As a company’s retail sales steadily grow, so does the need for modern storage capacity for its products. At the same time, the requirements demanded of storage systems also grow, because the efficient processing of incoming orders is now a critical competitive factor for suppliers.
This is also an area in which there is a huge amount of dormant potential when it comes to increasing productivity. According to studies, the order picking process alone accounts for up to 55 percent of the total cost of storage. The main reason for this is the time taken by employees to locate the stored items and bring them to the picking station. It is the distances covered alone which devour almost two thirds of the total time warehouse employees spend working.
It is therefore no wonder that companies endeavor to minimize the time and effort spent in this area.
This six-step guide is designed to help companies review their internal processes in the warehouse with a view to exploiting underused potential:
- Classifying the inventory
- Allocating the right storage solutions to the inventory
- Automating processes
- Identifying the optimal storage location for goods
- Optimizing picking processes
- Implementing a comprehensive software solution
1. Classifying the inventory
How precisely the inventory should be classified depends on a whole range of factors. The key features to consider are the size and weight of the stored goods and the frequency with which they are retrieved. In doing so, it proves to be especially efficient to review ALL stored goods and not just concentrate on optimizing fast-moving goods. The 80/20 rule often used by companies as a criterion, which states that 20 percent of goods account for 80 percent of sales, falls short here, because conversely this would mean that the company fails to take into consideration 80 percent of its goods – and thus the greater part of the total storage space – in the optimization process. After all, it is the less frequently retrieved goods in particular which compel the warehouse employees to cover especially long distances and are thus the cause of added costs due to the fact that they are stored a long way away from the picking stations. As such, it is advisable for the company to find a total storage solution for all goods in the warehouse.
2. Allocating the right storage solutions to the inventory
However, this total solution doesn’t mean that a single strategy must be found for all products, because in most cases the goods differ in terms of their size, weight, retrieval frequency, and other special requirements concerning their storage conditions (for instance a cool or dry environment, etc.).
The manufacturers of material storage systems offer a number of solutions which sometimes differ considerably from each other not only in terms of the available options, but also investment costs. They range from simple, manually managed pallet storage systems and shelving to technologically advanced, fully automated horizontal carousels and vertical storage lifts.
The task of each individual company is to identify the right shelving system for each product group.
It can generally be said that the use of pallet storage systems for especially frequently retrieved goods is now widely accepted practice at a number of companies (particularly in the area of e-commerce). However, it should be qualified by stressing that this form of storage requires a great deal of space. If a number of different products have to be accessed quickly and storage space is limited, carousel or high-bay storage systems are ideal, because their highly dense design permits them to accommodate a large number of goods in a tight space and these goods can also be conveyed directly to the picking station using the goods-to-person principle.
3. Automating processes
Larger quantities of goods can be stored and retrieved more quickly and with greater accuracy with the help of automated processes, thereby significantly increasing productivity. Further advantages include:
- Less space needed thanks to the use of high storage which makes optimal use of the available ceiling height
- Higher picking accuracy of up to 99.9%
- Better monitoring and management options thanks to software-assisted control systems
- Better inventory management – minimum stock levels and missing stock are identified more quickly
- Improved ergonomics in the workplace, because the goods are transported directly to the warehouse employees. This puts a stop to frequent lifting and bending movements.
4. Identifying the optimal storage location for goods
The better the way in which the various goods are stored, the more efficiently their retrieval can be managed. In addition, the amount of storage space needed and the distance covered by employees can be minimized through skillful distribution of the goods. This also brings about improvements in terms of:
- Retrieval times
- Picking accuracy
- Work processes
- Search times
However, in order to find the optimal position for each individual product within the warehouse, further data is required in addition to information about the goods (size, weight, etc.):
- Retrieval frequency
- Number of retrieved units in each case
- Number of units to be stored
- Product-specific storage requirements
- Turnaround frequency
Warehouse management software then allocates the optimal location to the goods based on this data.
5. Optimizing picking processes
Once the goods have been classified and assigned to the right storage system, the picking process has to be optimized. This is of particular interest to e-commerce businesses, because thousands of products are picked there every day and even small improvements can thus make a significant difference.
Three picking strategies in particular can be used here:
The creation of batches (batch picking) is a good way of organizing processes more efficiently. Particularly in the case of goods which are retrieved less often, picking them in a batch presents a fantastic opportunity to save time, because the warehouse employee can work through several orders on one single trip.
Alongside this strategy, zone picking provides an opportunity to divide the storage area into various sections (zones) and assign individual employees to each zone. Here they process the individual orders, but only the products located within the zone to which they have been assigned. Afterwards the order is passed on to the next section where once again the relevant goods are picked. This principle of passing on the orders through the various sections is especially suitable for companies which store goods with differing retrieval rates (high and low picking figures) and diverging storage system requirements due to their design or size. In this way, the various systems can be efficiently set up in individual zones.
The combination of both strategies outlined above is known as parallel picking. Here the individual orders are processed at the same time in all zones and forwarded to a central station where they are put together ready for shipping. Due to its complex structure, this approach is mainly suitable for companies which handle a large quantity of orders on a daily basis and have a comprehensive range of stock which requires diverse storage systems and zones.
6. Implementing a comprehensive software solution
This is ultimately about bringing the various existing software solutions in the newly organized warehouse under one roof. The company’s ERP systems must be merged with the programs for controlling the storage warehouse and finely tuning the picking processes. A number of manufacturers in the intralogistics industry already offer warehouse management software which can be adapted relatively easily to the needs of individual companies and incorporated into their existing programs.
After all, only when all the systems are linked in a way that allows them to communicate smoothly with one another and be accessed centrally can the processes within the warehouse be transparently organized and efficiently managed.
Once this is the case, there is no longer anything standing in the way of successful and productive warehouse management.