The last 20 years have seen a great improvement in cost management on the manufacturing floor. Most companies have maximized their inventory turns, implemented process improvement on the floor or outsourced difficult products entirely. That leaves the warehouse as the one area for real gains.
There are three assets we need to maximize in warehouse operations: The value of the inventory, the cost of space and the productivity of the labor to manage it.
Warehouse Management attacks inventory usage in several different ways. The first is accuracy. Good WMS users have pick accuracy in the neighborhood of 99%. Users with poor inventory accuracy will typically use safety stock to compensate for the fact that they cannot trust the on hand balance. In addition, poor picking accuracy generates returns and their cost.
The more often inventory is handled the greater the opportunity for breakage and loss. Use of dynamic bin allocation assures that the most active items are the easiest to pick. By setting activity based stocking levels in the quick pick area, we reduce the traffic in constantly moving inventory or going into bulk stores to break open a new carton. This improvement effects not only inventory value, but labor productivity as well. The ability of a WMS system to stock goods in multiple units of measure reduces handling and improves customer service. If a customer order requests full cases, having the ability to direct the picker to that bin that stores cases vs. pallets or individual sku’s assures a onetime pick and correct order configuration.
For specialized inventory, lot traced, special storage and date coded items all benefit from a WMS system with capabilities to deal with this.
Warehouse space, even if company owned, still generates cost in terms of taxes and utilities. Inefficient space utilization often results in rented warehouse space with the added cost of transfer transportation. The WMS knows the weights and dimensions of the SKU’s stocked as well as the capacity of the location in terms of weight or cube. The first step is for the WMS using directed put away to send the goods to the proper location so we do not duplicate locations. If we know the dimensions/weights, we can redirect the put away task to another preferred location, saving a trip to a bin that was already full. By maintaining an optimized warehouse, picking activity is also increased as trips are more direct and therefore take less time.
That leaves us with the labor. Measuring productivity in the warehouse has always been difficult. There are no routings or labor standards and therefore little to actually measure productivity to. Having a warehouse worker managed via Task Manager provides direct tracking of activities. Users are dispatched tasks electronically based upon their zone and equipment. The system time and date stamps every transaction required to perform the day’s work. In addition we know from the user profile where a particular employee was deployed in the warehouse and can group/measure against similar employees doing similar tasks. This allows for setting performance standards that are representative for a diverse set of tasks. Directed put-away and dynamic bin slotting has planned the most efficient manner of going about those tasks. To maximize efficiency, problems such as broken items, etc., can be dispatched to an ‘inventory person’ to resolve while the picker continues their assigned task.
So what’s the result? In a case study from a recently implemented customer, labor productivity improved by 11%. Order accuracy hit a new high of 99.3% and 93% of purchase order receipts are available in stock the same day as received.
These results were received in a 6 month timeframe thru the implementation of COLLECT® for SYSPRO. The system offers real-time integration to SYSPRO ERP via the Business Objects technology currently offered by SYSPRO. This technology allowed for direct update of the SYSPRO database with a sub 2 second response time. The customer is a current SYSPRO user with a large distribution environment. The set a record for shipments this year end, averaging 2800 order per day. When you combine the shipments, put-away transactions and PO receipts the system probably averaged 20,000+ updates per day.
-Rich Dettinger, Vice President Sales- Manufacturing Systems Corp
Richard Dettinger is a software executive with extensive background in the Enterprise Software Industry. And has over 20 years of experience in selling and implementing enterprise systems in the SME market. A graduate of the University of Wisconsin and General Electric Manufacturing Management Program, Rich is currently Vice President of Sales and Support at Manufacturing Systems Corp, in Toronto, CA. For more information on Manufacturing Systems Corp, please visit here.
SYSPRO is the leading supplier of ERP software to mid-market manufacturers and distributors. SYSPRO has more than 14,500 licensed customers in over 60 countries around the globe. For more information on SYSPRO, or to schedule a consultation on how we can better serve you, please visit here.
