties. Subsequently, increased expenses will result in diminished profit margins and revenue.

After defining KPIs to monitor and conducting an audit, it is time to implement improvements.

The following eight steps will assist you in getting started.

  1. Employee cross-education

Although the ideal workforce would consist of members who are exceptionally specialised in their respective fields, such an approach may lead to operational inefficiencies.

A staffing shortage or resignation will ensue immediately if an employee is required to take time off, resulting in operational inefficiencies within that particular department.

Conversely, consider cross-training your staff to enable them to execute a variety of tasks throughout your warehouse. This will afford you greater workforce allocation flexibility, enabling your employees to alleviate staffing shortages in multiple departments.

2. Establish and implement KPIs

Detailed information regarding the performance of your warehouse can be gleaned from numbers and data, thereby informing your strategies for improvement.

For this reason, it is essential to establish KPIs that are more specific to processes pertaining to efficiency so that you are aware of where you are falling short. Commence by identifying the key performance indicators (KPIs) that represent the efficiency of your warehousing operations.

Then, upon obtaining the data pertaining to these key performance indicators (KPIs), one can devise practical approaches to enhance them.

For instance, if one observes an excessively lengthy put-away cycle time, one may investigate the factors impeding this procedure and subsequently devise strategies to enhance operational effectiveness.

3. Enhance inventory monitoring

Inventory visibility is a critical factor influencing the execution of various warehousing operations. Better process planning will enhance warehouse efficiency through precise inventory management, including the knowledge of item locations and quantities.

It is critical to have real-time inventory monitoring in order to ascertain the quantity of available items and prevent inadvertent backorders.

You can establish reorder points in the event that inventory runs low so that you can promptly reorder more!

4. Implementation of WMS

Real-time inventory monitoring is simplified when a warehouse management system (WMS) is integrated with an inventory tracking system.

This system facilitates the coordination and optimisation of all facets of your warehousing operations to increase their efficacy. It offers recommendations for routes and procedures that are optimised to facilitate effective selection and warehouse put-away.

A WMS integrates with barcode or RFID inventory scanners, which your staff can utilise to update inventory data during put-away and selecting operations.

5. Arrange your warehouse to maximise travel time and space utilisation

The layout of your warehouse is a significant determinant in determining the effectiveness of the tasks being executed. Anticipate operations to be sluggish if personnel encounter difficulties navigating aisles or locating items.

Your warehouse configuration must be optimised to facilitate your team’s movement and help them locate the items they require to select.

An instance of a prevalent practise is warehouse slotting, which entails the arrangement of warehouse space according to product classification, SKU number, or any other characteristic of the products.

A further option is to optimise the architecture of your warehouse to allow for unimpeded movement of various machines and picking equipment.

In addition, implement storage systems that facilitate SKU management and product organisation.

6. Implement a tailored replenishment strategy

The implementation of a replenishment strategy for inventory contributes to its optimisation, particularly when the process is automated through the use of technology.

There are numerous approaches to inventory replenishment management. Establishing reorder points, utilising inventory automation technology, and implementing a top-off method are some of the most effective procedures.

Establishing a strategy serves to avert both stockouts and overstocking, the latter of which can result in the accumulation of expired stock.

7. First, safety

Warehouse safety must be a top priority in order to avert injuries and accidents that could result in unanticipated process interruptions and personnel shortages.

Managing expeditious equipment replacements and repairs, in addition to providing safety training for employees, can effectively mitigate the likelihood of warehousing accidents.

Additionally, furnish your warehouse with the requisite safety equipment, labels, shelving, and signage to guarantee the well-being of your personnel.

8. Invest in inventory handling and storage

One aspect of your warehousing operations that could significantly impact your overall efficiency is your racking system and inventory storage levels.

Investments in this domain are crucial for enhancing performance and accelerating the process. Generally, most warehouses have standardised pallet racking and rely on forklift trucks for storing and retrieving palletised goods.

With new racking styles and layouts, savings can be made in the footprint of the racking system, how the inventory is stored, and, importantly, the ease of access to goods, reducing the time and travel of forklifts and other materials handling equipment.

Please contact our team if you would like a warehouse audit conducted to answer the questions to enhance warehouse efficiency through your inventory handling and storage levels.

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