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LEAN WAREHOUSEOPERATIONSwww.fourprinciples.com
BACKGROUNDWarehousing’s historical core responsibility has been the storage of goods. However, the scope andcore responsibilities of warehouse management operations have evolved to deliver high level inventorymanagement, swift receiving and shipping dock management, accurate and flexible customised pick & packservices, and state of the art storing and safekeeping solutions for all goods.Best practice warehouse services enable companies to meet their strategic delivery needs by improvingmaterials flow, order pick & pack, replenishment, dock operations and maintenance of a swift informationflow from source to delivery point, thus facilitating the coordination of the entire supply chain to getpurchased materials in the right way, to the right place, and in the exact time they are expected by the nextlink in the supply chain up to and including the final consumer.Because of the development of an increasingly integrated global economy market with production facilitiesscattered around the globe, warehouse operations are becoming a key factor to cope with demandvariations, and inventory management is a critical component of a company’s financial performance, smartwarehousing has become a vital cog within supply chains because it holds so much potential for improvinglead time and cost reductions.Copyright 2017 Four Principles Management Consulting FZ-LLC2
CHALLENGESThe biggest challenge on today’s warehouse managers is to increase productivity and accuracy, reduce costand inventory while improving customer satisfaction, which ultimately means optimised goods rotation, lessfrozen capital and efficient use of all resources assigned.IN AN INTEGRATED SUPPLY CHAIN ENVIRONMENT, WHERE OFTEN ENOUGHWAREHOUSING IS CONSIDERED AS A NON-VALUE ADDING ACTIVITY, APPLYINGLEAN CAN ENSURE THE COMPANY HAS THE RIGHT VISIBILITY OF THE VALUEADDING ACTIVITIES CARRIED OUT AT THE WAREHOUSE IN ORDER TO GAIN ACOMPETITIVE EDGE BY: Delivering low-cost and on-time service todistribution centres, productive facilities and/or points of consumption through improvingefficiency and productivity while reducingcosts, and improving quality and accuracy inpreparation of orders Improving stock control to prevent productionor service disruptions due to lack ofmaterial, picking disruptions due to lack ofreplenishment, loss of sales opportunities,and unnecessary purchases Improving the information flow, traceabilityand service rates between the warehouseand the rest of the cogs in the supply chain Managing the constantly increasingcomplexity of the market by improvingflexibility and showing high changeadaptability to meet the customers’fluctuating demands due to seasonalities,rise of new sales channels, etc.Copyright 2017 Four Principles Management Consulting FZ-LLC1
FOCUS AREASWaste in warehousing processes represents tremendous savings potential and thus it should and can,using the right Lean tools, be identified and minimised. While in most warehouse services picking activitiesgenerate more than 55% of the costs, Lean principles, Kaizen methods, and re-engineering approaches canbe applied in every step of warehouse management. The right Lean Solutions can improve product quality,reduce lead-time and reduce working capital.AREAS OF WASTE OFTEN IDENTIFIED IN A WAREHOUSE LAYOUT ORENVIRONMENT:TRANSPORTATION / CONVEYANCEUnnecessary internal transport that resultsin added cost and lower productivity such asstoring fast moving inventory in the back of thewarehouse.INVENTORYAny activity that results in excess – or lack –of inventory or placed in a different locationwhere required. Poor visibility or inaccurateinformation over the existing inventory in thewarehouse logistics management systems willimpact the preparation of orders and ultimatelyresult in stock being unavailable for sales orshipping, thus increasing the frozen assets inthe company.MOVEMENTUnnecessary movement of people, suchas walking, reaching or stretching, dueto inefficient layouts, lack of ergonomicworkstations, manual picking that involvesmore than just one “touch” per item to preparethe order and make it ready to be shipped orpicking trails not optimised.OVER-PRODUCTION / OVER-PROCESSINGStocking and delivering products before theyare needed. Storing palletised goods whichshortly will be unpalletised.DEFECTSActivities that cause re-work, returns oradjustments, such as customer guidelineswhich require too many manual operations,or delayed customer instructions which arereceived after the order was prepared, billingmistakes, inventory discrepancies, or materialsmissing, damaged, defective, wrong ormislabelled.SPACEThe use of space that is less than optimal, suchas low or excessive fill-up rates of trailers,containers or cartons, inefficient warehousemanagement or use of warehouse space,racking systems not aligned to the kind ofproduct and expected flow.WAITINGPeople, systems and material delays dueto wasteful processes. Waiting for pickinglanes replenishment, material or shippingapprovals, waiting for data or waiting for correctmaterials and services to arrive due to poorreplenishment planning.Copyright 2017 Four Principles Management Consulting FZ-LLC2
LEAN SOLUTIONSDesigning and implementing Lean warehouse services can have a great impact on the total supply chain output.BY APPROACHING THE WASTE FOCUS AREAS MENTIONED ABOVE WITH LEANSOLUTIONS, SOME OF THE OPPORTUNITIES THAT RESULT TO REDUCE LEADTIMES IN WAREHOUSING INCLUDE: Handling time reduction in order picking, putaway, palletising and shipping Reduction in time spent checking and lookingfor inventory Reliability of information to coordinate therest of the supply chain Increased flexibility to adapt to changingmarket conditions and customerspecifications Reduction in truck and containers loading andunloading timesWe implement Lean Solutions to warehouse management operations. The solutions must fit the challenges.Copyright 2017 Four Principles Management Consulting FZ-LLC3
LEAN SOLUTIONS - CONTINUEDPULL Enable FIFO at the batch levelReduce inventory levels throughout processesAvoid over-productionIncrease visibility of bottlenecks in the processONE PIECE FLOW Enable FIFO to a single product / service levelCreate transparency of the real process lead timeReduce lead timeReduce inventory levels throughout processIncrease qualityReorganise the processes in the right sequenceTAKT Process transparency Balanced distribution of the workload acrossresources Process flexibility Ability to plan resource capacity and / or improveforecasting Optimal efficiency in resource utilisationZERO DEFECTS Enables problem root cause analysis and solvingPrevents problems snowballing through the processIncreases qualityEnables an open culture of problem solving vs. fingerpointingCopyright 2017 Four Principles Management Consulting FZ-LLC4
TANGIBLEIMPROVEMENTSLEAD TIMECOST Warehouse Lean project reduced the actualprocessing time of picking and packing by 50%,thereby shortening the total lead time by 25% Optimising cartons filling rate decreased thebuying needs by 46% and lead to a reduction of18% in transportation costs while reducingenvironmental impact Optimising the warehouse layout reduced storingtimes by more than 25% and picking times by 30% Lean warehouse to dispatch workshop improveddock scheduling and loading plans which improvedfilling rates of transports and a reduction in truckloading hours needed, reducing the lead timebetween 10% to 30% varying on the differentSKU categories Inventory accuracy improvements due tooptimisation and linking of ordering, data entryand inventory management processes resultedin a reduction of 20% of inventory required tosupport a growth strategyQUALITY Lean picking workshop resulted in a decreaseof picking mistakes by more than 90% due theto the standardisation of the picking processand its interfaces with the order generationand invoicing processes Optimised handling approaches and Lean ERPsystems impacted a decrease of picking andshipping mistakes by 40%Copyright 2017 Four Principles Management Consulting FZ-LLC5
Should you be interested to know more about our Lean servicesregarding this topic, then please contact us:Tel 971 4 368 2124Emailinfo@fourprinciples.comDubai, UAE Office AddressDubai Media CityBuilding 8Office 212P.O. Box 502621Dubai, UAECopyright 2017 Four Principles Management Consulting FZ-LLC6
using the right Lean tools, be identified and minimised. While in most warehouse services picking activities generate more than 55% of the costs, Lean principles, Kaizen methods, and re-engineering approaches can be applied in every step of warehouse management. The right
