Modern-day warehouses face multiple challenges due to the rising eCommerce market, making it difficult for executives and warehouse managers to even understand when and how to assess and improve their warehouses.
General goals like cost reduction and performance optimization look like good starting points but for a truly effective and fruitful warehouse evaluation, you need to ask the right questions.
This article focuses on and discusses the key components of warehouse evaluation and lists the right questions that you should ask to optimize your warehouse’s performance amidst all the complexities.
By asking the right questions, a simple yet effective warehouse evaluation can transform your warehouse into a road map for success.
Component #1 – Start with Your Space
Setting up a warehouse demands huge investments and that’s why maximizing space utilization is crucial. By optimizing space, you can store more, pick faster, and ultimately, fulfill more orders. SoSo, you need to analyze your layout and ask yourself:
- Are we effectively utilizing our space for product storage?
- Are we using space efficiently above doors and on walls?
- Is it possible to optimize space through strategies like maximizing vertical storage?
- Do our warehousing systems support directed put-away?
- Can we improve space management by keeping 10% of locations open?
Component #2 – Operational Metrics
Operational metrics like labor costs and costs per order help you evaluate your operational efficiency. Moreover, the gathered data helps you to find out which areas need improving and help you make informed decisions. Let’s look at the right questions.
- What key operational metrics are we currently tracking?
- What do they reveal about our fulfillment performance?
- Are we able to meet our desired standards of service and productivity?
- Why are there discrepancies between actual performance and targets?
- How do metrics like cost per order or labor cost align with industry benchmarks?
Component #3 – Labor Efficiency
Manual labor often comprises over half of warehouse operating costs. Streamlining functions, developing labor budgets, and providing incentives can significantly improve efficiency. For proper evaluation of your labor utilization, here are your questions that need to be answered.
- What percentage of costs is attributed to labor?
- How can we optimize labor efficiency?
- Are there opportunities to optimize labor budgets?
- How can we ensure optimal staffing levels without compromising operational efficiency?
Component #4 – Workflow
A smooth workflow translates to faster fulfillment and happier customers. Map your inbound and outbound flows to identify bottlenecks and areas for improvement. Consider asking the following questions:
- How well does our warehouse layout support inbound receipt processing, put-away, and returns processing?
- What are the existing bottlenecks in our workflow?
- Are our picking routes optimized?
- Can we implement hot pick locations to reduce walk time?
- Are fast-selling SKUs easily accessible?
Component #5 – Inventory Systems
Your inventory system plays a critical role in availability and accuracy. So, your objective here should be to evaluate your inventory system and learn about opportunities for inventory level optimization and implementation of accurate tracking.
- Are we effectively managing inventory levels to meet customer demand?
- How can we minimize overstocking?
- Do our inventory systems offer accurate tracking throughout the warehouse?
- How can we optimize inventory availability and location accuracy to minimize order fulfillment errors?
Component #6 – Vendor Compliance
Implementing effective vendor compliance procedures can reap rich benefits for your warehouse. That’s why we at Total Logistics Solutions, suggest even small retailers verify their vendor compliance because it’s an investment that pays off.
- How effective are our vendor compliance procedures reducing inbound transportation costs and streamlining receiving operations?
- Can we improve collaboration with vendors to minimize errors and delays in merchandise processing?
- What steps can be taken to enhance vendor compliance without resorting to chargebacks?
Component #7 – Slotting
Accurate slotting and efficient picking contribute to significantly speeding up order fulfillment. That’s why you need to evaluate your slotting procedures and maintain them from time to time.
- Are we following efficient slotting procedures?
- Are fast-moving SKUs readily accessible for picking?
- What strategies can we implement to optimize slotting and reduce picker walk time?
- How can we maintain slotting procedures as a dynamic process to adapt to changing demand patterns?
Component #8 – Picking Efficiency
Do we even need to emphasize and explain the importance of picking efficiency? Therefore without further ado, let’s directly jump to the right questions.
- How can we improve picking productivity, accuracy and reduce order throughput times?
- How can we enhance product slotting, pick ticket readability.
- Are our warehouse workers adequately trained and equipped to perform picking tasks efficiently?
Component #9 – Packing
Packing is another major component of warehouse operations. So, you must assess your process, materials, automation, and branding by considering different picking factors like the packing process, storage space for packing materials, etc. But for better evaluation of this operation, focus on questions like:
- Can we optimize packing processes and reduce labor costs while improving efficiency?
- What are the ways to streamline packing operations and minimize material waste?
- What role can automation play in optimizing the packing function and reducing manual labor requirements?
Component #10 – The WMS Factor (Reporting and Productivity)
Implementing productivity measurement is necessary because it will bring transparency into the system. Enabling workers to see their hard work pay off will motivate them and help businesses identify areas for improvement.
Couple this with the technological factor. Also, assess opportunities for automation within your existing WMS as that can help you find ways to boost efficiency. The questions to be asked here are:
- How can we implement productivity measurement and up our reporting game to drive performance improvements?
- Do our existing Warehouse Management Systems (WMS) offer support for desired operational enhancements?
- What can we achieve by integrating automation technologies with our WMS?
- Does our current WMS offer all the necessary features along with scalability?
If you can gather and analyze the answers to all the above questions properly, you will get a clear picture of the current scenario of your warehouse operations. You’ll have a quantifiable understanding of your warehouse’s strengths and weaknesses.
Moving on, you will need to develop an action plan prioritizing the major changes. After that, you need to organize your findings for easy reference and future improvement cycles.
Remember, warehouse evaluation is an ongoing process. By continually asking the right questions and conducting a comprehensive evaluation of warehouse operations, businesses can identify areas for improvement and develop actionable strategies to increase productivity, reduce costs, and meet customer expectations.
Don’t be afraid to seek expert help. A qualified consultant can guide you through the evaluation process and develop a customized action plan to achieve your specific goals.
So, relax, ask the right questions, and get ready to transform your warehouse into a champion of efficiency!
