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Warehousing: Small Changes Equal Big Paybacks

Warehousing: Small Changes Equal Big Paybacks

When I’m working at home hanging pictures my wife can always spot a crooked picture from across the room. I usually have to pull out my iPhone and use the level function or grab a tape measure because it’s not centered on the wall.

I have an associate who is very adept at doing the same thing except he looks for waste. Not waste as in trash on the floor – but waste in motion, layout or process design. He can spot the problem from across the room.

We already spent some time talking about qualitative approaches for assessing the warehouse in the areas of safety, productivity, key performance indicators (KPI), morale and cleanliness.

This post will provide some additional ideas on how to identify opportunities for improved efficiency or cost reduction within your warehouse operation.

The story that follows is one such instance of the product line manager I spoke of above just paying attention and questioning what a difference a minor change would make.

Situation 1:

Product line manager (PLM) walking the floor with the senior facility manager and noticed that his manual pick/pack flow rack operation was located near the receiving doors.

Suggestion: Move this operation closer to the shipping dock.

Facility manager: “How would a few feet make a difference?”

PLM: “Let’s walk the floor and measure the distance that the four operators travel moving product to the shipping docks. Then let’s measure the same distance if we move the pick/pack stations to where I am suggesting.”

Results: The difference was 98 feet. It took an additional 21 seconds per person to walk the distance. Each associate was making 67 trips per day. Each associate was spending 23 minutes of “walk time” per day. Roughly 5 percent of their day was spent in non-productive movement that could be easily changed.

The total cost to move the flow rack: $2,800. Annual cost of the associates walking unnecessarily: $9,700. The move paid for itself within four months and provided nothing but savings and increased productivity within the team.

Situation 2:

Product line manager notices that associates are running late in returning from their breaks. This caused a morale issue and incurred small amounts of additional overtime.

Suggestion: Observation led to the conclusion that the microwave oven capacity in the break room was a bottleneck in allowing associates to heat up their meal. This was an easy fix as there was ample space to place additional microwave ovens in the break room.

Results: Spend $400 on additional microwave ovens which leads to instant morale improvement and the elimination of the tardiness from breaks.

Not all changes will be this easy and provide such a quick ROI but getting out from behind the desk is a great start. These two examples may sound a bit mundane but any chance to improve the competitive advantage and increase margin is a win.

By Eric Hepburn

Hepburn is vice president of distribution center management for Penske Logistics and can be reached here. He is located at Penske’s global headquarters in Reading, Pa.