Can You Answer These 5 Questions About Your Warehouse Management?

How effective is your warehouse? Does it improve or worsen your efficiency? If you don’t know, there are many other warehouse managers in the same boat. A lot of manufacturing and packaging companies don’t have the right data to properly evaluate their warehousing processes.

This results in an inefficient warehouse that drains your bottom line.

So how can you measure how efficient your warehouse is?

• Identify some metrics to measure your warehouse’s operations.
• Set benchmarks for those standards that you need to hit.

Here are a few questions you should be able to answer about your warehouse. If you can’t, it might be time to reconsider your processes.

When and how often do you conduct cycle counts?

A cycle count is taking inventory of a small section of your warehouse to test how effective your inventory processes are.

• By counting a small section, you are sampling how accurate your records are. If mistakes are found in a small section, it’s likely those mistakes will be found throughout the rest of the warehouse.

You need to know how often these occur, and also in what order they occur.

• Cycle counts should be rotated so that the entire warehouse has been counted at the end of a cycle. Counting the same same sample repeatedly won't give you a good enough gauge as to how accurate your records are.

Make a schedule for cycle counts and execute them in a consistent pattern. If you don’t know your current schedule or when the last count was, it might be time to revamp your processes.

What is your inventory turnover rate?

Does the cash coming in immediately go towards more inventory or do you have too much inventory? Your turnover rate may be to blame.

• Inventory, along with accounts receivable and accounts payable, ties up $1.1 trillion in cash. That's 7% if of the US GDP.

Your turnover rate is how fast you completely cycle through your inventory.

• The higher your rate, the more you are shipping out of the door.
• AKA, more cash coming in.

But if you don’t know your rate, you might not know you have a problem.

• Cycle counts, annual inventory counts, and other tracking systems can make your rate more transparent.

Do you have control over your inventory?

Let’s say you have 100 units in stock, but can only find 75. A few people go hunting, but no one finds the missing inventory. Now you have to stock more to fulfill orders. A few months go by and during your annual inventory you find the lost product in some bin on the other side of the warehouse.

Good inventory management is the start of any efficient warehouse. It affects your customer service and overhead, not to mention can cause you stress if it isn’t designed well.

A warehouse management system gives you better control over how you manage inventory, tell you where a product is, how much you have, and even schedule new stock orders.

Are you efficiently using your warehouse space?

Your warehouse is probably filled to the max with hundreds of products with different sizes and shapes.

This makes maximizing your available space a big challenge.

Effective warehouse management should give you information updated in real-time, with accurate inventory numbers. This makes it easier to order new stock before the remaining stock runs out as well as avoids taking up more space for overstock.

If you’re still having warehouse storage problems, consider reducing SKU quantities. Ordering too much of the same product can put a damper on warehouse processes.

Another tip is to utilize ALL the space you have, especially the vertical space of your warehouse. Most fire systems allow you to get up to 18” below your sprinklers.

How many of your warehouse employees are cross-trained?

Excessive labor costs put a big strain on warehouses. One of the reasons for this is the variety of work that needs to be done at different times.

• Some days you need to stock new inventory, other days you need to pull inventory for production or shipment. Other times it’s counting inventory.
• If your warehouse workers can’t perform all of these tasks, there may be times where some are less busy (aka inefficient) than others.
• A study found that an average of 15 minutes per day per worker is lost due to workflow inefficiency. That’s over 3,000 hours a year lost in your warehouse!

So are all of your warehouse staff trained across multiple areas? Can they shift to tasks that are your highest priority? If not, it might be time for a formal employee training program.

• Now don’t go firing your staff if they aren’t inventory masters. Just consider cross-training those who have strengths in one area.

So what?

So how did you do? If you can answer all of these questions confidently then odds are your warehouse is operating efficiently. If not, it might be time to implement some new processes.

• What next?

Now that your warehouse is efficient, what about your packaging process? Check out this infographic to make your design process more efficient, too.