SUPPLY CHAIN MANAGEMENT | 7 minute read
Charles Intrieri is an experienced supply chain professional and is a recognized thought leader and innovator, primarily in the areas of supply chain optimization. In this guest post, he shares his supply chain expertise on how to run a warehouse audit and survey:
First, look at the inventory: Is it pallets? boxes? SKUs? No, it is money. It is money in a bank. The bank must be secure. No one should roam the warehouse and take parts for samples/sales unless they notify the warehouse staff. It is money they are taking! One of the root causes for variations in cycle counting on hand in the warehouse versus on hand in the computer is theft!
Typically, a company’s inventory that accounts for more than half of its working capital would get plenty of attention. However, in reality, only a few companies seem to really pay attention to their stockroom or warehouse, or the five processes that affect it (receiving, put-away, picking, shipping and maintenance, where “maintenance” represents the combination of cycle counting, consolidation, and other processes that maintain the stockroom in good operating order).
You can’t create a truly lean warehousing process if you don’t have effective processes to supply materials to the floor. If it takes a week or more for inbound shipments to move from the receiving dock to warehouse shelves (which it many times does…) and then out to the shipping door, you’re robbing other departments (R&D, Marketing, even IT) of capital that could make them more effective.
That lack of attention represents an opportunity for individuals, to make a difference at their companies and customers.
A stockroom that only holds materials for New Product Introduction will look very different from a manufacturing warehouse for a television or large appliance factory. But more frequently I’ve found that the problems I’ve observed were due to not making necessary investments. For example, focused investments in materials handling operations can have considerable ROI. Improving receiving and warehouse performance can enable you to take multiple days out of inventory.
How to solve warehouse problems: Use DMAIC: Define, Measure, Improve, and Control. Also use PDCA: Plan, Do, Check and Act. Use a cross-functional team to solve problems.
What Warehouse Management System (WMS) do you use? Is it effective? Without data accuracy, it is ‘garbage in; garbage out.”
Make cycle counting and root cause analysis a central focus in your warehouse: put up a large chart and post accuracy percentages for everyone to see because inventory records accuracy affects ALL departments in the company.
Do you have and use task interleaving in your WMS? You can save money here!
Is your inventory turning 6-8 + times/year? If not, you can save money.
If you are have automation, do you have a Warehouse Control System (WCS) integrated in to the WMS? Or do you have a Warehouse Execution System (WES=WMS + WCS)?
Whether it’s big or small, whether it handles small parts, large items, or a mix, a well-run warehouse will have the following characteristics:
The warehouse should have a lean culture and practice:5S, Kaizen (and Kaizen Blitz for Continuous Improvement), Kanban pull systems, and Lean Six Sigma. You must continuously improve warehouse operations daily.
SKUs should be stored:
Having trouble labeling your SKUs? Try our SKU generator tool!
There are trade-offs between these, especially when resources are limited. If space is limited, a well-run warehouse may decide to pack some of its slow-moving parts into a small space. This make picking those parts less efficient, but it will also increase the amount of space (and decrease handling time) for the frequently picked / fast-moving parts. If automation (forklifts, conveyors, etc.) is limited, the stockroom may use more floor storage.
What you should see when walking through a stockroom and associated areas like receiving, staging, etc.:
Mr. Charles Intrieri is a highly experienced and credentialed Supply Chain professional and is a recognized thought leader and innovator, primarily in the areas of Supply Chain Optimization, Third Party Logistics (3PL) International Purchasing/Importing, Requests for Quotation (RFQ) generation, Inventory Management and Logistics, Warehousing, strategic sourcing, supplier management, contract negotiations, truckling: TL/LTL/TMS/pooling/consolidation and reviews, and Purchasing operations. He is a motivational team builder with a history of conducting significant organizational transformation and achieving important operational successes at the local, regional and global level.
Check out Mr. Intrieri's blog at The Lean Supply Chain to learn more about 3PLs, warehouse management, supply chain optimization and inventory management and logistics. This post was originally published on his blog.
See also:
How to get paid on time as a supplier
3PL: everything you need to know about third-party logistics
What is dead stock and 3 tips to fix it!
