Warehouse Performance

Develop an industrial vision in the structuring and conducting of logistical activities

The desire to become ever-more productive, while complying with regulations on working conditions, means that companies must regularly examine the soundness of their organization. This can involve industrializing processes, variabilizing costs, developing the teams’ skills, and seeking innovative technical solutions.

Warehouse productivity is based on four key elements:

  • Management of operational ranges and restrictions (basic operations, task sequencing and site layout, unloading/reloading, picking, workstation ergonomics, activity point management)
  • Human resource management:
    • Managing human resources (wage policy, organization and management, absenteeism, individual monitoring of productivity, skills and training)
    • Operational planning (receipt planning, forecasting loads, and provisional resource management)
  • Resource management:
    • Equipment (storage equipment, handling equipment, conveyors, miniload/depots/sorting)
    • Setting up, volumes and areas (sizing of areas and quays, inventory levels and stockouts)
  • Bottle-neck management, for automated sites.

As we see it, it is necessary to combine several approaches to gain an overview of all the areas for improvement for one logistics site.

1.    An initial zero-based budgeting-style analysis - aiming to reconstruct the site's Profit and Loss (P&L), based on the flows and time standards of current processes. This can show the main deviations from a standard budget. This type of approach allows deviations to be identified across a number of topics:

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  • Workforce (total productivity [deviation from the standard], absentee rate, engagement rate, hourly rate for each position and country, etc.)
  • Building infrastructure (recreational/technical area ratios, quay rotation, aisle width, storage levels, etc.)
  • Equipment and general costs (cost of handling machines, number of machines, cost of computer hardware, cost of subcontracting, etc.)
  • Management and support (management-style structure, supervision rate, methods such as inventories, picking relocation, etc.).

2.    A more in-depth analysis of operational range times provides a detailed understanding of operational processes in warehouses and can determine the efficiency of the value chain by measuring non-added-value time. This approach allows the causes of inefficiency to be addressed and process evolution scenarios (order aggregation and splitting, mechanization, or even automation of processes, etc.) to be envisaged.

3.    Lastly, we use detailed analysis grids to assess maturity in terms of resource planning and management, and to identify the related areas for improvement.

To be effective, this initiative must be carried out in collaboration with operational staff, even if the site is subcontracted. The related action plans must be fully validated by the sites in order for the implementation to be successful.

How can Argon Consulting help you?

  • Creating new sites:
    • Sizing the logistics tool:
      • Maintenance staff
      • Warehouse administrative and management staff
      • Equipment
      • Areas: quays, picking, stockroom, offices, recreational space
      • Storage equipment: racks, platform, cantilever, active control equipment, etc.
      • Indirect costs: taxes, guardianship, IT, etc.
      • Selection of an in-house or outsourcing policy for services
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  •  Relocating or opening a new site:
    • Costing of investments, costs of change
    • Preparing for relocation, operational planning for relocation
    • Managing relocations
    • Coordination and training of teams
    • Defining and implementing KPIs
  • Tender phases:
    • Assisting on the selection of a logistics provider:
      • Drafting specifications
      • Defining a panel of service providers to include in bidding process
      • Opening bids
      • Producing analysis grids, defining weighting criteria
    • Advising on the choice of partner
      • Negotiating and contracting
    • Advising on choice of Warehouse Management System (WMS) tools
  • Optimization of existing sites:
    • Auditing and identifying areas for operational improvement:
      • Processes of product reception, storage, preparation, load, inventories
      • Operating modes: flow storage vs cross docking, picking, splitting, batches
      • Warehouse layout
      • Picking route
      • Warehouse performance tracking indicators
      • Information technology development
    • Benchmarking:
      • Unit costs (wages, rent, machines, etc.) for each region and business sector
      • Operating ratios
      • Performance measures and key ratios for each sector
    • Identifying saturation thresholds and proposing operational alternatives:
      • For staff: switching to two shifts, recruitment, use of temporary staff
      • For areas: stock reduction, switching from flow storage to cross docking, storage densification, expansion, loading and unloading areas, etc.
    • Preparing and coordinating training seminars for operational or management teams

 

Case Studies

Definition of a target distribution master plan to support the development of high added value activities in Asia/Pacific countries