How to increase warehouse performance

Would you like to optimize your warehouse performance? Boost its efficiency by 10–18% within the first year? We are ready to help you. We have been successfully dealing with warehouse management challenges for 20 years.

The importance of warehouses in today’s turbulent times continues to grow. This is primarily due to an unbalanced course of demand, high transport costs from the producing countries and often supply chain failures. Therefore, one of the frequent requirements for warehouses is to increase their performance. For example, by implementing a powerful information system.

Implementing a warehouse management information system alone often falls short – it requires a clear vision from the client and the expertise of an experienced implementation partner. We are proud to say that for 20 years, our projects have consistently delivered success.

Growth of warehouse performance with a new management system

It is often difficult to demonstrate a direct link between the increase in warehouse performance and the implementation of a warehouse management system. Sometimes it is not even possible because historical performance data does not exist.

But what can be traced is the development of warehouse performance after the implementation of the system in the following periods.

A number of external factors affect long-term warehouse performance. Their impact can make it difficult to properly evaluate warehouse performance data. These factors include fluctuations in demand, disruptions in the supply chain, the covid factor and other influences.

In order to eliminate the influence of external factors on the evaluation of the change in performance, we evaluate the change in performance according to a different key. When assessing effectiveness, we focused on medium-term performance indicators.

What conclusions did we reach when we evaluated the results of fourteen warehouses in which we implemented a management system, across different industries?

Typical results include the following:

• increase in warehouse performance by 10-18% already in the first year after start-up (in extreme cases, even by 123%!)
• long-term performance increase (horizon 3 years) can be 28-300%
• increase in efficiency by 25% (higher daily performance of an individual, less need for warehouse staff)
• processing time per item decreases by 10-26%

How we increase warehouse performance

We ensure high warehouse performance in four ways:

• defining the correct warehouse layout
• by intercepting and managing most warehouse processes
• fully automated assignment of work to warehouse workers on mobile terminals
• effective reporting and performance measurement

How do we proceed?

Definition of the correct warehouse layout

For new warehouses, when implementing the warehouse system, we try to properly deal with the appropriate layout of the warehouse work area. However, significant layout changes in favor of processes can also be made in existing warehouses. This often happens precisely in connection with process changes being introduced.

We can continuously and dynamically predispose fast- and slow-moving goods between different parts of the warehouse (e.g. mezzanine warehouse floors). We describe the entire structure of warehouse locations in the XYZ coordinate system, we define the passageways between racks and halls.

Based on this, we can then easily calculate the time it takes to move between any two locations in the warehouse. This helps us both in determining the nearest next job for the storekeeper and also in precisely defining the work standards as described below.

Capture and management of most warehouse processes

Our effort is to plan and manage most of the processes that appear in the daily plan to a significant extent and consume a large personnel capacity. As a rule, these are the processes of receipt, storage, picking, consolidation, packing and loading.

For these processes, we propose the introduction of system or possibly technological automation (such as goods-to-person systems, automatic warehouse systems, etc.). However, the ergonomic simplification of the steps in the application on the mobile terminal can also have a significant contribution to the increase in the warehouse worker’s efficiency.

With system automation, we can, for example, cover the regular updating of article master data, their added quantity to picking positions, the zone from the point of view of turnover, etc.

On the contrary, we try to simplify, schematize, sometimes even eliminate minority processes. For example, the annual inventory can be significantly shortened by continuous inventory of empty storage space when picking the last item, or by inventory of low stock (an easily countable quantity).

Fully automatic assignment of work to warehouse workers on mobile terminals

Thanks to fully automatic work allocation, the warehouse worker does not decide what to do for the work. The system decides for him, taking into account:

• his qualifications (ability to process activities in different queues)
• his used manipulation techniques (its type, range, permitted zones, speed)
• his exact position in the warehouse coordinate system
• dates of planned completion of individual warehouse orders

For each individual queue, we can define the weights of these and other criteria, which are used to calculate the resulting value of the overall criterion. On the basis of this resulting value, we then assign the optimal warehouse order to the storekeeper. After its completion, the automatic allocation process is repeated.

The system therefore constantly monitors compliance with planned deadlines. It works with the available resources and optimally exploits the handling technique. Last but not least, we optimize empty crossings between individual warehouse orders and thus limit inefficiently spent time and capacity.

Effective reporting and performance measurement

The increase in efficiency is often not only due to the introduction of a warehouse management system and work allocation. A necessary condition is also well-thought-out reporting and a system of remuneration for work done. This must stand on the definition of fair standards for all individual activities in the warehouse (including auxiliary, cleaning, etc.).

Only then, if the standards are set really fairly, is the storekeeper willing to admit that his performance is evaluated correctly and fairly. Only then will he fully trust the automatic work assignment system. From experience, we can say that the very introduction of such reporting and standards has a positive psychological impact that leads to an approximately 20% increase in efficiency.

Dashboards and overview boards

We can display the resulting data on the efficiency of warehouse workers directly in the warehouse, ideally in the form of suitable dashboards or overview boards. Thanks to this, the storekeeper gets the opportunity to compare his performance with his colleagues – in real time. Alternatively, he can see the calculation of his efficiency and the resulting rewards directly on the mobile terminal.

In conclusion

The process of optimizing warehouse performance is not only based on the deployment of new information technologies. Other steps must go hand in hand with it, which fundamentally contribute to the efficiency of everything that happens in the managed warehouse. If you do not want to miss an opportunity to maximize the performance of your warehouse environment, rely on a professional team that has extensive experience in increasing warehouse performance. A team like ours at Mibcon.

Are you interested in details on warehouse management systems and our performance improvement experience? Contact us – we will be happy to lend you a helping hand.