Five Basic Components of a Warehouse Assessment
Speed, accuracy, reduced labor costs, storage density…Sound familiar. These are issues most warehouses face today. What is interesting is that this was compiled from warehouses listing their key issues facing them from 10 years ago. Some things never change.
Although the industry has evolved over the years and employs many levels of automation and technology, a common theme is the need to address these timeless objectives. In working with companies who are addressing these issues, there is another common thread. That is a return to the basic processes in the warehouse.
As with issues staying the same, most warehouse functions and processes have remained relatively the same over the years. The application of technology or automation may have changed the way the function or process is achieved, but the objective and overall functional process itself remain the same.
With the ongoing commonality of warehouse functions among companies, we have found that almost every warehouse can enjoy benefits by addressing the basic operating infrastructure and processes in place today. One of the best ways to evaluate your basic warehouse needs is to have an independent warehouse assessment conducted.
The warehouse assessment process enables you to identify areas where you can improve operational performance. The five basic components of the warehouse assessment are:
1. Walkthrough and observations of the operation
2. Data gathering of necessary information and metrics
3. Interviews with key staff members
4. Report analysis to determine current productivity and service levels
5. External benchmarking to look for areas of potential improvement
Walkthrough. One of the first steps in the assessment is to take time to walk through the facility and observe general operating conditions and effectiveness of the processes being used. This is not a detailed analysis, but developing overall impressions can guide the more detailed steps of the assessment to be completed later. Many times, the initial walkthrough and observations help focus and direct the assessment process. After you have seen enough facilities, it is possible to form initial opinions as to the current level of productivity and service very quickly. The general cleanliness of the facility, employee attitude and morale, overall work pace, information posting for employees, congestion, appropriate use of automation, bar code applications, space and cube utilization, etc. are all issues that can be observed during the walkthrough that can provide clues as to the appropriate focus for the assessment. Using all of the tools available can provide valuable information for the direction of the detailed assessment.
Data gathering. The assessment will involve some new research, but chances are you’ve already been collecting a lot of the data for other purposes. Designing an assessment is a matter of putting it all together. Most assessments are a combination of research analysis, report review and on-site fact-finding. The first step is to gather all the research you already have and collect any that you are missing. It is always necessary to establish expectations or standards as the baseline for any comparisons. Measurement against these standards identifies areas where expectations are not being met and action is required.
Staff interviews. Another important step is to talk to those staff members directly involved in the activity being assessed. Interview key management staff to gauge their perspective on the operation and any future plans for growth, product changes, or planned process changes. Then talk to the workers on the floor doing the work in the warehouse. If anyone knows where the problems and opportunities lie, it is the people who live with the issues day in and day out. Don’t miss this important resource; they are many times the best source for information.
Report analysis. Among the types of reports you should consider are basic internal operations performance reports, including service levels such as order shipping accuracy, order turnaround time, etc.; receiving; quality assurance; stock putaway; returns; inventory control; replenishment; and picking, packing and shipping. Examining these reports can help reveal which departments are reaching desired levels and which ones need some attention. The reports usually will include information relating to budgets or expectations compared to actual results in key areas of the business, covering productivity as well as service metrics.
Benchmarking is important. Your assessment should compare your desired standards of service and productivity with your actual performance. Comparing your own figures—both actual and goals—to that of other catalog and multi-channel marketing companies can help you evaluate your performance, too. Just be careful to compare “apples to apples” and pick companies that are as much like yours as possible. External comparisons can lead you to certain areas or processes within your operation that are candidates for further study. But remember that you cannot take someone else’s standards or performance expectations and make them your own; there are always too many differences in operations to do this. Our opinion is that it is always better to compare your results against yourself and against a set of standards or expectations over an established time period. This permits the identification of trends as well as snapshot evaluations. It is really desirable to combine both internal and external benchmarks to evaluate where you stand.
It is also very important to make sure you measure activities and costs that are relevant and actionable. Reviewing true productivity metrics in terms of work units and man-hours is better than looking at a percent to sales measure. The percent measure is dramatically affected by price points and labor market conditions, which usually are out of the operation’s control. Emphasis should be placed on comparable benchmarks, which can lead to some action steps by the operations group.
Look for our blog next month about what the four critical areas to concentrate on during the warehouse assessment…
If you are looking for some assistance in conducting a warehouse assessment then you need a consulting firm with the experience and knowledge base that can make quick but thorough work and actionable detailed recommendations to immediately begin implementing. F. Curtis Barry & Company has conducted warehouse assessments for dozens of clients a year and would be more than happy to discuss with you how we would approach assessing your warehouse. Call Jeff Barry at 804-264-8040 or email him at jbarry@fcbco.com to talk today.
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