Warehouse Layout and Product Locations Drive Efficiency
Warehouse operations are typically very labor-intensive and frequently account for a significant portion of distributors’ costs. Using a warehouse control system for distributors to track and then optimize warehouse operational efficiency can often lead to markedly lower costs. For an existing distribution business warehouse here are two ways to increase operational efficiency: the first is to carefully evaluate and if appropriate modify the warehouse layout, and the second is to evaluate and perhaps modify the storage locations used for products. Both approaches attempt to improve the flow of goods through the warehouse and cut down on wasted effort.
Making changes to the warehouse layout, or changing where specific products are stored, is necessarily disruptive, and so should be done carefully. Typically, this kind of revamping of warehouse layout or storage locations will be done only when business is slow, or when you have recently added or deleted even 5-15% of your inventory. Even with a strong warehouse control system for distributors these are not easy changes to identify or implement. However, even small changes in these areas can lead to big improvements in efficiency and cost.
Laying out your warehouse is something that will already have been done. It is a massive exercise to completely redo this and so likely will never happen. However, it is possible to review and perhaps modify and/or redesign certain areas of the warehouse to improve the flow of goods through the warehouse. For example, if some areas in the warehouse are hard to get to or there are other access issues, it may be possible to consider things like removing an aisle to create an area where forklifts can operate safely. It may also be possible to move or redesignate staging areas or loading and shipping areas within a warehouse.
It is easier to move products around than it is to change the warehouse layout. However, modifying product locations is still challenging, and you need a powerful warehouse control system for distributors to provide the data on which to base product moves. Changing product locations would be done to reduce efforts to pick or put-away goods or to improve safety or accessibility. For example, fast moving items could be moved closer to the staging areas. Similarly, heavier items could be moved to areas that have better access for forklifts and pallet jacks.
There are three main methods of determining optimal placement of items in your warehouse. These are Inventory Stratification, Like-Items (also known as Family Grouping), and Special Considerations.
Using a typical ABC type product categorization, products can be organized by their sales volumes. So the “A” category would be the fastest moving items, “B” the moderate movers, and “C” the items which move slowest. You may not need a warehouse control system for distributors to understand that all other things being equal you would want to place your “A” items so they are most accessible for storage and shipping. The “B” items would be less accessible and the slowest moving “C” items would be the furthest away.
The disadvantage of applying this placement method is that it may mean you end up storing unlike items side by side, but if you prefer to organize your warehouse based on usage and frequency, this is the method of choice.
Using your warehouse control system for distributors, it is possible to fine-tune this method of organizing the warehouse. To the ABC categorization it is possible to add a loading/unloading ratio for each product. The ABC category applies to the frequency at which items are used, and the loading/unloading ratio factors in the handling of the items from the time it enters the warehouse to the time it is shipped out. Basically, the loading/unloading ratio is the number of trips warehouse personnel have to make to get to the storage location versus the number of trips it takes to get the item from storage to its point of use. The higher the ratio, the more important it is for that product to be placed close to its point of use.
Like Items or Family Grouping
Like-Items, or Family Grouping, means placing like items with similar characteristics next to each other. Using this method, one would store pipe with pipe and sprinkler heads with sprinkler heads, etc. Similar items have the same kinds of storage requirements, e.g., the space requirements for different bore pipes are similar but quite unlike the space requirements for sprinkler heads that would likely go into a traditional bin. Another benefit of this type of system is that there is an obvious organization of products so they can be more easily found by pickers or put-away after PO Receiving.
You might also group items that are frequently sold together, like sprinkler heads and valves. This would make it easier for pickers to fill orders for items that will be specified together. You might also consider creating zones for different types of products that often go together. The same product could also have multiple locations within the warehouse to facilitate sale with other products that it is often grouped with. Not every warehouse control system for distributors can handle this, and even if yours can, this will increase the complexity for pickers and put-away personnel and may lead to errors.
Another method of grouping is by ‘special consideration’, which takes into account the unique way some items are received, stored, picked, packed and shipped. Take the example of very heavy items that might require special equipment for picking. That alone could influence the placement of that item in your warehouse. Other special considerations might be size, fragility, perishability, or whether the item is hazardous in any way.
Warehouse operations are very labor intensive and so, even small changes in the warehouse layout and product placements could lead to big efficiencies and big cost savings. Using a warehouse control system for distributors that allows products to have multiple units of measure (e.g., Eaches vs Boxes vs Pallets), that tracks inventory at multiple locations for each product, that can support multiple picking methodologies and that allows for the use of wireless scanners for warehouse operations, can pay for itself quickly. The efficiencies, reductions in errors, and personnel cost savings, add up fast. Contact us to learn about Accolent ERP’s warehouse control system for distributors and see what is can do for you.