Warehouse managers, whether they are responsible for multiple facilities equipped with the latest in technology, or a simple operation that relies more on spreadsheets and clipboards, share a common goal—to run an efficient facility that gets product in and out in a timely manner.
Granted, some are more committed to improving their overall operations than others, but regardless of where they are on their journey, there are plenty of tools at their disposal to raise the bar on productivity.
Crawl before you walk
During his career, industry consultant David K. Schneider has watched the warehouse—and and what goes on inside of the four walls—become more elevated in the minds of supply chain executives. What was once considered a “cost control” issue is now viewed as a potential profit center that has a direct bearing on the bottom line for many companies.
“For a long time, businesses treated distribution and logistics and those who managed these functions as ‘the back room guys, the box kickers,’” he says.
Schneider understands the reasons for that perception. Years ago, when supply chains were referred to as “physical distribution,” each function, from procurement to accounts payable, operated independently from one another. There was hardly a holistic or “integrated view,” explains Schneider.
While working at a lumber company in the late 1980’s, Schneider saw an opportunity to streamline his company’s process enough to not only get lumber in front of his customers more quickly, but to get the financial transactions completed before the paper invoices hit the mailbox.
“This freed up over $2 million in working capital,” he remarks, simply because he was able to successfully “tie all the separate silos together.”
Schneider was not alone in realizing the potential impact of tying it all together.
“Enlightened companies started to figure out in the 1990s that if you paid attention to your warehouse and distribution, you might gain an extra 9 or 10 points of profit. Next, they started to understand that if they managed it better, they could free up additional working capital and invest it elsewhere, and maybe get an 8, 10, or twelve point return. Furthermore, if they were to reinvest in new systems that could help reduce inventory levels, they could create better margins or increase sales.”
As a consultant, Schneider chose the food and beverage industry as a key target, in part because the industry is comprised of so many smaller operators whose operations could benefit from his services.
There are a “significant population of players” who still use older technology, he explains, or in some cases, no technology at all.
“You would be surprised at the number of AS/400-based systems that are out there, or the number of companies that have no systems at all.”
Fortunately, there are myriad ways to boost warehouse productivity, says Schneider, and the fundamental steps don’t require anything more, frankly, than rolling up your sleeves.
“There are all sorts of things warehouse managers can do without spending capital. It just takes effort,” he says.
The first step is to evaluate your process, Schneider emphasizes. “Does each step make sense? If not, you’ve got a process problem.”
Schneider is a big proponent of process mapping, which can be done internally or in conjunction with outside help.
For example, “You can have someone come in and map your process. Then, have your own people map the process with white boards, flip charts, and sticky notes. After conducting a gap analysis, you’ll discover a variance. Look at it objectively, then decide which one is better and that will become the process to follow.”
Of course, once you establish a plan, you need to stick to it. It sounds trite, he says, but many companies deviate from the plan, in other words, “they don’t execute,” then are disappointed when they’re not getting the results they expected.