Warehouse Optimization includes the principles of Lean warehouse management, warehouse best practices and the most efficient warehouse layout. When Lean first came to North America and Europe, the focus was on manufacturing. However, over the last 20 years warehouse operators have realized that the philosophy of Lean can be applied just as well to their processes. Lean warehousing seeks to continually reduce non-value added steps in receiving, put-away, picking, packing and shipping of items. In addition, supporting office processes such as order entry, purchasing and accounting should be part of the scope of Lean Warehousing. Just like manufacturing, warehouse process flow can be made more efficient by using Lean tools to identify and eliminate non-value-added steps, involving employees in Lean implementations, and creating a culture of continuous improvement.

Lean warehousing seeks to continually reduce non-value added steps

The most frequently used Lean tools in warehouses are time studies, spaghetti diagrams, quickchangeover and 5S visual management. Time studies and spaghetti maps are used in warehouse layout to improve labor efficiency by minimizing move-time to process orders. Quickchangeover is used to speed up the unloading and loading of trucks to maximize dock capacity and minimize truck downtime. 5S visual management creates disciplined operations by making sure there is a place for everything and everything is in its place. 5S eliminates clutter and ensures materials, information and supplies are easy to find.

Warehouse best practices focus on three areas: 1) having the correct inventory for fulfilling customers’ orders, 2) making sure the right item, at the right quantity is put in the customers’ box, and 3) minimizing movement of warehouse operators. Much of the focus on a warehouse plan is around labor productivity. However, inventory and quality are also critical aspects. Some type of inventory optimization should be used to ensure you have the right inventory to balance a high fill rate with the cost of carrying inventory. Quality is an often overlooked aspect of warehouse optimization and Lean warehousing. While quality gets a lot of attention in manufacturing, the direct connection warehouses have with customers should make quality even more important. If you have ever received the wrong item, the wrong quantity or a damaged item you will understand the problems this can cause your customers. In addition, because they think warehouse operations should be simple, customers will not often forgive quality errors.

Warehouse layout is the most important aspect of Warehouse Optimization and Lean Warehousing to improve labor productivity. See our Facility Layout summary for additional information on this methodology.