- February 11, 2022
- Posted by: Hesol Consulting
- Category: Warehousing
This article portrays 10 different techniques which play an important role in optimizing a warehouse in terms of efficiency and cost.
1. Recommended Storage Quantity or RSQ
At times inventory is classified as a waste though it is not. The inventory is a competitive edge in most of the scenarios but, waste in real terms is an excess inventory. To declare an inventory as an excess inventory, one should know what is an ideal inventory, i.e., what is exactly done calculating the recommended storage quantity.
In a nutshell, it is a recommended storage quantity does is, consider all the different supply chain parameters and constraints and arrive at the ideal inventory level at each of the stocking points within the supply chain. So, basis the ideal inventory, an inventory is classified above that as an excess inventory. Also, inventory programs are driven towards achieving the recommended storage quantity. Thus, the metric that is used to evaluate this is inventory turnover.
2. ABC Analysis
It uses a Pareto analysis technique to do an ABC analysis for fast, slow and non-mover. It is also called an FSN analysis. One can also do an ABC analysis:
- To arrive at the top performers by volumes,
- To arrive at the top performers by sales value,
- Also, arrive at the top performers by margins.
Collectively the method used remains the same. By this ABC analysis, one can prioritize the SKUs such that they can focus their effort on them. For instance, if one has 10,000 SKUs it is humanly impossible to focus on all those SKUs and manage them. By prioritizing the SKUs, one focuses their effort on them. And this particular technique is going to be crucial, and it indirectly helps on the overall warehouse optimization.
3. Cubic Space Utilization
The name is derived from the length, width, height of the warehouse and by the cubic space utilization that are ensuring that is utilizing the complete space within the warehouse to the brim. Thus, one should consider the entire warehouse and arrive at the cubic space utilization. Only then one will focus on the aisle space, focus on the processing areas, as well as focus on the office areas. Thus, every square foot within the warehouse will come within the radar, such that that one keep improving on them. The metric used here is the cubic space utilization percentage.
4. Concepting
Concepting is also known as slotting. What it does is that in cubic space utilization it was discussed about ensuring all the space is utilized, and there one should plan whether one is going for a rack, a bin, etc. So, to decide that concepting is used as a sub technique when trying to increase the cubic space utilization. Thus, concepting ensures that there are zero space leakages within the new storage.
5. Dynamic Slotting
Once it is decided on the overall facility layout design and storage structure design, now there a question arise, if a static slotting is going to be conducted, or a dynamic slotting.
Static slotting means one creates a space for a product and if the product is not there the space remains empty. Whereas in dynamic slotting, when the product comes in, at that instance it is decided where this product should go. Thus, the location gets rotated for different products.
Dynamic slotting is a very powerful technique, but one needs to set those key storage and allocation parameters very clearly such that the system does not get confused.
While adopting a dynamic slotting lighting but if still not setting those parameters properly, it will have a direct negative impact on the put-away efficiency.
6. Material Flow
Now there are different material flows, there is an I type flow, U type flow, L type flow, but the crux of every material flow is ensuring there are no crisscrosses within the warehouse movement. That is the key criteria when one is designing a material flow. A technique that can be extensively used for material flow is Spaghetti Diagram. It is a very powerful method by which one can arrive at all the unwanted movements within the warehouse. And then helps to streamline all the material flow. The metric used for evaluating material flow is called the “Through-put time”.
7. Gold Zone Management
Though there are many definitions of gold zone available on the internet,
“Gold zone is a zone which is easily accessible; depending on the profile of the warehouse few locations will be easily accessible.”
Such locations are which are closer to the dock, is easily accessible, or the location which are on the ground shelves. Considering all these factors one arrives at your warehouse. Now, those gold zones of the warehouse should be the same way as gold. If a slow mover is sitting on that gold zone, then one is simply wasting a lot in terms of their productivity. So that is what one tries to achieve using the gold zone.
And the metric that is used to ensure that one is following the gold zone management properly is the fast-moving SKUs.
8. Pick Path Sequencing
Pick path sequencing is a very powerful technique in terms of picking efficiency. So, what it does is, automatically generate a picklist in such a way that if the picker follows that sequence as described in the picklist he won’t do any crisscross movement or won’t do any backtracking movement leading to improvement in picking efficiency.
9. Material Handling
Same as how storage is designed, material handling must be designed. If one is coming up with a material handling design and the other one is pumping in huge capital and not giving the return on investment that means, there has not been a proper material handling design. One needs to ensure that they design the material handling aligned with the requirement of the business such that that investment gives a return on investment. The Metric that is used here is the utilization of material handling equipment.
10. WMS or Warehouse Management System
WMS as a full-fledged software available or WMS as a module is available in many ERPs. What is so important is choosing the right WMS that suits the warehouse operations. If done well, WMS will not be a bottleneck but will be a great value add to the business.
Thus, these are the 10 concepts that help to optimize a warehouse. Within these 10 techniques explained is just the brief about each of the techniques. Please read the success stories in https://www.hesol.co.in/success-stories/ to know more on how these techniques are used. Note: Specifically, select the category ‘warehousing’ once you are on the success stories page.
