Ideas for improving warehouse performance (2)

continued from: Ideas for improving warehouse performance 


Most people want to do a good job, know where they stand, and be recognized for their performance. One easy way to accomplish this, and also improve productivity, is to develop a simple process measuring overall performance and post results in the warehouse. It does not have to be a complicated process.

Simply measuring and recording the overall performance of the warehouse can generate positive results. If possible, individual performance can be added as a metric (standards) later after the organization, group, or team’s key performance indicators (KPI) are in place.


Key Performance Indicators

Are you a best-in-class operation? Do you have a bad warehouse? Not sure how you stack up against your competitors? One of the best ways to answer these questions is to begin the process of benchmarking. Merriam-Webster defines benchmarking as “the study of a competitor’s product or business practices in order to improve the performance of one’s own company.” Basically, benchmarking helps determine how good ‘good’ is, and how they are making the standard.

Benchmarking helps your company to compare how well you are performing against others and identifies whether your company is at a disadvantage. Whether you are benchmarking to increase productivity or reduce operating expenses, driving best-in-class performance may increase efficiencies, profitability, and improve customer service.

While the core of Benchmarking involves developing a better understanding of how your operations and processes are performing relative to others, these same metrics can be used to establish a baseline for improvement. Whether your goal is to become the best of the best warehouse, or simply make small incremental improvements, you should consider starting by establishing current state measures of common warehouse performance metrics.


Once organization-wide KPIs are in place, you should next consider implementing individual performance metrics (standards) to support the KPIs, and incent individual performance. A standard is:

·         An accurate measure of a specific operation(s) used by management to communicate objectively with employees.

·         A work measurement tool providing an accurate means of comparing what happened to what was supposed to happen.

·         A means of quantifying the time required to perform a unit or units of work utilizing defined methods and procedures.

·         A minimum expectancy and quality level required on a given work function.

Regardless of the equipment and technology you use, people and processes make the biggest difference driving a significant majority, typically 60-75% of an operating budget. Establishing and implementing standards covers a spectrum of sophistication and is an evolutionary process starting with establishing a historical baseline for performance. However, using historical performance metrics is similar to driving while looking in the rear-view mirror. You may get where you are going but the trip will likely take longer than needed.

Companies using only historical performance data commonly realize 50-60% labour utilization/productivity as a group. Once historical performance data is available, companies can trend and report the information to operators as a step to move productivity into the 65-75% range. The improvement is due in part to creating a competitive atmosphere among operators and quite possibly the Hawthorne Effect (people tend to perform better when they think they are being observed).

With historical performance reporting in place, next is defining the best way to perform a task under normal operating conditions, or a preferred method. A preferred method is a user friendly description of the best way to perform a task under normal conditions and is supported by a detailed list of instructions on how to best complete a task. These instructions then become the basis for employee training documentation. Keep in mind the preferred method may not always be the fastest or easiest way to perform the task but is established to balance productivity with repeatability, accuracy, and safety.

With preferred methods defined and implemented, companies typically realize 80-90% productivity. With preferred methods in place, companies can then begin to experiment with engineered standards and incentive programs to drive productivity into the 95-110% range. However, implementing credible engineered standards and fair incentives typically requires investment in technology to support real time tracking and management. While picking consumes a majority of the labour budget and can be improved with standards, all other functions in the warehouse can benefit as well.


Whenever a UPS driver leaves his seat, he places his package car key on his pinky finger. Here’s why: In 1921, UPS began to create work methods for its drivers to ensure their safety and get packages to their destinations faster. They found misplaced keys were a common driver issue. They devised the current method of requiring drivers to place the truck key ring on their pinky finger after unlocking the bulkhead door and retain the ignition key in hand before returning to the car. This frees the drivers’ mind from thinking about which pocket the keys go into, and prevents drivers from accidentally locking the keys in the cargo area.

When you consider about 70,000 UPS drivers make an average of more than 200 stops per day all using this method, the saved seconds add up and those saved seconds become minutes throughout the day for each driver.

The methods and standards created by UPS’s industrial engineering team come from years of careful measurement and study of what’s most efficient and safest for the drivers.

Preferred methods can be easily applied in the warehouse resulting in immediate benefit. For example, parking the pick pallet closer to the pick bin will result in eliminating 4 steps per pick. For an operator picking 1000 lines per day, this reduces the operator travel distance by 2 miles (2000 steps per mile). Whatever metrics you apply to improving your pick process, through training operators on preferred methods, the savings will be relevant.

Ideas for improving warehouse performance (3) & (4) will be published in the next 2 weeks.

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