Challenge: Doing more with less in a distribution operation by improving order picking productivity.
Sound familiar? In the face of flat or declining growth rates, the pressure is on for companies to reduce operating expenses to protect margins.
Supply chain executives are faced with the challenge of reducing labor costs, but at the same time, customers are placing more orders with smaller quantities.
Customers are also under pressure to lower costs by reducing inventory levels and this translates into more cost to serve for your business.
Thus the business challenge is how to do more with less within the distribution operation. To this end, there are usually opportunities to increase efficiency depending on a company’s starting point.
Since 50+% of warehouse labor resources are typically involved in picking, packing and shipping outbound orders, it usually makes sense to focus on these operations first.
Now may be the time to revisit some basic first principles to maximizing warehouse efficiency. With this entry, we focus on 5 ways to improve picking operations:
- Mixing multiple SKUs in the same bin location reduces picking productivity. We have done time and motion studies that prove that there is a definite time penalty associated to mixing multiple SKUs into the same bin location.
We see this in many warehouses where a bin location may represent a shelf level that contains 5 - 10 SKU pick facings. The operator is directed to the shelf level and then needs to search through the different SKUs to find the item to be picked.
Not only does this reduce accuracy, it also slows the operator down by as much as 15+ seconds per pick transaction. Having a discrete pick location for every SKU is rule #1.
- Reducing travel time improves order picking productivity. This is why batch and cluster order picking strategies are used in warehouses. It is also why some companies invest into conveyor systems.
Travel time can easily account for 50% or more of order picking hours. By combining orders into a single travel instance the time spent travelling is greatly reduced. The smaller the order, the better the opportunity to combine multiple orders into a single travel instance.
- Conventional order picking productivity improves when it is at ground level. The statement that it costs more to pick vertically than it does to pick horizontally is a generally accepted principle that has been demonstrated through benchmarking efforts over the years.
The reality is that some companies lack the real estate at ground level to provide pick facings for all SKUs hence they need to pick vertically like it or not. Parts distribution centers are typical of this situation. In these cases, assign the slowest velocity items to be picked from vertical locations and the keep the fastest velocity items at floor level to minimize the penalty associated with vertical picking.
- Order picking productivity improves with "hit" density. If an operator picks from one out of every 100 pick locations then this will be slower than if the operator picks from one out of every 10 pick locations. Higher pick density = higher pick productivity.
Thus it may make sense to set up hot zones in the warehouse to concentrate the SKUs that generate the majority of picking activity. Some warehouse operations have ABC velocity definitions so that the fastest moving "A" SKUs are positioned together within designated wider operating aisles to reduce congestion. By increasing the pick density of the "A" items, travel time is reduced and the opportunity to speed up the picking process is greatly improved.
- Warehouse efficiency is improved when items are assigned to the correct storage media. Imagine if all operators have wet paint on their hands, then the optimized warehouse has the minimal number of finger prints on the boxes. Each set of finger prints costs money. Taking finger prints off the boxes means the warehouse has been set up to minimize product handling.
The first basic principle to be adhered to is that items should be stored in the appropriate storage media. Having slow moving SKUs in pallet racks may be as wasteful as having fast moving SKUs in shelving bins. We make this decision based on a variable called cube movement velocity which measures the volume of movement for each SKU. The cube movement velocity = movement in units x cubic dimensions of the unit.
Measuring this metric for every SKU provides an important way to ensure that products are being handled within the most appropriate storage media. High cube movement belongs in racking and low cube movement can be assigned to smaller storage media formats.
More information on order picking productivity and warehousing management.