Having had the privilege of starting a business in the basement of an apartment where we shipped a few packages a week and growing it to be able handle over a thousand packages a day we learned many things.
Over the years we spent lots of time doing research and getting advice on warehouse and logistics efficiency but often found the advice lacked specificity that we could apply to our business or included suggestions that related to businesses much larger or smaller than ours.
Here are a few principles that we learned that seem universal and could be relevant many businesses.
Steps Count, So Count Steps
The first principle that helped drive many warehouse processes was the idea that at the end of the day, the core of any manual logistics operation was the number of steps a person could take in a working day. In the narrowest sense, this is as simple as placing products that you are shipping and supplies to ship those products within close proximity to each other and where they need to go.
Within those products & supplies, placing the ones that are used most frequently near the front and products that are accessed less frequently could be placed farther away.
This principle can be applied at a very high level to a business with slowly changing inventory where locations could be evaluated once or twice a year. In a business with lots of turnover, locations of products could be evaluated as often as weekly or even daily.
The challenge is that a warehouse is not a static place. The natural progression of time will cause lower volume products to stay where they are and products that sell faster will be removed from their location as they are shipped. This natural atrophy will cause slow moving products to fill all the best spots leave a product that deserve a higher priority pushed more and more steps away over time.
Regular evaluation and relocation of both products & supplies is required to keep everything located in a way to maximize the steps of warehouse workers.
Reduce Decisions, Less is More
When we started shipping more items we kept adding shipping supplies that would suit those products. Before long, we had quite a long list of box sizes & packing materials that we tried to keep in stock. While at the time it seemed most efficient to use a box that was ideally suited to what we were shipping, we also created the requirement for a new skill in choosing the perfect box from a selection of dozens every time we needed to ship an order. In the end, what seemed like it was most efficient was causing extra time in the packing process to try to find the perfect box for every shipment. Add on top the administration of trying to keep all those items in stock it became counter productive. Also, since we were purchasing smaller quantities of many different boxes we were passing up an opportunity to negotiate quantity discounts with our box supplier.
Analysis lead to restricting the number of box sizes considerably. Considering dimensional weights, the products we shipped most often and the cost of the boxes themselves allowed us to find the sweet spots in box sizes.
We’ve all received that Amazon shipment that just seems crazy when receiving a little item in a huge box. While I’m not ready to say that is always the best idea, it is clear that the shipping giants have seen the benefit of reducing the options when shipping.
The ideal selection of shipping materials maximizes both the shipping cost of the shipments by the carriers and the time that is required to prepare those shipments.
A key to efficiency & accuracy in warehouse logistics is to break logistics processes into logical chucks. The breakdown of each of these is going to vary from one company to the next but the idea is the same. By separating the process into steps like an assembly line you can gain simple efficiencies by keeping the tools for each step located in a specific area and keep those performing those processes focused on it’s specific requirements. Closing packages is an easy example, it is more efficient to close 10 boxes in a row with the same tape gun rather than putting it down and picking it up 10 separate times. Another advantage to segmenting the processes is that you can build spot checks along the way to help ensure that the previous step was completed accurately. An additional opportunity is to create guidelines that direct a different person to perform checks than the one who originally completed the task. One example would be that the person responsible for checking the accuracy of the items in the order would not be the same person who picked the items initially. These separation of powers can work with a shipping crew as small as 2 people by having them swap tasks at times throughout the day.
By having the shipping process broken into individual parts you can train them individually and allow people to only perform ones they have been trained in. It also makes it easier to know how to incorporate others when you need additional help as you can have them focus on certain steps where someone with less experience can provide value right away.
Finally, having a process broken down into its individual parts makes it easier to find the root issue when problems or errors come up.
Measuring productivity is challenging. Without feedback as to what has been accomplished, any task can become burdensome or oppressive. Knowledge of what was completed can make the difference between the “worst shipping day ever” to being the “biggest shipping day ever".
Ideally warehouse performance feedback would be immediately available to each individual, completely objective, and highly motivational. Getting to this place is out of reach for most companies so they fall into the trap of measuring nothing. Even simple information provided on a weekly basis can make a big difference in the motivation of a logistics team. Depending on your business, different statistics might be more relevant such as number of orders, number of boxes shipped, number of units shipped, total weight of shipments, etc.
It is easy for a warehouse team to wonder if anyone knows or appreciates all the work they do. It is likewise easy for those outside the warehouse to focus on shipping errors, shipping not happening fast enough or challenges in getting product out the door. Communicating statistics about what has been accomplished can help the whole company to value what has been done.
It is also helpful to focus statistics on what has been done successfully. While working on eliminating errors is always important it is much better to broadcast “98.6% accuracy” than to focus on the number of inaccurate shipments.
When you are consistently measuring productivity you then have a platform with which to set expectations, provide targets, and define success. Knowledge is power. When you have a team with access to good metrics you will see them working to improve those numbers.
Connect Tasks to the Big Picture
When designing logistics processes it is easy to take a clinical view focusing on the nuts and bolts of what needs to happen while ignoring the human elements. Many companies design their processes as if they are performed by robots who will simply execute a set of instructions. Instructions such as “Extract 1 unit from location A26C, place it in a size 6 container” may be specific and actionable but trying to perform tasks like that for 8 hours a day can be challenging for anyone without a bigger understanding of what is being accomplished.
Connecting logistics tasks to the larger perspective can make an incredible difference in motivating employees. Instead of looking at a warehouse staff as people who put stuff in boxes, how about considering them a critical step in the sales process? Instead of thinking of orders that need to get out the door, consider the product arriving to your customer as the single most important interaction your company has with its customers. Likewise, empowering the shipping crew with the idea that they are critical to the company reaching their overall goals can make a huge difference in how they view and perform their jobs.
In addition to the overall perspective on how the warehouse crew affects the business, them having more specific knowledge of the products they are shipping can make a big difference in how they perform their job. Few companies would invite people from the warehouse to the kind of trainings they do for their sales team, but including them can make a significant contribution to the bottom line.
I’m reminded of holiday 2012 when people started receiving cases of iPads instead of a single iPad they ordered. I’m sure the people involved were simply following directions. Go to a certain location, grab 1 unit, apply a shipping label, etc. It is easy to place blame for such a mistake on an individual. Clearly they made a mistake but what speaks to me more is the idea that there was a clear disconnect between the task being performed and the big picture of what was going on. They certainly didn’t pay enough attention to what they were shipping. Do you think if that person had a chance to play with an iPad for even a few minutes that they would have made the same mistake?
If the article is to be believed, less than 25% of the people surveyed would have attempted to return the product they received incorrectly. A single mistake like this has a significant cost, in this case perhaps the equivalent of a weeks salary. Helping an employee connect what they do to the company’s big picture can make a big difference in their accuracy & performance.
In addition to the benefits in terms of what happens in the shipping day, connecting an individuals job to the overall values & goals of a company can be dramatic in terms of employee retention and engagement. While it isn't always practical to engage warehouse employees with the specific products they are shipping, every company can operate in a way to engage them with the values & goals of the company.
Employers are having a harder and harder time keeping quality employees. You will hear them complain about how “kids these days” don’t like hard work or lack commitment. While this may be the experience of some managers with millennials I find that the opportunity is actually deeper. It isn’t that people lack commitment, it is that they are seeking something important to be committed to. The days are gone where just having “a good job” was motivation enough in itself. There will always be a better job when a job is only a list of tasks. When a company’s executives are able to communicate the values and mission of a company there is the opportunity to make a job about much more than a paycheck.
When an employee has bought into the vision of a company, they are much more likely to work in a way that is compatible with that vision. When the vision is something that they are inspired by, they will also be much less likely to do things that would compromise the company's ability to pursue it such as ignoring poor performance in others, having poor attitudes and theft. It is always more effective to encourage the behaviors you want than to try to shame or scare the bad behaviors out of people.
While each company is unique, I hope that some of the ideas above will be of help in managing logistics in your company.