Focus on the Freight, Not on the Space

QUESTION: We manage a warehouse for one of our customers, and it’s too small. Any ideas we can use to justify the need for a larger space?

This probably isn’t what you expected to hear, but moving to a bigger place may not be the answer. Your problem may not be the size of the warehouse but control of the inventory moving in and out of it.

A number of other logistics options jump to mind for you and your client:

o Reduce the amount of inventory on hand by holding only what needs to be held. Buy frequently and in small quantities. You’d be amazed at the effect this has on space, as well as on inventory investment and the avoidance of obsolete stock.

o Go from traditional racking/shelving to Narrow Aisle or Very Narrow Aisle (VNA) layouts, and use every inch of height in the building.

o Move to a cross-docking concept for bulk movements. If you’re also acting as your customer’s distributor, compile orders from its various outlets and buy in bulk exactly the aggregate of what customers want as their individual orders. As the goods arrive, split up the shipment on the receiving dock, label it, and put it directly onto an outbound trailer (or deliver it to each of your customers’ outlets right away if they’re geographically close).

o Plan the receiving process carefully so that the receiving staging area is never overwhelmed. Focus on simple things, such as ensuring that incoming goods never sit in picking aisles, blocking the rest of your operation and adding costs.

This last option-scheduled receiving-is a good one for several reasons. First, it has an immediate and beneficial impact. And second, it can be done by the warehouse manager virtually by himself (and will reflect directly, and hopefully positively, on him).

Scheduled receiving is common-sense stuff. Think of it this way. If a warehouse were a bathtub and inventory the water level, then shipping is the drain-hole and receiving is the faucet. If you don’t want your bathtub to overflow, you have to control the faucet flow.

Scheduled receiving is your way of controlling the flow. Here are a few tips to help make the process work more smoothly:

1. Quantify the levels of incoming goods.

Your in-flow/out-flow system has to be able to accommodate the unexpected: additional trailer loads, early or late arrivals, pallets of freight over and above what was booked.

In a lot of cases, problems arise because it’s hard to know how much time to allow for handling material if you can’t gauge the actual work involved in advance. For instance, you know you have 23 cases of Product X coming in, but are the cases large or small?

There’s a need for some kind of standard measure. “Pallet-equivalent” may be a reasonable solution (along the lines of “20-foot equivalent” used in the container business).

I often suggest to warehouse managers that they conduct a study to determine standard checking and put-away rates (lines per man-hour) and that these be used, along with average lines-per-pallet information, to book in pallet quantities and trailers in an efficient manner.

2. Promote adherence to the scheduling process.

Simply put, scheduled receiving works best when goods arrive on schedule. When too many pallets arrive in too short a time period, the receiving lanes become full, trailers get diverted to other receiving doors, and pallets clutter aisles that need to be kept free.

The other effect is that the carriers who meet their set appointments are delayed, appointments are not honored, and the entire booking-in process is undermined. It should also be noted that there are some occasions when a trailer might initially be refused (because it’s late, for example), but later accepted following a coercive phone call. This undermines the warehouse manager’s authority and should be avoided at all costs.

3. Establish a formal booking-in process.

Many warehouse operations have no formal booking-in process at all, and carriers arrive at their own convenience rather than at a time convenient to the warehouse operation.

Typically, booking-in might work like this: the carrier calls in to someone responsible for bookings, who passes along the request to the warehouse manager. In deciding when the trailer should arrive, the warehouse manager considers the space available; the work implicit in the load size and the type of materials that will arrive; the other loads expected that day; and the staff on hand. He then either calls the carrier directly or informs the bookings department when the load should arrive. Bookings relays the message to the carrier.

Here’s where the warehouse manager has a chance to shine, because the process is heavily dependent upon his knowledge and judgment.

4. Automate the paperwork.

Hand-written booking-in sheets are a minefield for delays and mistakes. Use a computer-based scheduler instead. Even a simple spreadsheet program will work in the interim to enhance legibility and to expose staff to the features they would like to have on the eventually adopted system.

5. Establish standing appointments for certain carriers.

For carriers that regularly deliver to the warehouse, schedule standing appointments (daily, semi-weekly, or weekly) so that the rest of the scheduling can be done around them.

Appointments could be done on a per door or per receiving crew basis to ensure that a reasonable amount of work is scheduled.

Incoming loads should be delayed no more than 24 hours. If delays go beyond this, then additional resources need to be reallocated to receiving. Small-package carriers such as UPS, FedEx, Purolator, etc. should be accepted wherever they arrive.

In the long term, given some historical data and performance statistics, it’s possible to simulate this scheduling problem and to allow operational planners to be developed to help manage the process. It’s also worth exploring whether your original enterprise software system has a receiving scheduling model which may currently be switched off.

Some companies receive in the morning and switch to shipping in the afternoon, thus ensuring that all receipts are available for picking the same day. This effectively reduces the lead time of items by one day-a significant saving.

The operational plan outlined above will allow the receiving department to schedule work for the receivers and put-away staff. It will ensure that all receipts can be checked and put away, available for picking the same day.

In effect, it controls the flow of water from the faucet to the bathtub, and so prevents messy, expensive overflows.

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