Many lean purists believe that all warehouse functions are nothing but pure waste. Unfortunately, efficient and effective logistic operations in the global economy create significant competitive advantages and simply cannot be ignored. The Lean warehouse is necessary and plays a crucial role in the entire supply chain. The use of facilities for inbound material logistics and outbound finished goods distribution are the bridges that connect all the imbalances and lack of flow in the entire stream. Leaders inside the warehouse must be knowledgeable about Lean warehouse techniques. By using lean principles, warehouses will see a remarkable improvement in organization and product flow as well as their ability to meet the demands of customers.

Creating a Lean warehouse is not something you accomplish overnight. It takes vision, planning, strategy, tools and tactics. You need to develop team members into problem solvers and then provide a leadership infrastructure to support their efforts. Identifying and solving problems may seem simple enough, it can prove to be elusive for some leaders.

The results achieved through your Lean warehouse efforts can be powerful. Improved customer fill rates, decreased inventory levels, decreased inventory carrying costs, improved inventory accuracy, increased asset and team member utilization are all benefits of a Lean warehouse. The concept of standardization is a key Lean warehouse principle. Creating standardization of processes is to create tasks are easily repeatable with planned zero waste. The creation of standard work allows your warehouse team to understand processes from the point of view of inputs, procedures, timing and outputs.

The visibility of material flow, inbound logistics, internal warehouse flow, and outbound logistics are crucial to the Lean warehouse. We need to understand the flow of material and support the perfect order, which is the right quantity, at the right place, at the right time in the right quality. The lean concept of visual management allows leaders to understand the score of the operation so they can make decisions in real time that impact the overall flow of material to the customer. This concept is counterintuitive to many warehousing operations. Most warehouse operations simply react to what orders show up at the facility on any given day.

The goal is to create a Lean warehouse, where problems are visible and where we fix problems at the root cause. Accomplishing this will create the Lean warehouse and drive powerful business results.

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Lean concepts are well known in manufacturing, but progressive managers of warehouses and distribution centers are starting to understand what lean can do for them. Warehouses and distribution centers are extensions of manufacturing operations. When leaders understand this principle, then using the same lean principles makes perfect sense in achieving total alignment within an organization.

Check out this informative video on the Lean Warehouse by Georgia Tech Supply Chain & Logistics Institute.

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But, no matter how great your barcode solutions are, you must have these items in place for your warehouse strategy to work:

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

To many, this might seem common sense, but we all know that common sense is not common practice.

Enjoy the post and learn more about Ginger after the article.

Let’s face it. We live in a technology driven world that demands speed in every realm of life.

As consumers, we expect companies to deliver orders and provide customer service as quickly as possible. In our businesses, we require instant retrieval of current information to run a successful company.

Think about it”if you offer the same products at the same price as your competitors”yet it takes you longer to deliver the goods”chances are that customers may opt to shop next door. Then you lose both the sale and the customer, which isn’t the desired result.

Barcode Solutions: Big Benefits For All

By design, barcode solutions”which are a type of automatic identification and data collection system”help companies compete in today’s competitive landscape. With affordable hardware and specialized software for expediting everyday tasks, such as managing inventory and tracking assets, you can not only deliver orders faster and improve customer service, you will:

• Optimize inventory levels

One of the biggest drains on cash flow is excess, slow-moving, and/or obsolete inventory. Barcode inventory tracking allows you to manage and optimize your inventory so your business is back in control.

• Respond quickly with real-time data

Businesses looking for a competitive advantage must have instant access to information. With barcode systems, companies can analyze data in real time so they can quickly respond to industry changes and customers’ behaviors.

• Reduce errors

Data entry errors and slow or inaccurate updates create problems that can negatively impact a company’s entire operations. Automated systems dramatically reduce the potential for error.

• Control expenses

In today’s economy, controlling operating expenses is vital to business’ bottom line. Barcode solutions promote efficiency, which helps organizations reduce or reallocate personnel expenses while increasing productivity.

• Increase customer satisfaction

We all want to attract and retain customers. Yet doing so can be difficult. For businesses to succeed, they must meet”or exceed”customers’ expectations. Did you know barcode solutions can improve retention? For example, they can ensure deliveries are fast and accurate, which leads to lasting loyalty.

The Price of Success is a No Brainer

For companies of any size and industry, the relatively low price of barcode scanners, printers, mobile computers, and labels makes the decision to invest in a barcode solution a no-brainer. Having organized, accurate data directly impacts an organization’s overall health.

Luckily for business owners, the cost of this success is priceless!

About Ginger Ebinger

Ginger Ebinger is the Marketing Manager for SystemID Warehouse, the nation’s leading value-added reseller of AIDC products and solutions for small-to-medium-sized businesses. An evangelist for all things barcodes, Ms. Ebinger routinely shares helpful information that keeps companies competitive.

The post Barcode Solutions: Gain a Competitive Advantage and Better Inventory Control appeared first on 6sigma.

Read more about Robert after his article.

Every company needs an inventory management system. Whether you’re in wholesale, retail, service or virtually any other industry, you have to keep track of your products. Here are five reasons why it’s so important to use small business inventory software:

1. Stop products from spoiling.

If you have too many products in your warehouse, you increase the risk that they will become obsolete, damaged, spoiled or stolen before you can sell them all. Depending on which industry you’re in, you’re probably more worried about some of these risks than others. For example, if you’re in the technology industry, you don’t want your expensive products to become outdated, damaged or stolen, but you probably don’t care about their freshness date. Food producers, on the other hand, put product spoilage high on the list of inventory management concerns.

2. Stop paying hidden costs.

Having too much inventory doesn’t just increase your risk of paying more in the future; it costs you more money all the time. Where will you store the extra inventory? You may need to buy a larger warehouse than you really need or rent trailers if your warehouse isn’t big enough. Plus, you have to provide security to prevent theft. And don’t forget about the money that’s tied up in inventory that you could have used to hire personnel or grow your business in other ways.

3. Stop disappointing customers.

On the other end of the inventory spectrum, if you have too few products in your warehouse, you face a whole other set of risks. Your customers don’t want to wait too long to get their orders shipped to them. So if you run out of the products they’re looking for or if your picking, packing and shipping processes are too slow, you could drive customers away.

4. Stop wasting time.

Inventory management can be time-consuming, especially if you’re trying to do it by hand or in Excel spreadsheets. Speed is everything in business. How fast you reorder products, ship customer orders and update your inventory records could make or break your company. That’s why an automated inventory management system is so important. Scanning product barcodes and setting up automatic reorder points can save valuable time by streamlining complex processes.

5. Start planning ahead.

You can’t afford to be purely reactionary in your inventory management. You need to start planning ahead and being proactive. Instead of being unprepared for sudden spikes in sales, try to notice these trends ahead of time by monitoring social media channels for mentions of certain products and looking at historical records to spot seasonal upticks in sales. All of this is easier said than done. It goes back to having a powerful inventory management system to free up your time and do most of the data analysis for you.

About Robert Lockard

Robert Lockard works at Fishbowl, the maker of the No. 1 requested inventory management solution for QuickBooks users.

Robert is a prolific writer, having written more than 600 blog posts, hundreds of Web pages and dozens of news articles. He studied public relations at Brigham Young University and graduated with a Bachelor’s degree in 2006.

He has written on a variety of subjects, such as real estate, online marketing, QuickBooks inventory management and film reviews. Robert lives in Orem, Utah with his wife and two children. He loves running, biking, reading and watching movies with his family.

The post Why Use an Inventory Management System appeared first on 6sigma.

There are at least 3 critical items that allow you to reduce costs and increase service level in warehousing:

1. Tight and Necessary Warehousing Processes
2. What Warehouse Metrics do you have in place to help you determine if your processes are going well or not.
3. You warehouse location is optimal in the first place to meet service level commitments.
4. These together will help you reduce costs in your warehouse.

Where to build a distribution center, fulfillment center, or warehouse is a strategic question. The answer to “where” are drivers to costs and the customer experience. Where to build your next warehouse is an incredibly important question to answer. After you answer the “where” question, then we need to discuss what warehouse processes and warehouse metrics ought you establish.

There are, of course, many factors to consider:

• What is your expected inventory profile?
• What is your geographic distribution strategy?
• State and Municipalities incentives? State and Local Government Incentives?
• Proximity to the Logistics Carrier (such as UPS World Hub or Ground Transport)
• The pool of local talent available in the area.
• Inbound and Outbound transportation costs.
• Access to interstate highway systems or inbound sea import locations.
• Crime rate, Housing, Educational Facilities
• State Taxes, Nexus
• Building construction codes and zoning restrictions

The above are important criteria and should be considered. A popular technique for selecting a new facility location based on different weighted criteria is the prioritization matrix.

But, to answer the question of “where”, also requires a more quantitative approach that should be used in concert with the above considerations. One common approach to identifying where to build the next single fulfillment center location is a method called the Center of Gravity Method.

Center of Gravity Method

The Center of Gravity Method is an approach that seeks to compute geographic coordinates for a potential single new facility that will minimize costs. It’s an approach where the main inputs that it considers are the following:

• Markets
• Volume of goods shipped
• Shipping costs

This method is beneficial because it’s (1) Simple to compute, (2) Considers existing facilities, (3) and Minimizes costs.

How To Use Center of Gravity Method

Step 1:

• Place existing warehouse, fulfillment center, and distribution center locations in a coordinate grid.
• Place the grid on an ordinary map.
• The relative distances must be noted.

Step 2:

Then, using the equations below,

• Cx= ∑ dix Vi/ ∑ Vi
• Cy= ∑ diy Vi/ ∑ Vi

We calculate the X and Y coordinates using these equations where Cx is the X (horizontal axis) coordinate for the new facility. Cy is the Y (vertical axis) coordinate for the new facility, dix is the X coordinate of the existing location, diy is the Y coordinate of the existing location, and Vi is the volume of goods moved to or from the ith location.

Step 3:

Once you have obtained the X and Y coordinates place that location on the map.

But, it doesn’t end there. As I mention earlier, there are other factors to consider. What this method allows is a point of departure – or, literally, a starting point of where (from the perspective of longitude and latitude) you options are for where to grow your fulfillment or logistics network.

Center of Gravity Example

Let’s suppose your company wants to expand its logistics network and locate a facility within a network of three existing facilities. Given the following assumptions below, what are the coordinates for the new potential location?

Let’s assume the following:

• Warehouse 1 has a daily outbound goods volume of 2,500 units
• Warehouse 2 has a daily outbound goods volume of 1,300 units
• Warehouse 3 has a daily outbound goods volume of 5,000 units

And the current coordinates of the existing facilities:

Given the assumptions and grid coordinates above, we get the following:

• d1x= 200
• d2x= 300
• d3x= 100
• d1y= 50
• d2y= 100
• d3y= 150

And,

• V1= 2,500
• V2= 1,300
• V3= 5,000

Which gives us,

• Cx= (200 x 2,500) + (300 x 1,300) + (100 x 5,000) / (2,500 + 1,300 + 5,000) = 158
• Cy= (50 x 2,500) + (100 x 1,300) + (150 x 5,000) / (2,500 + 1,300 + 5,000) = 114

If we were to plot the new suggested warehouse coordinates on the grid, we would get:

Of course the discussion doesn’t end here. Once a coordinate or several are identified given the current logistics network context, then other factors must be considered. This is just the beginning – a point of departure.

The post Center of Gravity Method in Distribution Center Location appeared first on 6sigma.

A key element in the effective management of the warehouse is the Warehouse Management System. Another variant is the Inventory Management System. But, before I answer the question “What is a Warehouse Management System?”, let me first explain the role of the warehouse in the supply chain and what Lean Inventory Management is all about.

Why Have a Warehouse?

A warehouse is expensive, requires labor, capital, equipment, systems – all expensive. Moreover, we know that one of the 7 Wastes of Lean is inventory which is the primary occupant of the warehouse. Given all of this, why have a warehouse?

Here are a few main reasons why warehouses exist:

1. Match Supply with Customer Demand: Because demand can change quickly, having the appropriate level of merchandise ready to ship to the customer is a key ingredient in a good customer experience. In this case, the warehouse allows for quick and rapid response and acts as a buffer to the changing customer demand.
2. To Consolidate Product: In warehousing, the debate isn’t about one-piece flow versus batch, it’s really about what level of batch is appropriate. There is a fixed cost any time product is transported. To lessen the cost burden on the supplier, it often makes sense to fill the carrier to capacity. Because of this dynamic, consolidation of inventory has come into play and is a major strategy to reducing overall supply chain landed costs.
3. Provide Value Added Processing: In some situations, to differentiate in the market required adding some value added processing prior to selling merchandise to the customer. This might mean strategies such as creating kits of various pieces of inventory to create a sale-able product (known as kitting). An example of this is with bicycles: bicycles come in parts and are consolidated at a warehouse for assembly. The company then sells the bicycle whole, not in parts.

Types of Warehouses

I’ve spent a large portion of my career in fulfillment and distribution, primarily with online retail but also some in healthcare and consumer packaged goods. In general, here are the types of warehouses

1. Retail Distribution Center: This type of warehouse typically supplies product to retail stores, such as Wal-Mart or Target. The customer for this type of warehouse is the retail store.
2. Service Parts Distribution Center: This type of warehouse holds spare parts for expensive capital equipment, such as planes or other types of manufacturing. Toyota has a network of supply parts distribution centers where they supply automotive parts to the manufacturing plants.
3. Online Retail or eCommerce: This type of distribution center receives orders online, then those orders enter the pick, pack, ship process to the end customer.
4. 3PL Warehouse: This type of warehouse is where a brick-and-mortar retailer of an online retailer outsource their warehouse operations. For example, Amazon.com often acts as a 3PL to large retailers, such as Target. In other words, if you purchase an item from Target.com, that inventory is actually housed in Amazon.com’s fullment centers and will be shipped from there. In this example, Amazon.com acts as a 3PL to Target.
5. Perishables Warehouse: Similar to the examples above, this type of warehouse holds food items or pharmaceutical items that have a short shelf life. This type of warehouse usually is part of a “cold chain” where temperature and other conditions that can impact the merchandise is closely monitored and controlled.

What is a Warehouse Management System

To manage the complex activities I share above often requires the help of information systems and is helped by a warehouse management system. The main activities any warehouse management system needs to be able to do are the following:

1. Record receipt of inventory
2. Record shipment of inventory
3. Stock locator (inbound: where can a piece of inventory be stored and outbound: where can I go to pick an inventory item a customer ordered)
4. Main Features:
   • Receiving
   • Cycle Count
   • Put Away
   • Location Tracking
   • Picking
   • Packing
   • Consolidation
   • Space Capacity
   • Shipping
   • Replenishment (replenish prime bins from safety stock and replenish safety stock from supplier)
   • Vendor and Carrier quality compliance
   • Trailer Manifesting
   • Returns
   • Labor Management
   • Advanced Slotting

Warehouse Management System Video

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