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3 Steps to Improving Warehouse Efficiency and Inventory Control

Posted by Robert Baran on Thu, Dec 13, 2012 @ 12:10 PM

Let’s face it – as time goes on, it becomes harder to keep your warehouse as organized and efficient as you would like. The longer you’ve been in business, the harder it most likely seems to keep your warehouse flowing smoothly and efficiently. In order to improve warehouse efficiency and inventory control, companies must re-evaluate their processes and procedures. Bin locations that increase workload and picking methods that are not industry appropriate are just a few examples of how a company’s efficiency may be decreased by their current processes. The following steps will help you organize your warehouse properly and, ultimately, improve warehouse efficiency:

1. Take a Second Look at Your Picking Methods

In order to streamline your processes and make the picking process easier for your staff, you should consider implementing software that will help you sequence orders so that they are grouped by pick path or areas within your warehouse. Re-evaluate your picking methods and make sure that they are still appropriate. Consider the following picking options you have to choose from should you need to switch methods:

  • Single order
  • Multi-order
  • Batch picking
  • Zone picking

2. Reorganize Bin Locations

Companies should review the organization of their warehouse at least once a year in order to ensure that they are meeting their standards and maintaining maximum productivity. What may have been a good set up when you first started may not necessarily work in your current warehouse. Make sure that you evaluate the current organization methods and make the necessary changes to improve warehouse efficiency. Generally, when companies add new lines and inventory the incoming inventory is typically “stashed” wherever it fits, creating chaos and leading to decreased efficiency and increased picking times.

Reorganizing your warehouse may seem like a huge inconvenience, but it’s worth it (it can improve your picking times by as much as 50%).

A good tip when organizing your warehouse is to store higher volume items where they are easily accessible in a location that is as close as possible to your shipping area. Lower volume items can be placed in bin shelving further away from the shipping area. By keeping your high volume items near shipping, your warehouse will run more smoothly and efficiently. 

3. Implement Cycle Counts

The annual physical inventory count is a much-dreaded event in any warehouse. Not only do employees have to put in long hours, but the company has to pay overtime, shut down operations and count record after record after record. What many companies do not realize is that there is a much easier and effective way to count physical inventory.

Cycle counting, a process that requires you to count inventory at regular intervals throughout the year, is a great addition or alternative to a yearly physical count. It not only keeps your back-office systems more accurate, but it also keeps your warehouse more organized and running smoothly. Warehouses that can succeed with the cycle count process can generally do away with the annual physical inventory count altogether.

Take a look at the following cycle counting options designed to improve warehouse efficiency:

  • The ABC Method

This method involves counting by categorization. Many warehouse and distribution companies find truth in the following lean manufacturing principle: “20% of your inventory is responsible for 80% of your sales”. If this statement sounds accurate for your company, you can rely on this cycle counting method.

In order to implement this method, you need review the entire inventory in your warehouse and divide it into three categories: high-level items (or level A items), mid-volume items (or level B items) and low-level items (or level C items). Because level A items are handled more frequently, they should be counted more often. Consider counting level A items once a month, level B items once a quarter and level C items every 6 months. To keep the counting manageable, divide up the stock so your staff can complete a portion of counting every day or week.

  • Geographic-based Method

This process involves starting at one end of your warehouse and systematically working your way to the other end. If you do this several times a year, your inventory numbers will remain accurate and you will discover misplaced or “lost” items along the way. This process is best for companies who find themselves often misplacing or losing inventory. The great thing about this method is that it allows companies to set daily or weekly goals for counting smaller amounts of products rather than trying to count everything in the warehouse all at once.

By working to transform your warehouse processes and procedures, you can improve warehouse efficiency and inventory control, increase employee productivity and boost the overall profit of your business. 

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Topics: Warehouse Efficiency, Manufacturing ERP Software, inventory control