Opinion: Think Inside the Box

By David Frentzel

Vice President of Global Contract Logistics

APL Logistics

This Opinion piece appears in the May 30 print edition of Transport Topics. Click here to subscribe today.

Because transportation costs outweigh warehousing costs several times over and continue to rise, most companies think outside that big box called the warehouse when the topic is logistics and concentrate instead on how things get to their destination. But that doesn’t mean a company can afford to park its warehousing strategy and forget about it. A great deal of cost-efficiency can be gained simply by taking a careful look at warehouse procedures and asking some key questions:

• Is there room for formal improvement? Even the best-run warehouses have pockets of waste and inefficiency, and few things are more effective at removing them than formal quality-improvement programs such as Lean, Six Sigma and Just Do It. My company’s facilities began using these programs in 2007, and we’ve saved $20.2 million so far.

The great thing is that these programs don’t require a huge capital commitment. Your company can implement them using the same managers, supervisors, pickers, forklift operators and other personnel it uses to carry out its day-to-day operations, and participation won’t require much time away from the job. Plus, nobody will miss the unnecessary steps, work or expense they eliminate.

• Should we be pickier about our picking? One of a warehouse’s most important roles — delivering products with 100% accuracy — is also one of the most difficult to pull off, especially if a company’s supply chain involves pick lines. (For the uninitiated, a pick line is a row, or several rows, of products stored in open bins in a distribution center in such a way that individuals or machines can retrieve items quickly to fill individual orders.) That’s why it’s so important to consider revisiting, re-equipping or rearranging these work-intensive areas frequently.

For example, adding a layer-picking device could automatically double or triple your company’s picking productivity — and reduce related staffing demands. By the same token, the introduction of hands-free voice-picking technologies could improve your order-filling and recordkeeping accuracy and velocity significantly. Even something as simple as rearranging the order in which items are picked and where they are located in the warehouse could help make your pickers’ jobs faster and ergonomically safer.

• Is it time to consider task interleaving? I’ve often wondered why the practice of rearranging forklift drivers’ workflow to eliminate empty time or empty miles traveled — a concept known as warehouse task interleaving — hasn’t caught on with more companies, given how much of their time forklift operators and other employees spend not only going from Point A to Point B to complete a task but also deadheading from Point B back to Point A, with no useful task taking place during the return journey.

Admittedly, task interleaving isn’t always easy to introduce.

It requires a robust systems capacity, and implementing it can truly challenge even the most seasoned warehouse managers — especially if they have to help their employees unlearn years of work habits. However, the potential payoffs can be tremendous.

• How do we treat — and manage — our people? Warehouses are more automated and technical than they used to be, but most are still people-intensive operations. That’s why even small investments in motivating and retaining these professionals can be dollars very well-spent.

Offering financial incentives to people working on the warehouse floor when safety and productivity levels are met can go a long way toward helping a facility not only to meet but to exceed performance goals. Creating games such as “Safety Bingo” (honoring injury-free days) and publishing an entertaining and informative employee newsletter can enhance employees’ morale as well as their safety.

Tools that help manage your warehouse employees are also important, especially when you consider that labor is still the single largest expense for most warehouses. Warehouse labor-management systems today have much to offer in this respect, because they enable companies to examine every functional task within their facilities down to the granular level and enhance every employee’s sense of individual accountability. Yes, the cost of hardware, software, licenses and implementation for these systems can add up, but their advantages usually more than justify their expense.

• When was the last time we asked for something reasonable? There are times when your warehouses may have to spend money to save money, and some upgrades swiftly pay for themselves. For example, one of my company’s facilities spent about $7,500 to install impact switches on its forklifts — and within two years, that change alone saved $25,000 in maintenance and building repair expenses.

Another facility estimates it will save $142,000 annually in labor costs, thanks to the purchase of a $13,000 thermal shrink-packaging machine. And several have undergone relighting projects, with an average cost of $100,000 immediately delivering as much as 50% in energy savings — easily paying for themselves in six months to two years. You don’t need to hesitate when requesting funds for equipment and technologies certain to deliver a solid return on investment.

These aren’t the only questions to ask if you want more productive distribution centers, but they are a vivid reminder that not all improvement potential is rolling down the highway. Sometimes, it’s good to think inside the box.

APL Logistics, an international provider of warehousing and other logistics services, is a unit of Singapore-based Neptune Orient Lines. APL Logistics’ Americas headquarters are in Phoenix.