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Waste Not, Want Not: Audit Warehouse Operations for Inefficiencies

You can never be too busy to review how warehouses 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 disability 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. However, 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.

Who should be responsible for this evaluation? Each year your operations manager should give management an update on changes in product flow so you can see they are actually staying up to date. This may mean implementing Kan Ban systems, changing assembly lines and possibly redefining roles of laborers in the warehouse. Do not be afraid to ask if they share an updated value stream map of your processes.

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.

You should be aware to implement some of these improvements may require an investment in new equipment and technology. Do not let that stop change, just make sure you see a plan justifying the financial investment. It is a good practice to have senior management challenge operations to make sure they have thought through all consequences of change they are recommending.

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 have implemented improvements, measure your new-and-improved cycle time. Knowing how much you have shaved off the baseline metric can be a powerful motivational tool. Use it to drive continuous improvement.

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 is important to carefully weigh the costs vs. benefits. You will also need to evaluate compatibility issues with your existing accounting or resource planning systems. Train employees on how to use the technology; otherwise, you will not reap all of its potential benefits.  Finally make sure your operations team has a full grasp on the skill set of your team implementing and monitoring your changes, is there a written plan?

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 financial advisors before auditing your warehouse for guidance on best practices.

For more information, contact Mark Thomson or your ORBA advisor at 312.670.7444. Visit to learn more about our Manufacturing and Distribution Group.

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