Warehouse Optimization in 2024

It’s the beginning of the year and time to reflect on how your warehouse performed last year.  2024 will prove to be a challenging year with a presidential election around the corner and a firestorm of geopolitical situations going on around the world that could have significant impact on our economy. 

Start preparing now, take proactive steps in the short-term and the long-term to ensure you’re able to weather the storm.  Have an open mind and embrace new ideas and opportunities.   Get help if needed to optimize your operation, better plan your labor, consider automation when feasible, and collect as much data as possible to help you make smart decisions.

Here are four key areas to consider for optimizing your warehouse:

1.       Strategically positioning your Inventory to maximize efficiency will easily increase your pick rates by as much as 50%.  Your goal should be to focus on reducing travel time for all activities in the warehouse.  If you have access to a slotting tool, use it, otherwise, you can do it offline.

• Step 1- Analyze the movement patterns for every item and categorize them according to movement.   Use whatever naming convention you prefer.  Most will use an A,B,C,D convention where A & B are your fast movers and C&D move slower.

• Step 2- Once you’ve categorized your inventory, you’ll need to decide where best to locate this inventory.  A good rule of thumb is to spread your fast movers over several aisles and alternate them in with your B movers.  This will reduce clutter and congestion in the aisles during picking activities and allow you to pick the max potential based on zone. 

• Step 3- Create forward picking locations and replenishment locations. Set min/max levels and determine what the appropriate replenishment frequency will be best for your operation. In the case of a fast mover, you might find yourself creating 3-4 pallet locations for the same item in order to reduce the number of replenishment tasks.   

• Step 4- Now that you have a plan, you can begin the process of relocating and repositioning.  Use this opportunity to clean up the racks or bulk areas by consolidating partial inventories and discarding of loose packaging.  You may also do this in conjunction with a scheduled cycle count or annual physical inventory.

2.       Re-evaluate your workflows and determine if the current methodologies used in the warehouse are best for this time.

• Step 1- Start with Picking.  There are methods that perform better in different business climates.  The most common approaches for picking include:

-Wave picking to a staging area or packing station. By grouping like items using like carriers (ex: UPS/FedEx), you can pick multiple orders at the same time thus reducing the number of times a picker goes to that location.

-Pick to cart or tote/container. If you have lots of small item orders, picking into a cart with bins could be a good option for companies that do not have automation.

- For case pick environments, you will want to make the determination on whether you want to use a Pick-To-Clean or Pick-To-Fill methodology.  Pick-To-Clean means your WMS will force the picker to pick from partial locations in an attempt to free up space.  This is usually done when warehouse space is at a minimum. In Pick-To-Fill, the WMS will direct your picker to the location where they can fill the requirement without having to go to other locations.  This certainly provides the fastest pick rate but on the back end, you’ll need to work on inventory consolidation moves to make the one time fill rate more successful.

• Step 2- Consider put-away options next.  Now that you’ve invested time and labor into slotting your inventory, your put-away methodology needs to be consistent with the slotting or your efforts will quickly be erased.  Put-Away functions are usually limited to the features of your WMS.  In the event your WMS does not support an intuitive put-away logical, you will need to run reports and manually move the received inventory from the dock to the rack or bulk locations.

• Step 3- Carton Labeling for outbound shipping is the next area to review.  This can be a very low-tech process where the warehouse staff are given a stack of labels to apply.  Or in the event of a more complex labeling requirement where the staff has to physically match up a unique label to the correct carton, you might find that automation could be used to improve the speed and accuracy of this area.  By automation I mean, a label print and apply line.  You simply drop the cartons onto a moving conveyor and the labeler prints and applies the correct label every time.

3.       Managing warehouse labor is always a big challenge, especially during busy seasons or peak shipping days.  In order to manage your labor force effectively, you need to understand how long each transaction should take and what’s an acceptable KPI standard.  For example, some of the top performing warehouses might have a pick rate in the range of 50 to 120 lines per hour per person.    Here are a few steps you should consider when planning out your labor: 

• Step 1- Identify the appropriate KPI’s for your industry and commodity type.  I can share some of this data if you reach out to me at [email protected].

• Step 2- Develop, test, and document standard operating procedures for each activity.  At the end of this exercise, you should have a proven SOP that will ensure your staff’s success an attaining the expected performance goals. This is the only way to accurately predict with confidence the expected performance outcome. 

• Step 3- Next you need to roll out a training and certification program so that everyone gets the correct level and training and practice with the process. You should also include cross training and potentially create a reward system that pays for team members to invest the time into training for other areas of the warehouse.

• Step 4- Now that you have everyone trained and using a proven process, the next critical step involves communicating with your sales department or customer service team to discuss and review forecasts as well as historical volumes. Once you know what activity to expect and you have a good expectation on the timeframe it will take to complete, you can begin the process of planning out your labor. 

4.       Re-visit and re-asses the tools in your toolbox.  This includes the scalability of your Warehouse Management System as well as your financial accounting solution.  If these systems can’t scale to meet your current needs now or in the future, it is time to consider replacing them.  In three years, it will be too late, and your competition will have the upper hand.

If you are interested in a brief conversation on proven strategies and best practices for warehouse optimization, please contact me at [email protected] .