Applying Systems Thinking in the Warehouse Environment
By Don Benson
The warehouse environment is a microcosm of the world. There’s good and bad; cooperation and chaos; predictable patterns and surprises every day – whether you’re running a distribution business, an e-commerce business, or you’re a manufacturer.
If you want to improve the productivity and performance of the warehouse and distribution center, operations must constantly improve and adopt innovations in the marketplace like adding direct to consumer order processing to warehouses that currently support retail orders and merging and expanding distribution channels through a single warehouse.
The best warehouse environment operations are agile. Managers are both anticipating and reacting to peaks and valleys, seasonal and promotional variations in demand and shifting labor requirements with a constant focus on through-put and putting more through the funnel.
But there’s an interdependence and collaboration between departments and responsibilities that’s needed to create an effective and efficient operation. The old military, top down style does not work anymore. At the corporate level, this collaboration must include buyers, sales, and accounting. At the warehouse level, picking supervisors, receiving supervisors and warehouse managers must be involved. There’s nothing you’re going to touch that doesn’t have a ripple effect.
There’s a definite sequence when moving orders through the warehouse that provide a foundation for brainstorming continuous improvement opportunities. The process could start with minimizing staging on a shipping dock.
Unfortunately, most only know their piece of the warehouse and don’t possess the large-scale vision to help balance the flow. The truth is throughout each day, each month, mid-month and end of month, workload demands are different. Stride toward building patterns for planning, directing and controlling the flow.
Technology such as warehouse management system (WMS) software provide a critical piece of the puzzle, but when solid foundations are not in place, and the skills are not there to plan and coordinate to meet the needs of key stakeholders, adding a layer of technology just automates the chaos and confusion. The only way to maintain any degree of management control is through systems support and applied systems thinking.
What is system thinking?
“System thinking” is a powerful way to understand how the warehouse fits into its business environment, to structure the continual historical, current and future demands on the warehouse while defining requirements. When should you conduct system thinking? Hopefully, before sinking $300,000 to $5 million in warehouse management system (WMS) software. Unfortunately when things aren’t going well, decision makers tend to look to quick and expensive technology solutions, rather than initiate a slower and longer approach that begins with improving processes, training people, strengthening relationships between the company and the warehouse, within the warehouse, and with their stakeholders.
Why is it that Company X and Company Y deployed the same WMS, but wound up with different results? The quick answer is that Company X took the time to apply and integrate systems thinking to improve methods, procedures, and flow before configuring and implementing their WMS. Company X understood the dynamics of warehouse requirements, including changes in sales, customers, SKUs and sales per customer.
Rather than fast forwarding to the solution, let’s take a look back. If you really want your company to break away from the pack, know that you’re providing world class service for your customers, and operating as efficiently (and profitably) as possible, get back to goals and strategies that address the challenges in your warehouse environment.
Lock yourselves in a conference room, and pose these questions to both corporate and warehouse team members.
• What are our business objectives?
• How can we exceed customer expectations?
• How can we maintain energy and success?
• How well do we use technologies like WMS to achieve our desired outcomes?
• How do we plan for the day?
• What are our feedback mechanisms to learn how the plan for today was effective and how to improve the planning process for tomorrow?
• How do we measure and share results in ways that are meaningful?
• How do we conduct labor planning?
• How do all the pieces fit together for the warehouse to work more like an NBA championship team?
Consultant David K. Schneider suggests a three-step approach to system thinking:
If the problem is new:
1. Start Searching for the Root Cause. The faster the search for the cause starts, the faster the fundamental solution can start to work. Start searching for and eliminating possibilities before treating symptoms, since treating the symptom could hide the root cause.
2. Carefully Apply Symptomatic Solutions. Choose short-term solutions that provide relief for the worst symptoms of the problem. Try to use short-term solutions that do not mask the fundamental problems. Use the symptomatic solution only to buy time for the fundamental solution to work.
3. Remove Symptomatic Solutions that No Longer Work. Identify the solutions in place that no longer work to reduce the required effort and clutter.
The end result should be a vision and a working plan that’s measurable, considers shifts and priorities and articulates business goals – allowing all the opportunity to build skills together toward a common objective.
A closer examination of your warehouse’s picking area is a great place to start because that’s where the greatest expense is and the strongest need for good processes and coordinated activity.
Start with simple and effective changes:
1. Look at picking instructions. Do they present data needed by the picker including location number, product description, and quantity? Is it legible and in the ideal sequence for the picker?
2. Does the pick number have a label on it that contains the same number and format as the pick instruction? Is it legible from a distance?
3. Are the numbers organized so the picker doesn’t have to wander up and down aisles?
4. Are SKUs slotted in a way that minimizes the time for receiving put-away or picking?
An excellent way to test for potential slowdowns is to bring in an employee who is unfamiliar with the picking process, and ask them to find products. If they can look at the list, and easily find the product with no guidance, the process is solid.
Next, look at your material handling equipment (carts, pallet jacks, forklifts) or storage equipment (rack, shelving) or layout needed to support picking in each area.
At this point, you may be ready to consider a WMS, but first you must know what a WMS can and can’t do. A WMS can:
• Organize and optimize picking accuracy through automatic identification processes like bar code scanning
• Improve batch picking – where a picker selects the material/merchandise for a group of customer order as part of a single trip through the picking area
• Improve order picking labor productivity by reorganizing customer-ordered SKUs into a list that directs the picking activity in a location sequence
• Divide a customer order into groups to direct the picking by storage type (frozen, wet, inflammable, yard), and/or handling type (pipe, two-person) and by ordered quantity (repack, case or pallet). This process supports the simultaneous picking of several parts of an order.
• Facilitate and interact with other technology systems including portable data terminals and interactive voice devices.
A WMS can’t:
• Turn a tactical do-er into a strategic thinker
• Solve all of your business challenges and opportunities in 30 days or less
• Teach all stakeholders to be better communicators
Don Benson has his pulse on the highly volatile nature of the warehouse and distribution industry. For more information, visit www.warehousecoach.com, email email@example.com or call 510.701.9784.
Jack Rubinger is an industrial copywriter for Graphic Products, Inc. in Portland, Oregon. For more information about Graphic Products and DuraLabel thermal transfer printers and warehouse labeling supplies including floor marking and barcode labels, visit www.DuraLabel.com, call Jack Rubinger at 800.788.5572 or email firstname.lastname@example.org.