Roima’s Theses on How to Improve Intralogistics, Part II

Receiving is one of the most important phases in the intralogistics supply chain; a mistake in receiving affects the entire chain and can, at its worst, multiply the costs. For example, an inaccurate stock balance entry in receiving distorts the real stock situation and is immediately reflected in sales.
In receiving, all energy is often put into the transfer of goods, multiple handling, inefficient quality check process, reception buffers and clarification of purchase orders. What if a purchase order is missing – do companies and their workers know what to do then?
Depending on the nature of the items, receiving involves different kinds of handling operations. With the help of WMS, it is possible to execute handling operations efficiently and thereby minimize the execution time and automate possible entry routines.
When goods are transferred from vehicles to the warehouse in the optimal way, the material can be immediately brought under the control of WMS, first to balances, then to picking and finally to sales. At the same time, the lead time is shortened and handling costs reduced.

Measuring the quality of operations in the warehouse

The quality of warehouse operations can be monitored with several different metrics, such as picking accuracy and balance accuracy. In addition, delivery time is a clear, absolute metric.
Picking accuracy reveals how many errors (item or quantity) are done in relation to the pick rows. A good target level is 99%. When examining picking accuracy and the impact of errors, it is good to bear in mind that if you have 50,000 pieces, even such a small percentage as 0.5% amounts to 250 pieces, and with 500,000 pieces, it amounts to a total of 2,500 pieces. Thus, with big volumes, even a minor error percentage is significant – especially when studies show that the cost of a single picking error is 250 euros.
What, then, are the factors that affect picking accuracy? The starting point is a good balance accuracy, where error-free receiving and flawless stock location labels play important roles. Picking accuracy can be improved using different types of checking mechanisms, such as changing location check digits and light control, as well as barcode scanning to verify the item and/or stock location.

Optimized overall efficiency as the goal – Avoid adjusting parts

According to the general efficiency principle, processes have to be streamlined and standardized. It is easy to agree on this starting point – we have found this to be true during the dozens of big WMS deliveries we have carried out.
When intralogistics processes are streamlined and clarified, the warehouse’s overall efficiency and quality of operations will improve. The formation of warehouse processes has often happened gradually over the years, steered by temporary needs without looking at the bigger picture. Reacting to situation generates creative solutions into the process which require special attention and competence from the personnel, at the same time increasing the risk of errors. Correcting the processes often requires external help or an external stimulus, also because the changes may at first encounter strong resistance. However, it is good to bear in mind this basic truth: A supply chain is only as strong as its weakest link.

Examine the order-delivery chain openly

You can easily asses the efficiency of your order-delivery chain by the following means:
Find out how many times an order is handled before delivery. Each handling time increases costs and the risk of errors. By contrast, when the job is clear (the picker receives a notification of the next picking task automatically from the WMS system), straightforward (the WMS tells where to pick the following row) and smooth (the picker has taken a printed dispatch list and package label from the printer in advance), the efficiency and quality will improve.
Measure the lead time of one order. With big volumes, a long lead time can easily cause two problems: (1) susceptibility to errors increases and (2) the flexibility of the warehouse decreases. As a result, the company loses two important competitive advantages: short delivery time and good customer service.
In Part III, I will nail Roima’s Thesis #3: Dynamic, flexible and optimized warehouse. See you soon!