Warehouses must work harder than ever to achieve overall efficiency and to control costs. An effective strategy is to adopt lean manufacturing principles.
Lean is characterized by waste reduction by more effective management, engaging all team members to find ways to increase efficiency and productivity, and finding ways to compress time frames.
Each operation will benefit from lean in unique ways, but here are four common ways lean can help decrease warehouse waste:
- Reduce waste caused by excess inventory and over-production. In the lean manufacturing model, any inventory that isn’t directly required to fulfill specific customer orders is a potential waste. Compare existing inventory with sales data before production to decrease the volume of excess inventory. Also reset production processes to manufacture only sufficient inventory to meet short-term sales goals. If possible, adjust production processes to manufacture product based on customer demand, rather than on maintaining excess inventory in the warehouse.
- Minimize labor expenditures related to unnecessary motion. Reducing overproduction can help reduce labor costs by eliminating unnecessary movement of goods. If only sufficient quantities of product are manufactured to satisfy customer demand, then employees aren’t needed to move excess in and out of inventory. Unnecessary labor costs can also be eliminated with effective project planning to ensure that equipment usage and usage times are accurately estimated. This decreases the time employees spend waiting for equipment.
- Decrease transportation-related waste. There’s no question that transportation is a key competitive differentiator. However, transportation processes can be a major source of waste. Reduce waste by routing deliveries via the most direct, most time-efficient route. Choose the modality that is most cost effective and reliable. This will help eliminate the need to rush orders to compensate for poor planning. Transportation processes should be aligned closely with customer service and inventory strategies so the entire process runs smoothly and you meet customer expectations.
- Reduce over-processing waste. Over-processing waste typically happens when extra work is required to rectify problems that would not have occurred if the proper processes had been in place. Following lean manufacturing principles, processes are analyzed and tracked individually, with considerable attention paid to determining whether they work properly in sequence. They are then refined to close gaps and eliminate unnecessary steps.
Although analyzing processes may seem like a job for engineers or executives, employees are often the best candidates to suggest ways to improve warehouse processes. They know first-hand what works, which tasks or steps in a process are wasteful, and often, how to make the process operate more smoothly and efficiently. Lean also empowers them to make a difference, which can motivate them to continue to keep their eyes open to ways the warehouse can operate more efficiently.
The solution to the problem of how to operate more efficiently and cut costs — especially in an era of fierce competition, faster fulfillment, and greater demand for customized products and service — may lie within your own processes. Use lean manufacturing principles to evaluate your operations, identify and eliminate waste, and continuously work to improve processes. The return will be a warehouse that contributes to the overall success of your company.