John Hogg, Managing Director of , has provided his views on Lean Warehousing. They are as follows:
Many companies are now talking about Lean Warehousing with their Third Partly Logistics (3PL) service providers.
It has developed a reputation as somewhat of a panacea to the problems of the typical warehouse. But what is Lean Warehousing? And does it really live up to its promise? More importantly, how can you make it work in 3PL warehouse?
These issues are examined by John Hogg in the context of a real-life Lean Warehousing implementation.
Client need
Six weeks from ‘go-live’, the client commissioned the implementation of a new warehouse. The entire warehouse was to be set up to use Lean Warehousing.
The client’s warehouse was a pick and pack operation. It contained 1100+ items and more than 70% of all orders were split case picking and packing. Orders were delivered from the client’s ERP software via FTP into the Warehouse Management System (WMS). Order confirmation was returned from the warehouse via FTP to the client.
Approach
The client and the 3PL agreed on simple but effective Key Performance Indicators (KPIs) for the project:
- Orders received by 12:00 were to be shipped by close of business next day
- Inventory accuracy was set at 99%
- Goods received within 24 hours
- Costs had to be at budget or better
Solution
In order to satisfy these KPIs, the 3PL selected the Lean philosophy (5 S) for the implementation:
Sort – (Seiri) - The first S focused on eliminating unnecessary items from the warehouse.
Paperwork in a warehouse is common but typically ineffective. Radio Frequency (RF) technology was selected (terminals with large screens) to eliminate all paperwork from the warehouse. A single button automated stretch warp machine was installed at the end of the pick path to wrap pallets.
Warehouse Management Software was selected for the warehouse and configured with weights and measures (per item) to eliminate the need for scales and to allow auto calculation for transport.
Walk paths were set up with no loop back during order picking to complete an order.
Product was placed strategically, so that heavy products could be picked first and smaller lighter items picked last in order to eliminate the need to restack pallets.
All forklifts can operate anywhere in the warehouse. Man up order pickers were used to eliminate the need for ladders and to assist with order picking from level 2 and 3.
Set In Order (Seiton) - The second S focuses on efficient and effective storage methods.
Racking was purchased and erected in the warehouse. Given the shape and size of the warehouse, wide aisles were used to allow fast movement for picking and replenishment (and use all available space) and to support the ability to use all materials handling equipment in all areas of the warehouse.
The racking was set up with the first three levels being pick faces and the top two being for bulk or replenishment stock for the pick faces. The pick faces were fitted with chipboard to allow small cartons to be stored on levels two and three.
The bin location system was set up to allow X and Y coordinates and for a standardised gird of locations in the warehouse, to help casual employees understand the warehouse layout within minutes of arriving on site.
All locations were barcoded and all aisles fitted with large visible signs, to enable quick and effective orientation on site.
Pick trolleys were purchased and fitted with a knife, calculator and a tape gun. A packing bench was set up to allow mixed cartons to be packed and cartons completed. The bench included cartons, tape and packaging material, all within arm’s reach.
A single high speed thermal printer was selected for all labels and a standard single label used for all uses in the warehouse.
Thus, when an order is completed and all cartons packed, the store person can print all dispatch labels for the shipments. The picking confirmation process was set to create the consignment notes for the carriers and add a barcoded con note number to the dispatch label for easy tracking by the carriers.
Shine (Seiso) - The third S is to clean the warehouse.
All racking and benches were fixed to the floor and each location was labelled.
No product was allowed in the aisles and no product was allowed into the pick face from bulk until all stretch wrap was removed. Pyramid picking was not allowed.
Outsourced cleaners were engaged to service the warehouse office and all amenities. Many towels are installed in bathrooms to eliminate paper towels in the warehouse.
Warehouse staff clean floor with an electric sweeper and not a broom, everyone takes turns as part of their duties. (Daily cleaning is part of the process. A clean and clutter-free work area encourages staff to take pride in their work and environment and to take ownership of the equipment and facility). A contract floor scrubber was also engaged to remove ground-in dirt from the concrete floor (every 8 weeks).
Standardise (Seiketsu) - The fourth S is standardising best practice in the warehouse.
All RF units and PCs were standardised. PCs were selected based on ease of use and colour (black).
The following process was established:
When orders are received from the client, they update the Warehouse Management System and are ready for picking.
Warehouse staff picks up their RF unit and log on. Pickers select order pick and the system directs them to the first pick location in the pick path needed for that order.
Picker scans, picks, checks, scans and moves on to the next location. At the end of the order, the RF asks for the number of cartons or pallets and when updated, allows the process to be completed and labels and consignment notes to print.
When the order is complete, it is automatically sent to the client’s FTP mailbox, ready for invoice confirmation. When the confirmation is completed the invoice (or delivery note) prints in the warehouse and is attached to the order ready for dispatch.
Menus are specific for each function to assist staff with their functions. Pickers can see the pick menu, receiving the receipt menu and dispatch sees the information for dispatch. The warehouse manager and customer service can see all information based on their security and access level.
Receiving requires items to be booked in and a pallet ID attached to all inbound items. This is then used for put-a-way, replenishment and picking, as items move around the warehouse.
Stock takes, cycle counting and returns to the client are all managed via the RF units and the pallet ID labels.
Sustain (Shitsuke) - This is a difficult S to implement and achieve. Human nature is to resist change and more than a few organisations have found themselves with a dirty, cluttered warehouse just a few months after attempting to implement 5S.
The tendency is to return to the status quo and the comfort zone of the ‘old way’ of doing things. Sustain focus on defining a new status quo and standard of warehouse organisation.
Being a new implementation with new staff, then there is no old way of doing things. With the removal of paperwork and the need to use RF units to perform tasks in the warehouse, the status quo is the process.
Outcome
Upon completion of the 5S process, warehouse staff was motivated by the lack of fuss and ease of performing their tasks. They were also enjoying the recognition they received for a job well done.
All KPI’s are still being met after 6 months of operation. The warehouse was performing like a production line, delivering predictable and reproducible results, using 40% less labour than the client’s original warehouse.
The implementation and setup were effective from day one. More detailed work was needed on master file information. However, this was an anticipated part of continuous improvement in both the client and 3PL systems.
Many of the results are built into the process and the fifth S - Sustain is now the baseline default for the warehouse.
Conclusion
Obviously, the Lean philosophy alone, is not enough to resolve (or pre-empt) all warehousing problems. But when combined with traditional project management skills, it is effective at transforming a warehouse into a clean and organised system that performs like a production line, delivering predictable and reproducible results with significantly less labour.