February 10, 2015

Applying Lean Principles to Warehouse Management

Lean principles can be applied to many functions within manufacturing operations –…
Avatar Jeff Maree

Changes in manufacturing, along with globalization, are creating new challenges to those in warehouse management. Allowing stock to sit on shelves waiting for an order is no longer standard procedure. Managers are presented with many ways to operate efficiently, but may be searching for ideas on how do reduce costs.

My proposal: take a few tips from the world of Lean manufacturing, and apply them to our world of warehouse management. In other words, what can we do to remove waste from people, processes and equipment, which can then translate into lower costs? Here are a few tips that might help you with your Lean “journey” to lower warehouse costs and increase profits.

1.RFID in Warehouse Management

The first step in reducing warehousing costs is by making use of the technology available. Barcode or RFID labels are one method of simplifying your warehouse operations, and this lowers your costs. Barcode systems are low in cost. RFID does cost more, but offers a system of reusable tags.

If you can use RFID, you will see the greatest results. Readers can pull information from greater distances, and line of sight is not required. You can even use read/write technology. Choose the system that best meets your needs and handles the information your facility requires, including product date or build information.

This information can be converted into valuable operational intelligence, which can help you to route more efficiency pick and ship paths, as well as how to better keep track of materials as they approach obsolescence or maturity dates.

2. Labor Efficiency

Labor is a large cost of warehouse operations. The more times one item is handled, the higher the costs associated with the item. When you multiply this by hundreds of products, you can easily see an area in which to reduce your costs.

Say you have implemented barcodes or RFID. Now, when materials come in to your warehouse, the labels should be applied on receipt. Depending on the type of facility you are operating, the labels can be applied before the materials leave production to simplify the process further. In other words, what duplicative handling processes do you currently have in your operations? This waste can be removed to bring benefits to your bottom line.

Next, get rid of the pencil and paper method of confirming products in receiving. Scan the barcode, confirm the quantity and send the product directly to its storage location. If you use the right software system, all databases can be updated at one time. Receiving, inventory control and accounts payable, if applicable, all get the same information immediately. And, removing human errors (and the corresponding time to fix) will remove wasted activities from your process.

3. Storage Management

Once you have simplified receiving materials, products must be stored in the most efficient manner possible. If employees are spending hours locating and retrieving items, you are losing the cost battle. By using the right inventory system, your workers can know exactly where to look for each item when placing them into storage or picking them for shipment. Programs can also be designed to group items by location, preventing hours of back-and-forth trips by employees or lift trucks.

You also need to make the best use of warehouse storage. Shelving racks are no longer a one-size-fits all application. If you have an overload of products in one location with contents spilling on to the floor, and empty racks on the other end of your warehouse, your method is not working.

A customized storage solution will keep your materials organized. By using the right options, you can also eliminate the need for expanding your warehouse space. Fluctuating inventories should not create an overload. If you need to search for more space on a regular basis, you should invest in a better system.

4. Warehouse Management Software

A partner can be an outside warehousing solution provider or an in-house software program. Your choice greatly depends on what you need to make your warehouse work – and who can do so with the least amount of waste. If your warehouse is located far from the manufacturing center, you need the right partner for your transportation needs. Even if you maintain your own fleet, by using GPS routing technology, you can reduce the time spent getting products to your warehouse.

5. Just-in-Time Production

Just-in-time production and delivery of materials has been proven as a method to reduce costs. Manufacturing excess product or ordering excess materials for production ties up valuable cash flow in inventory, reduces efficiency and creates waste as part of your overall manufacturing process. Excess materials in storage add to the costs of operating a warehouse.

By working with both vendors and clients, you can establish a schedule that keeps materials and products moving into and out of a warehouse at an even rate. You will no longer face products gathering dust on a shelf. You can reduce sudden emergency production requests that cost more for the extra labor required. Admittedly, it does take some time and thought to find the balance, but finding it will reduce the costs associated with warehousing.

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