UILDING A USINESS ASE FOR ETTER WAREHOUSE MANAGEMENT · Warehouse Management Systems: The best WMS for your company increases supply chain visibility by integrating seamlessly with
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BRIGHT MINDS. BETTER METHODS. BEST OUTCOMES.
BUILDING A BUSINESS CASE FOR BETTER WAREHOUSE MANAGEMENT
Warehouse design and configuration are important but often overlooked aspects of a successful supply chain design and strategy. This white paper explores the cost benefits and related process improvement steps for warehouse optimisation and lays out the unique approaches available to reduce warehouse errors, ensure optimal shelf replenishment and optimise the use of manpower, space and technology.
WAREHOUSE OPTIMISATION AND THE SUCCESSFUL SUPPLY CHAIN
Supply chain network planning can
significantly improve margins, support
expansion into new markets, enhance the
customer experience and reduce operating
costs. An integral aspect of supply chain
network planning, warehouse optimisation
further supports a successful supply chain
by helping to anticipate long-term
demands on warehouses and allocating
resources, including labour and equipment,
potentially cutting millions of dollars of
cost out of your supply chain. Whether you
manage a growing enterprise or have
acquired less-than-productive warehouse
assets, here are some of the many ways
warehouse optimisation can improve your
operational and supply chain results.
REMOVING WAREHOUSE WASTE: A FINANCIAL & OPERATIONAL DRAIN
Despite rapid advances in materials
handling equipment (MHE) and warehouse
management system (WMS)
sophistication, many warehouses limp
along with traditional manual picking
methods. In fact, many companies lack any
basic warehouse planning or management.
According to estimates from CBRE, manual
picking methods mean 75-80 percent of
employee time is spent walking the
warehouse floor.
Warehouse optimisation seeks
opportunities to reduce or eliminate these
seven financial and operational drains:
Unnecessary transport, including any
unnecessary shifting or moving of products
not actually required to perform inventory
processing, expediting and shipping.
Excess finished product that is not being
processed, but is simply stacked or moved
to keep it out of the way, ostensibly for
future processing, as it takes up useful
warehouse space.
Unnecessary movement of people or
equipment (via moving or walking) that
exceeds the amount required to perform
the necessary processing.
Excessive waiting as people or equipment
are held up in an inefficient system, while
waiting for the next production process
step.
Overproduction as goods are produced
ahead of demand, resulting in the buildup
of unnecessary stock and related carrying
costs.
Over-processing resulting from poor
equipment and poor process design that
creates unnecessary activity.
Defects remediation which involves effort
to inspect for and fix product defects.
Careful weeding out of waste provides
valuable benefits: A Dematic study found
that optimised pick path planning and
product slotting (in a pharmaceutical
environment, for example, where 57
percent of operatives’ time was spent
traveling) typically increased pick time
speed by 10-18 percent by removing the
time required for finding, travel and other
support activities.
Effective warehouse optimisation also
requires a careful cost/benefit analysis that
CASE STUDY
A large pharmaceuticals, veterinary and medical equipment products company sought to reduce cycle times, errors and costs; achieve optimal inventory holdings; and explore the commercial viability of maintaining multiple warehouses.
The firm determined their best approach was to employ a best fit WMS; develop and document their WMS functionality requirements from receiving to despatch from the warehouse; establish enterprise resource planning (ERP) system interface protocols; and train personnel in using new technologies.
The firm increased productivity by 58 percent and saved $3 million within 18 months.
A large automotive distributor with over 95,000 SKUs and a single DC serving multiple dealerships sought to decrease labour costs and increase productivity.
The firm opted to develop a pick-face design for the fastest moving SKUs—including slot sizing to optimise the picking and replenishment tasks and slot sequencing to improve picker productivity—and determined minimal requirements for additional storage equipment.
By simplifying the warehouse layout, redesigning and implementing better picking and replenishment processes, investing in a WMS, reducing headcount and training remaining personnel to become more efficient by using the new systems, they increased productivity by 28 percent and saved $2.3 million within 10 months.
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BRIGHT MINDS. BETTER METHODS. BEST OUTCOMES.
BUILDING A BUSINESS CASE FOR BETTER WAREHOUSE MANAGEMENT
Bright Minds. Better Methods. Best Outcomes. Chainalytics accelerates fact-based transformation spanning the entire planning horizon for supply chain leaders around the globe, including 18 of Gartner’s Top 25 supply chains. Our peer-to-peer collaboration and market intelligence platforms enable our clients to achieve industry-specific insights quickly. Our mission is simple: To help companies reveal the maximum value from their supply chains. With locations in North America, Europe, and Asia-Pacific, Chainalytics serves companies globally in a borderless fashion. To tap into the top minds in supply chain management, visit www.chainalytics.com.
ABOUT THE AUTHOR
An expert in supply chain management, Bruce leads Chainalytics’ Asia-Pacific team of professional supply chain consultants and analysts dedicated to providing successful outcomes for clients. Bruce has worked with many of Asia-Pacific’s leading organizations in the automotive, aviation, healthcare, consumer, energy and mining sectors.
Prior to joining Chainalytics, Bruce was the co-founder and driving force behind Logiworx. Prior to co-founding Logiworx, Bruce held senior executive positions with DHL in London and helped establish franchise operations in Saudi Arabia, Egypt, Bahrain, and Doha. As Australian Business Manager for Nedlloyd Lines in Australia, Bruce introduced container shipping services to Indonesia, Malaysia, Thailand, and China. As MD for FedEx/Oceania, he travelled and worked extensively in Singapore, Hong Kong, Japan, The Philippines, and Taiwan.