Streamlining Warehouse Operations

Lean & Six Sigma in Distribution/Warehousing

This Distributor began their Lean Journey in the middle of the Great Recession. Despite the fact that sales were down, they were willing to invest in reducing costs and improving Customer Service.

They chose 3 problem areas of the company and combined Implementation Projects with Supply Velocity’s Lean Workshop. We will review the Warehouse project below.

Lean Six Sigma Tools

Performance Scorecard
Spaghetti Diagram
Pareto Analysis
5S Visual Management

Details

1) As you have probably seen many times, all of our projects start off with the creation of a project, or department Performance Scorecard.

2) The next step was to map the existing process. We used a Spaghetti Diagram to follow around the order-selectors as they pulled parts for customer-orders. As shown they did a lot of traveling.

3) Next, we performed a Pareto Analysis of Items in the Warehouse by Orders. There were about 7000 items stocked in the warehouse. 504 represented 80% of the orders.

4) The team then mapped where these “A” items were located, and it was all over. (See slide “Location of top 250 items”)

5) They moved the top 500 up to the front, close to the Pack/Ship workstation. The next 200 items down encompassed 90% of orders. These “B” items were placed in the next closest locations. Everything else was classified as a “C” item and moved into the back two-thirds of the warehouse.

6) Once a quarter the Vice President reruns this analysis. The new “A” item locations are evaluated to be moved closer to the pack/ship area.

7) We also 5S-ed the Pack/Ship station to improve productivity of boxing up orders for shipment.

Lesson Learned – Having the Right Team & The Power of Continuous Improvement

Our team had the Owner of the Company, V.P. of Distribution, order-selectors who worked in the warehouse and people from other departments. This varied team brought different perspectives and great solutions.

In the beginning, some people in the Warehouse felt they had a world-class operation, and had difficulty seeing how they could improve. They had to learn, on their own, using the tools above, that every process can be improved. Once they were convinced, they became the greatest supporters of the power of Lean.