Sunday, July 4, 2010

Warehouse Management Principles

The main principle that drives distribution best practices are:  Know your situation and know your capabilities. You don’t necessarily need a new warehouse to handle increased business, and while it is better to take a technological route to increasing productivity, it’s quite possible that better processes are the answer, not newer systems.
Following are several best practices that companies have taken to maximize the productivity of their distribution facilities that go well beyond a throw-money-at-it-and-pray strategy:
_ Reduce your inventory
Run as lean an operation as possible. In particular, eliminate all the obsolete products in your warehouse, the so-called dead inventory that your finance department has resisted writing off because it assumes storage is free. Work more closely with your suppliers to time the receipt of goods as closely as possible to the time of use.
_ Be selective in what you stock and where you stock it
Examine your order pattern to determine which are your fastest-moving products, and then keep them at the front of the warehouse. If you use both regional and central DCs, keep the most expensive items upstream to avoid having to move that expensive inventory.
_ Add hours or shifts
Sometimes even the best technology and processes aren’t enough to satisfy customer demand, particularly during peak season. In these situations, many companies opt to increase throughput by increasing hours of operation. While your labor costs will increase, you’ll gain in the short term by not having to invest in capital equipment. As a long-term strategy, however, you’ll have to determine if running an extra shift year-round is more cost-effective than investing in technology.
_ Clear the dock area
Sometimes the best solution is also the easiest: Insist that every incoming truck have an appointment, so that every dock door is run off a firm schedule. The more predictable your operation, the more efficient will be the flow-through. Consider drop-and-hook for truckload deliveries, where an inbound trailer is unhooked and dropped off in the yard, brought via a jockey truck to the dock for unloading, and then returned to the yard. In any event, ask yourself how much staging you really have to do. You’ll hear all sorts of reasons and excuses why somebody can’t take a load off the truck and put it straight into a stack without ever putting it down, but those reasons are no longer valid.
_ Bypass the DC entirely
This strategy, known as predistribution management or more colloquially as the DC bypass, aims at delivering products directly to retail stores or the point of consumption rather than to a warehouse. The greatest benefit here is timeliness.
_ Outsource your warehousing to a third-party logistics provider
Before you consider hiring a 3PL to take over the bulk of your distribution processes, it’s vital that you first analyze your specific needs and determine if your company will be better served by letting a specialist run your
Source: SupplyChain Best Practices - DavidBlanchard

1 comment:

  1. Article Gives a basic idea of reducing your cost upfront.