Lean Warehousing Optimization (Expert Consulting Services)

Warehouses and efficient storage of inventory are a critical part of every supply chain. Supply Velocity uses Lean practices, Lean warehouse management, and the most efficient warehouse layouts to ensure your warehouse operations provide a competitive advantage for your company and your supply chain.

As part of our warehouse optimization consulting and broader warehouse consulting services, we help optimize your warehouse to reduce costs, improve efficiency, and improve customer satisfaction.

When Lean first came to North America and Europe, the focus was on Lean 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 (muda) in receiving, put-away, picking, packing, and shipping of items, while improving material flow, warehouse space utilization, and throughput.

When applicable, automation and e-commerce become an important function in the transition to lean warehouse management. In addition, supporting office processes such as order entry, purchasing, and accounting should be part of the scope of Lean Warehouse Management.

Just like manufacturing, warehouse process flow can be made more efficient, thereby reducing inefficiencies. We also evaluate the role of WMS/ERP and automation to identify areas for streamlining and standardization.

By using Lean tools and involving employees to identify and eliminate waste (muda) in your distribution center, you will create warehouse processes that embody a culture of continuous improvement.

Lean principles seek to continually reduce waste – then standardize improvements as best practices to improve efficiency and reduce costs.

How We Use Lean Tools in Warehouse Optimization

The most frequently used Lean tools in warehouses are time studies, spaghetti diagrams, quick changeover, and 5S visual management. Time studies and spaghetti maps are used in warehouse layout to improve labor efficiency by minimizing movement to process orders.

We use these tools to evaluate material flow, throughput, and warehouse space utilization. Quickchangeover is used to speed up and streamline the unloading and loading of trucks to maximize dock capacity and minimize truck downtime.

The 5S system of visual management creates disciplined operations by making sure there is a place for everything and everything is in its place. The results are both cost savings and greater customer satisfaction through on-time deliveries that are defect-free. 5S eliminates clutter and ensures materials, information, and supplies are easy to find. The steps in 5S are:

• Seiri (Sort)
• Seiton (Set in Order)
• Seiso (Shine)
• Seiketsu (Standardize)
• Shitsuke (Sustain)

Warehouse best practices focus on three areas:

1. Having the correct inventory for order fulfillment and improved inventory accuracy.
2. Making sure the right item, at the right quantity, is put in the customer’s box.
3. Minimizing the movement of warehouse operators to increase throughput and reduce costs.

Much of the focus of lean warehouse design is to optimize and streamline labor productivity and workflow. Lean warehousing principles result in responsiveness to customer demand, management of excess inventory, and overall improvements in storage space (capacity) and space utilization.

Designing racking to efficiently stock pallets, shelving to store small items, and floor stock to store stackable SKUs will simplify receiving, putaway, and picking, which ultimately reduces bottlenecks. This can involve effective use of your warehouse management system (WMS).

Lean warehouse management includes not just physical improvements, but the appropriate use of WMS and ERP systems to optimize material flow and achieve the best warehouse performance. We evaluate slotting and pick-path design to identify areas for improvement.

Other supply chain concerns are inventory management and quality. Inventory optimization should be used to ensure you have the right inventory to balance a high fill rate with the cost of carrying inventory. This creates proper safety stocks based on SKU class, supplier leadtime, and SKU class service level percentage.

When applicable, includes the use of just-in-time inventory management as drop-ship deliveries directly from vendors. These practices reduce costs, improve efficiency, and improve customer lead times.

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 rarely forgive quality errors. We evaluate error modes and identify areas for mistake-proofing to drive improved inventory accuracy and fewer defects.

8 Wastes in Warehouse Operations

The traditional 8 wastes of lean are very easy to transfer to lean warehouse projects. Supply Velocity’s Lean methodology teaches our clients the fundamentals of lean thinking.

1. Transportation – optimizing your supply and delivery network to minimize product transportation.
2. Inventory – optimizing target inventory levels through the use of calculated safety stock, forecast stock, the use of MRP to manage inventory levels, and, when applicable, just-in-time deliveries from suppliers directly to customers.
3. Motion – SKU slotting based on velocity and bin-location-coding to simplify putaway and product picking for both robots and operators.
4. Waiting – minimizing how long operations have to wait for each other and how long customers must wait to receive the product. An example of internal waiting is putaway waiting for product to be received, picking waiting for putaway, and shipping waiting for receiving.
5. Overproduction – never pre-picking or kitting beyond customer orders
6. Over-processing – adding value to the product/order/shipment beyond what the customer is willing to pay for
7. Defects – mistake-proofing operations through 5S visual tools, a video playbook of standard operating procedures to ensure the right product gets in the box and will not get damaged in shipment.
8. Underutilized Talent – ensuring your employees are adding value to the company and customers through their ideas and intellect. We recommend including your warehouse operators in Kaizen improvement events and using employee engagement methods such as 2-Second Lean to identify areas for rapid gains.

(And a new, 9th waste) Variability – designing and standardizing your operations to improve quality and cycle time consistency. This can be done by minimizing defects (see above), visual management, and other common warehouse tools like warehouse management systems (WMS) that create optimal putaway locations and pick-paths, or automation for highly repetitive tasks. Read our white paper on The 9th Waste here.

Warehouse layout is the most visible aspect of Warehouse Optimization and Lean Warehousing. See our Facility Layout summary for additional information on this methodology.

By designing a lean warehouse, you can improve workflow, material handling, reduce forklift travel, and operational costs, thereby improving profitability. We help optimize your warehouse space and layout to increase throughput and build the best warehouse processes for your operation.

We provide warehouse consulting services to evaluate your current-state operations, identify areas for improvement, and optimize your warehouse to reduce costs, improve efficiency, and improve customer outcomes.

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