Remove all barriers to efficiency

Tuesday, September 30, 2008

Warehouse and distribution areas are busy hubs of activity in typical HME operations. People and products seem to be in a perpetual state of motion as orders and items are constantly moving in and out of the work area. In an area where high activity is the norm, opportunities for cost savings and efficiency gains are not too difficult to find.

Despite this high level of activity, the average order tends to move through the warehouse slowly. Throughput can be cumbersome as orders tend to stack up in batches or queues as they await the next processing step. Excessive queuing of orders lengthens processing and cycle times which can contribute to customer dissatisfaction. An uneven workflow can also contribute to warehouse clutter as work-in-progress takes up valuable floor space which can create a confusing and cluttered work area.

There are many problems that can contribute to delays in order processing times. Problems with picking, blocked aisles, equipment availability, packaging, inefficient warehouse layout and cumbersome pick paths can all create barriers to efficient warehouse and distribution operations.

Implementing lean concepts can help reduce some of these barriers by helping to create a smoother workflow throughout the warehouse. The idea behind a lean warehouse operation is to devise a system that allows for faster, more efficient and more accurate order fulfillment.

A recent study involving a large HME supplier revealed that their overall order processing cycle time was grossly inefficient. Orders were being worked on less than 40% of the time within the total cycle time. Nearly 9% of the total cycle time was spent on wasteful activities, such as removing items from blocked aisles or waiting for a lift truck. Many orders sat waiting or idle nearly 50% of the total cycle time.

Lean applications can help improve cycle time utilization, reduce costs, increase productivity, and increase customer satisfaction. To get to lean, begin with conducting a time study and analysis of the current order fulfillment process. Identify non-value added steps and note the amount of time spent on each of them. Then, assess overall workflow in an attempt to reveal inefficient product pick paths, wasted motion, excessive delays, excessive footsteps, aisle and work area congestion, and equipment availability.

Once you have gained a better understanding of the warehouse order cycle time and the wasted steps have been identified, begin to gradually implement lean concepts.

Lean Tips for Creating More Efficient Warehouse Flow

- Create an easy-to-read, visible, consistent, standardized product shelf labeling scheme.

- Create a product locator map that indicates aisle number, shelf number, and bin number for every product.

- Create and display a map of the warehouse that identifies shelves and product groups.

- Organize products based on product groups.

- Use color-coded bins for specific product groups.

- Ensure all shelves have locators that are easy to identify and consider color-coding labels based on specific product groups.

- Create a workflow diagram-as part of the visualization system-that explains how an order flows through the order fulfillment process.

- High volume items such as diabetic supplies should be stored near ship-out area.

- Error proof the pick process by using a bar coded verification system to help ensure pick accuracy.

- Use a standard checklist at the shipping station that clearly identifies each step that needs to be carried out in order to process the package for final ship out.

- Have a final quality checkpoint established just prior to staging the package for shipper pick-up.

- Optimize pick paths-use direct pathways to shipping prep area to minimize footsteps and optimize pick flow as much as possible.

- Use daily cycle counts to help ensure accuracy of perpetual inventory system and reconcile system count with physical count.

- Have a standardized checklist and procedure in place for the timely processing of new products into the warehouse.

- Implement a daily or even hourly “put-away” process that helps prevent cluttered and blocked aisles from forming.

- Implement a “picked-by” identification slip to be placed in each customer’s order.

- Implement performance standards and metrics-number of line items picked per hour, etc.

- Focus on cross-training employees-this can help smooth workflow as a process.

One of the principles behind a lean warehouse operation is increased visualization and organization. Every tool, machine, and product should be in its place, properly labeled and easily identified. When labels and signage are effectively utilized and routine housekeeping is emphasized, it will become much easier to detect abnormal from normal and less time will be wasted searching for items.

Creating a lean warehouse operation is more than just optimizing workflow. Getting to a true lean state begins with a careful analysis of the current order fulfillment process.

Understanding cycle time and identifying non-value added activities are important requirements in order to identify lean improvement opportunities.

Chris Calderone is the founder of Lean Homecare Consulting Group.