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Three Steps to More Efficient Warehouse Management

By MarksNelson on May 5, 2017 in Articles, Don Towle CPA, CGMA, Manufacturing Distribution
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This weekend I had a lunch date with my nine-year-old granddaughter.  I like my weekends because I can get a little one on one time with the grandchildren.  I had several things on my mind as I got into the car, where will she want to go to eat, what can I surprise her with for desert, how is my daughter-in-law’s new job coming.   Before I knew it, I look up and I was pulling into the parking lot at the office thinking Maddie‘s house isn’t even this direction.  I think at one time or another we all have caught ourselves headed in the wrong direction just because it was a habit to go that way.  That is human nature.

It is the same way on your production floor and your warehouse.  Employees running the same routes doing the same procedures they did yesterday.  Deliveries seem to be going out timely and you’re busy making new sales calls.  When you visit the warehouse or the production floor, you talk with your managers, people are happy and the place is alive with activity.  Maybe there is a few bugs but its working and too disruptive to change and your too busy to fix minor things that are not broken.

You can never be too busy to review how warehouse or production floors are laid out and how employees move around the space. Awkward or repetitive movements by employees, oversized packages, and disorganized layouts can slow down productivity and even lead to medical and safety claims. Small adjustments can make a big difference in your bottom line. Here are three steps toward more efficient warehouse management.

1. Know your cycle time

Looking around the warehouse, you probably see a lot of people and products in motion. But don’t equate constant motion with efficiency. A closer inspection may reveal people and products waiting in queues due to blocked aisles, unavailable forklifts or computer glitches. You may even find some workers wandering aimlessly for misplaced or hard-to-find items.

Improving efficiency starts by reviewing the order fulfillment process. Do you know how long it takes to process an order from start to finish? Your average cycle time is a critical benchmark. The goal is to find ways to reduce it by minimizing errors, wasted movements, congestion and inefficient picking paths. Bottlenecks, idle workers, unused space and piles of unattended inventory represent opportunities for improvement. One great source of information is the guys on the floor.  You’re going to need their buy-in for successful change so have the guys working 40 hours a week on the floor help you identify ideas for change.

2. Implement improvements

Formal policies and procedures are an obvious way to reduce inefficiencies. Efficient warehouses have a specific protocol for putting away shipments of new items, restocking returns, cleaning up messes, responding to accidents and storing warehouse supplies and equipment.

Once those types of standard operating procedures are communicated to employees, focus on streamlining fulfillment. Examples of workflow improvements include:

  • Rethinking floor, aisle, and rack layout to improve space utilization,
  • Rearranging product locations so the most popular items are located on ground-level bins that are nearest to the packing stations, and
  • Redesigning signage to make it easier for pickers to identify aisles, racks, products, and workflow.

After you’ve implemented improvements, measure your new-and-improved cycle time. Knowing how much you’ve shaved off the baseline metric can be a powerful motivational tool. Use it to drive continuous improvement. Set measurable goals and communicate progress daily or weekly so everyone is involved in the success.

For example, a distributor was able to reduce its cycle time by 15% by allocating work to pickers based on units of time, rather than assigning a picker to fulfill one entire order at a time. This strategy keeps the pickers moving and feeds packing stations in predictable intervals. The distributor also assigned pickers to specific zones in the warehouse to avoid congestion and improve equipment availability.

3. Consider technology

Manual processes and outdated systems can cause errors and delays in fulfillment. So why not automate certain functions using technology? Bring your existing inventory management systems into the 21st century with upgrades such as wireless mobile devices, radio frequency identification (RFID) technology, automated material handling equipment and voice-picking applications. Doing so can potentially speed up fulfillment, reduce errors and enhance customer satisfaction levels.

Before investing in a technology upgrade, it’s important to carefully weigh the costs vs. benefits. You’ll also need to evaluate compatibility issues with your existing accounting or resource planning systems. Train employees on how to use the technology; otherwise, you won’t reap all of its potential benefits.

Need help?

Sometimes objective outsiders with experience in the manufacturing and distribution sector can see warehouse inefficiencies that company insiders overlook on a daily basis. Or they may be aware of improvements that other companies have successfully implemented. Consult with your MarksNelson business advisor before auditing your warehouse for guidance on best practices.

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About the author

Don Towle directs the firm’s Employee Benefit Plan Audits.  He is committed to providing a quality audit that meets federal obligations while keeping clients aware of changes and identifying improvements.


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