Manufacturing and Warehouse Operations best practices commonly follow the same principles. If you tour any great warehouse or manufacturing plant, it will excel in the following seven performance areas:
- Labor productivity
- Capacity utilization
- Customer Service
- Inventory turns
- Employee engagement
All successful operations carefully manage and improve their labor productivity (also known as plant or warehouse efficiency). This is accomplished by optimizing the facility layout, to minimize materials movement, and with the adoption of 5S Visual Management to prevent employees from spending time looking around for information, materials or supplies.
All successful operations carefully manage and improve their labor productivity
High warehouse and manufacturing capacity utilization is the key to achieving high return on assets. Utilization is measured using operating equipment efficiency or OEE. The OEE calculation is based on the actual units successfully processed divided by the total product that can be produced in the facility based on standard cycle time and a 24 hour a day, 7 day a week, 52 week a year schedule. Often when OEE is measured, managers will find that they are using only a small percentage of their capacity. Utilization is improved through the use of Quickchangeover and Total Productive Maintenance to minimize downtime on their assets (machines, trucks, forklifts, etcetera).
Safety is not only important legally and morally, it is an enabler of improving capacity utilization and labor productivity. Numerous studies of factories and warehouses have demonstrated that the safest way of doing work is actually the most productive. Great warehouse and plant operations work on improving behaviors and equipment to prevent the possibility of injuries.
Providing great service to customers is always a top priority of great operations. At warehouses this is measured by fill rate or service level (% of items shipped on time). At factories this is measured by on-time delivery. Customer Service is improved through inventory optimization and fast-turnaround manufacturing using kanban-flow methods.
Inventory is the second largest cost in every supply chain. Great operational companies carefully manage inventory, balancing the tradeoff of customer service (having inventory on-hand for customers) against cash flow required to store inventory. Optimal inventory levels should be based on forecasting and safety stock optimization.
Since the 1980s, when Japanese car manufacturers showed us that high quality can also mean low cost, companies have embraced the Quality Revolution. The most effective method of improving quality, or reducing mistakes and defects, is to reduce variation in your processes. Six Sigma is a set of graphical and statistical tools that help reduce variation and improve quality in processes.
A productive, high quality and high performing warehouse or factory will never be achieved if your people do not buy into your mission. The best way to get people excited is to involve them in your continuous improvement efforts. The Lean Method of rapid-improvement-events, or Kaizen, allows cross-functional teams of people who are close to the work make improvements in their work areas.
Supply Velocity’s background is Warehouse and Plant Operations and we offer many services to improve your facility’s performance.