Ideas for improving warehouse performance

Coins in the couch – Low hanging fruit

When you were little, (or maybe not so little), did you ever discover coins under the couch cushions? Or maybe you recently got out the new season coat and found a ten dollar bill in the pocket. Either way you were a bit excited and proud of your serendipitous endeavours. Making improvements in the warehouse can be similar to finding coins in the couch. The improvements are there, you just need to look.

For over 20 years I’ve had the opportunity to work with some great minds in warehousing operations and supply chain management, and learn from their experience. Early in my career I worked with large high volume distribution centres designing operations to efficiently meet current and forecasted customer demands. As supply chain technology evolved and warehouse management systems (WMS) became a standard practice for modern facilities, I noticed it was more important than ever for companies to have a solid foundation of processes and procedures to maximize their investment in technology.

Today, I frequently meet with managers of manufacturing raw materials warehouses or small to mid-sized finished goods distribution centres considering technology but who could first benefit from improving their fundamental processes or even replacing their processes all together. To help managers identify where to look for improvement ideas, I’ve reached out to my network of great warehouse resources to develop a living list of low hanging fruit ideas for improving warehouse performance.

Management has 3 primary tools at their disposal to help improve productivity, velocity, and customer service levels: Labour, Space, and Equipment. Frequently two other elements, technology and inventory, are debated as potential tools for a warehouse manager. For purposes of this article we are purposely avoiding the discussion and application of automated material handling technology. Regarding inventory, I propose a typical warehouse manager has very little influence over the level and type of inventory in the warehouse. You are generally told what is coming in (by purchasing or demand management) and what is going out (by orders and customer service). Your only influence is to protect the inventory in your position and make it easily accessible to satisfy customer demand.

So let’s review the low hanging fruit concepts you can consider to help improve the efficiency of your warehouse operations and find quarters in the couch. As we discuss improvement ideas, keep these key points in mind:

1. Labour costs typically consume at least 60% of a warehouse budget

2. Pick labour can consume up to 70% of warehouse labour

3. In a typical supply chain the warehouse is the last place to touch the product and potentially impact customer service levels and perceptions

4. You are paying for space even if you don’t use it, or if you use it for non-active product

5. And as shorter delivery lead time expectations become the norm, your operations should be setup and organized to be able to rapidly respond to changes.

As you think about process improvement ideas and changes you can make to your operations, try to prioritize the projects based on impact to these value levers.


This is not a political statement. Rather a non-statistical observation. From my experience, people with a military background make better warehouse managers. I’m not certain if it’s the type of people attracted to military service or if the military trains people how to be organized, but people with a military background tend to be more prone to organization and implementing our first topic, 5S principles.



5S has long been part of successful manufacturing processes. A natural extension is applying these principles in warehousing and distribution. The pillars of 5S are:

1. Sort – eliminate whatever is not needed

2. Set In Order – organize, identify and arrange everything in a work area

3. Shine – regular cleaning and maintenance

4. Standardize – make it easy to maintain; simplify and standardize

5. Sustain – maintaining what has been accomplished

At its core 5S supports establishing a visual workplace and is a part of Kaizen — a system of continual improvement —a component of getting lean. The 5S program focuses on having visual order, organization, cleanliness and standardisation. The results you can expect from a 5S program are improved profitability, efficiency, service and safety.


Set In Order & Shine

In the warehouse, the easiest improvement you can make is to keep things clean and organized. Any warehouse can be made more productive and efficient by simply making sure the operations are well maintained, organized, and clean. A warehouse manager once told me the two best tools he had available were a paint brush and a broom. His point was work flows more fluidly through the facility when aisles, storage sections and processing functions are clearly marked and maintained. A dirty, cluttered and disorganized facility is invariably more costly to operate. It doesn’t take much to mark aisle boundaries with a yellow line. Even if the layout if not ideal, at least you will have some indication if pallets and equipment are miss-stored and potentially blocking work flow.

Consider a large parking lot at a retail store. On a clear summer day you may be able to get 100 cars safely parked in the lot. How well utilized is the same parking lot when it snows? Chances are you will get up to 25% fewer cars in the lot primarily due to drivers not seeing the marked spaces and essentially parking wherever they want. The same concepts apply to warehouses and are a great first step in implementing a visual management system.

Keeping things clean helps support pride in workmanship and improves safety. At a minimum buy a large rugged garbage can, shop broom and dust pan to place at the end of every other aisle. This will allow operators, managers and other employees to keep the aisle clear of debris. Some companies go so far as assigning specific sections of the warehouse to a team and post the team information at the end of the aisles. The teams are responsible for keeping their sections clean and maintained.

There is efficiency in order. In a warehouse there should be a place for everything and everything should be in its place. The warehouse should have clearly marked areas for traffic, processing and storage. This will help ensure product is stored properly, product is kept secure, and the work environment is safer. Speaking of safety, I hosted a lean tour of a large distribution centre in Atlanta. Along with seeing many lean process ideas I learned they had a strong focus on employee safety. For instance, one thing everyone did (and we received training pre-tour) was the practice of Stop, Look and Point before your crossed an active equipment travel aisle. This is a practice they adopted from Toyota.

On a trip to England to observe warehouse practices, I learned all employees and guests in the warehouse are required to wear safety vests to make them more visible to equipment drivers. While this is a regulation in England, I expect it is something you could easily do in your operations to help ensure employee safety.


Warehouse layout can have a big impact on labour productivity and space utilization. For example, aisles should typically run the length of the warehouse from end to end without obstructions or dead ends. You can also consider adding cross aisles. A properly positioned cross aisle can reduce travel time from 6 –13%. Keep in mind the aisle does not always have to be down the middle of the warehouse. Skewing the aisle toward the front or having aisles at less than 90 degrees tends to reduce travel time more especially with an ABC slotting strategy.

But keep in mind it is possible to have too much of a good thing. More cross aisles equals reduced travel times. Too many cross aisles equals reduced storage density and number of bins. Effective cross aisle use is a balance between travel time and space utilization.


Standardize Bin Numbering

To help reduce confusion and inefficiency make certain to implement a bin numbering system that can be used to easily and systematically identify each warehouse bin. A numbering schema utilizing some form of identification for the zone, aisle, bay, level, and position is ideal. Additionally, all bins should have a common reference point to allow an operator to generally identify a bin.

When planning bin addresses, factor in expansion potential. For example, rack level assignment should ascend from the floor; A, B, C or 1, 2, 3, etc. Within each shelving or rack-section level, assign numbers to each position, ascending from 1 to “n”, from left to right as you face the section.


Creative Labeling to Save Time

When it comes to assigning identifiers to bins (labels) there are simple things you can do to make reading the labels easier. In many warehouses labels include a bar code identifier used for scanning by a radio frequency (RF) mobile device.

In these instances the labels should be positioned for line of site scanning by the RF device. Even if you use long range scanners that can reach up to 40 feet, your operator still might have an issue if they are not in the correct position to effectively scan the label. This is especially true for high bay rack storage and labels positioned over large bulk areas. Take for example high bay rack storage. If labels are placed on the beam below each pallet position, operators may not be able to easily scan the upper bins from the ground floor. If the operators are working with man-up order pickers, the issue is resolved by going up to the bin level and scanning the label.

There are, however things you can do to allow easier scanning from the ground. For example, you can either place the label on the beam below the bin to make it more easily accessible from below or hang an angle placard from the bottom. Alternatively you can put all the labels at the ground level. In this scenario, the operator identifies the correct level, scans the corresponding label, then proceeds with completing the task.

For bulk areas, companies either apply bin labels on the floor or hang them from the ceiling. The challenge with floor labels is they tend to wear away over time while hanging labels are up out of the way. However, hanging labels create another challenge if the operator cannot access the aisle from multiple sides. If they enter the bin lane from the front they can easily identify and scan the bin label. However, if they enter the lane from the other side, they will need to manipulate their body and scanner to effectively see and scan the label. To get around this, you can hang a two sided angled sign or consider applying the label to a piece of PVC pipe as opposed to a flat angle bracket. The curved nature of the pipe will allow the operator to identify and scan the label from multiple sides.


90% Savings

I have a customer who needed to label all their bins. They received an estimate from a traditional labelling company for $5000. They ended up using a web service to create their own label format then generated a PDF version of the label. Next, they sent the PDF files to their local print company and had all the labels printed for $500. A 90% savings. Granted creating labels is not an on-going expense, but even small savings can add up.


Lego Layout

I attended a presentation (Fueling the Fire of Kaizen Throughout the Lean Enterprise) by Mark Preston, a Lean Leadership expert. Among the many interesting concepts he presented was the idea of a Lego Layout. A Lego Layout is a scaled three dimensional representation of a work centre or facility. The idea is to create a model of the work environment and allow operators to conceptualize the work flow. With the model, team members can then begin to make system wide or local work area process improvement recommendations. While this model should not replace an actual scaled layout drawing of the facility, it does inject a level of fun and creativity into an otherwise drab two dimensional approach. Operators will tend to be more engaged, previously unidentified ideas could result, and the finished model, strategically placed in the lobby should generate much interest and discussion with visitors.


Involve employees

The most valuable resource at your disposal is usually the people who work in the warehouse. By asking employees for input on ways to improve the operation, you are moving to the real source of how the warehouse operates and where the real issues lie. If anyone has ideas on how to improve the warehouse, it is those workers on the front line. Either formal or informal processes have been successful in gathering information from warehouse staff that has improved operation efficiency in many companies. Involving those closest to the operation not only generates ideas but increases the likelihood of a successful implementation.

As an example, getting employees involved in designing pack stations should result in productivity improvements for the packing function. Getting the employees involved to help define the proper size, height, and configuration will make a big difference in their attitude and performance.

A focus on improving the functions where people spend most of their time will maximize the potential savings. During facility tours it is common to see pack stations tailored to the operators preferences. For example, tools will be positioned in specific places, notes will be posted where they are easily referenced and supplies are readily accessible. Take a look at your work stations and see if there are ideas that can be implemented in other areas or operations.

And encourage employees to take ownership and accountability for their work areas. I see many warehouses where different work sections are cleaned and maintained by operators. Many times a banner is seen at the end of an aisle saying this aisle or section is maintained by the employee, with their picture.

One of my customers demonstrated how one plus one can be less than two. They frequently ship multiple individual full cases to customers. Through a rough analysis they determined two full cases taped together cost less to ship than two individual cases. Of course this assumes both cases are going to the same ship to address.

Continue to: Ideas for improving warehouse performance (2)…

Contributed by: HighJump Software Inc & iWMS Supply Chain Software (the SA channel partner for HighJump)